Butler et al v. Mueller Copper Tube Company Inc. et al
Filing
139
MEMORANDUM OPINION. Signed by Magistrate Judge David A. Sanders on 1/24/19. (jcm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
ABERDEEN DIVISION
JOHN R. BUTLER AND
STEPHANIE BUTLER
PLAINTIFFS
VS.
CIVIL ACTION NO. 1:17-cv-0019-DAS
MUELLER COPPER TUBE COMPANY, INC.,
NEW HAMPSHIRE INSURANCE COMPANY, INC.,
AND SEDGWICK CLAIMS MANAGEMENT SERVICE
DEFENDANTS
MEMORANDUM OPINION
This matter arises on competing motions for summary judgment. After considering the
matter, the court finds as follows:
Facts and Procedural History
Plaintiffs seek to recover damages for alleged bad faith handling of John Butler’s workers’
compensation claim, which arose on the afternoon of August 22, 2013, when he suffered a crush
injury to his right foot during the course and scope of his employment with Mueller Copper Tube
Company, Inc. Butler had his right leg amputated below the knee on October 10, 2013. On August
22, 2014, he filed a petition to controvert his workers’ compensation claim. Following two years
of litigation before the Mississippi Workers’ Compensation Commission (“MWCC”), the parties
agreed to settle the indemnity, or wage, portion of his claim, while keeping the medical portion
open.
At the time of his injury, Mueller had workers’ compensation insurance through New
Hampshire Insurance Company (“NHI”). Mueller also had a service agreement with Sedgwick
Claims Management Service to act as a third-party administrator of Butler’s claim. Butler
exhausted his administrative remedies before the MWCC, which compelled the employer and
carrier to provide certain medical and indemnity benefits, and filed this action for bad faith delay
of benefits.
Plaintiffs seek partial summary judgment on the issues of delay and vicarious liability.
Defendants seek summary judgment on all claims and complete dismissal with prejudice.
Summary Judgment Standard
Summary judgment is warranted when the evidence reveals no genuine dispute regarding
any material fact, and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P.
56(a). The Rule “mandates the entry of summary judgment, after adequate time for discovery and
upon motion, against a party who fails to make a showing sufficient to establish the existence of
an element essential to that party’s case, and on which that party will bear the burden of proof at
trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).
The moving party “bears the initial responsibility of informing the district court of the basis
for its motion, and identifying those portions of [the record] which it believes demonstrate the
absence of a genuine issue of material fact.” Id. at 323. The nonmoving party must then “go beyond
the pleadings” and “designate ‘specific facts showing that there is a genuine issue for trial.’” Id. at
324 (citations omitted). In reviewing the evidence, factual controversies are to be resolved in favor
of the non-movant, “but only when . . . both parties have submitted evidence of contradictory
facts.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). When such
contradictory facts exist, the Court may “not make credibility determinations or weigh the
evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S. Ct. 2097, 147 L.
Ed. 2d 105 (2000). Conclusory allegations, speculation, unsubstantiated assertions, and legalistic
arguments are not an adequate substitute for specific facts showing a genuine issue for trial. TIG
Ins. Co. v. Sedgewick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002); SEC v. Recile, 10 F.3d
1093, 1097 (5th Cir. 1997); Little, 37 F.3d at 1075.
Analysis and Discussion
The Mississippi Workers’ Compensation Act is the exclusive remedy available to an
injured worker in the state of Mississippi. Miller v. McRae’s Inc., 444 So. 2d 368, 370 (Miss.
1984). See also Miss. Code Ann. § 71-3-9 (“The liability of an employer to pay compensation
shall be exclusive and in place of all other liability of such employer to the employee, his legal
representative, husband or wife, parents, dependents, next-of-kin, and anyone otherwise entitled
to recover damages at common law or otherwise from such employer on account of such injury
or death[.]”). However, “an employee entitled to worker’s compensation benefits from her
employer has a separate and independent right to recover damages from the employer’s worker’s
compensation insurer because of the insurer’s intentional bad-faith refusal to pay compensation
when due, which constitutes an independent intentional tort committed by the insurer outside the
scope of the worker’s employment.” Williams v. Liberty Mut. Ins. Co., 741 F.3d 617, 621 (5th
Cir. 2014) (citing Southern Farm Bureau Casualty Ins. Co. v. Holland, 469 So. 2d 55, 56-59
(Miss. 1984)). Holland was extended “to allow bad-faith refusal action against employers as well
as insurance carriers.” Id. at 622 (citing Luckett v. Miss. Wood Inc., 481 So. 2d 288, 290 (Miss.
1985)).
To prove his claim against the employer, the employee would have to show, as he
would to prove a claim against the carrier, that there has been “(1) an intentional
refusal by the employer to pay with reasonable promptness the insured’s claim; and,
(2) the absence of any arguable reason for the defendant’s refusal to pay with
reasonable promptness.”
Toney v. Lowery Woodyards and Employer’s Ins. Of Wausau, 278 F. Supp. 2d 786, 794 (S.D.
Miss. 2003). The standard is the same for a claim based on delay of benefits. See Bullocks v.
Gottfried Corp., 403 Fed. Appx. 947, 950 (5th Cir. 2010).
NHI and Sedgwick argue that any unreasonable delay in benefits was caused by
Plaintiffs’ tardiness in submitting documentation or due to the attorney who defended the
underlying workers’ compensation claim, David McLaurin.1 Mueller seconds these arguments
and also argues that it fulfilled its statutory duty by securing workers’ compensation coverage
and that it did not actively participate in the administration of the claim. Plaintiffs seek to impose
liability on the defendants through a theory of vicarious liability, arguing that McLaurin acted as
Defendants’ agent and therefore his actions should be imputed to them. They further argue that
Mueller exercised some control over the administration of the claim—above merely granting
settlement authority—and that Mueller specifically directed Sedgwick to hire McLaurin.
Mueller
Plaintiffs agree that Mueller would, under general circumstances, be entitled to summary
judgment. However, Plaintiffs argue, based on a statement made by counsel in NHI and
Sedgwick’s brief supporting their motion for summary judgment [112], that “Mueller retained
the right to select and pay counsel of its choice to represent Mueller and NHI” and that “Mueller
exercised this right with respect to Mr. Butler’s claim and directed Sedgwick to refer the defense
to David McLaurin . . . .”2 However, there is no evidence to support this contention. Indeed,
Plaintiffs concede that they “have been unable to identify an express term within the Mueller
Service Agreement providing Mueller with absolute authority to assign defense counsel on
qualified claims.”3
The evidence does, however, show that Mueller asked to be kept abreast of how Butler’s
claim was proceeding and that a Mueller employee agreed with Sedgwick’s direction to
1 Defendants do not concede unreasonable delay, only that if unreasonable delay occurred, it was caused by
McLaurin.
2 [Dkt. 112] p. 6.
3 [Dkt. 117] p. 2.
McLaurin to subpoena medical records in order to evaluate Butler’s suicide attempt to determine
whether it was compensable as part of the workers’ compensation claim.4 As to Mueller’s
involvement, Rita Reeder, the Sedgwick adjuster handling Butler’s claim, testified during her
deposition that Mueller’s only involvement was in giving approval for additional settlement
authority. Plaintiffs do not allege Mueller was dilatory in granting settlement authority. Reeder
testified she did not seek input from Mueller on decisions related to the payment of benefits or
the approval of medical care and related bills for treatment, nor did Mueller in any way hinder
her handling of the claim. Even assuming Mueller “retained control” over Butler’s claims, there
is no evidence it exercised that control.
McLaurin likewise testified that he kept Mueller apprised as to the status of Butler’s
claim, but that Mueller was not involved in decisions regarding payment of benefits, nor did he
consult with them regarding claims-handling decisions. While he could not remember who hired
him to defend Butler’s claim, he noted he had done work for Sedgwick for fifteen years and was
handling approximately twelve files for Sedgwick at the time of his deposition.
There being no evidence that Mueller “actively participated in the acts alleged to
constitute . . . bad faith” in a manner that constituted “a willful and intentional or malicious
wrong” or an “independent intentional tort,”5 the Court finds that Mueller is entitled to summary
judgment and its motion [110] is therefore GRANTED.
4 The employee, Travis Fisher, simply stated, “I agree with Rita[;] I question underlying issues prior to
injury.” Fisher was agreeing with action Reeder had already requested McLaurin take. There is no evidence this
agreement influenced his actions, nor does it support “active participation” on the part of Mueller.
5 Toney, 278 F. Supp. 2d at 794; Rogers v. Hartford Accid. & Indem. Co., 133 F.3d 309, 312 (5th Cir.
1998); Williams, 741 F.3d at 621.
NHI and Sedgwick
“[A]n insurer’s delaying investigation and payment of a claim can constitute an
intentional tort.” Willis v. Allstate Ins. Co., 2014 WL 5514160, *15 (S.D. Miss. Oct. 31, 2014)
(citing AmFed Cos., LLC v. Jordan, 34 So. 3d 1177, 1185 (Miss. Ct. App. 2009)). However, “an
insurer’s conduct does not amount to gross negligence or an intentional tort as long as the insurer
is actively investigating a case.” Id. (citing Washington v. Am. Heritage Life Ins. Co., 500 F.
Supp. 2d 610, 617 (N.D. Miss. 2007)). “Generally, a client’s reliance upon advice of his attorney
prevents a finding of bad faith.” AmFed, 34 So. 3d at 1184-85. However, an insurer may be
liable if it abdicates its investigation to its attorney and relies on him to perform the
administrative functions that are within its purview in evaluating and processing claims. See id.
at 1185.
In AmFed, the adjuster, Cox, asked AmFed’s attorney, Bolen, to investigate the
underlying claim. Id. at 1184. Cox left to Bolen the tasks of verifying the existence of and
obtaining a copy of the Commission’s order as well as requesting a calculation. Id. Bolen waited
a month before sending the request, and once received, waited until returning from vacation to
forward the calculation to Cox. Id. It then took AmFed an additional two weeks to prepare
checks based on the calculation. “From the time [claimant] notified AmFed of her lump-sum
order, it took seventy-six days—approximately eleven weeks—for AmFed to pay her the
benefits she was due.” Id. While AmFed argued it was entitled to rely on Bolen’s advice, the
court found “no evidence that AmFed’s delay was based upon Bolen’s advice. Instead, AmFed
abdicated its investigation to Bolen and relied on him solely to perform the administrative
functions of verifying that a lump-sum order existed and requesting calculation of benefits.” Id.
Thus, the carrier is not automatically liable for the actions of its attorney by virtue of agency, but
rather is liable for delaying its investigation by making “intentional choices to pass along
duties[,] in reckless disregard of the consequences.” Id.
Plaintiffs claim a bevy of delays occurred in processing the underlying claim. For
instance, Reeder filed an incorrect Form B-18, indicating an intent to pay 122.5 weeks of
benefits rather than 175. Plaintiffs’ counsel raised the issue multiple times with defendants and
their counsel, McLaurin. Following a motion to compel, McLaurin notified Reeder to file an
amended B-18, indicating 175 weeks of benefits. Reeder filed an amended form two months
later. Plaintiffs further claim that at a hearing on a motion to compel, Defendants admitted
Parkwood Behavioral Health bills were owed and would be paid, therefore the ALJ did not enter
an order compelling payment. Defendants then refused to pay the bill until receiving an itemized
invoice. Finally, Plaintiffs claim Defendants simply refused to pay for prescriptions and medical
devices or to reimburse mileage until ordered to do so by the ALJ.
Defendants, in turn, argue any unreasonable delays6 were McLaurin’s fault alone, for
which they have no liability. They claim Plaintiffs never sought mileage reimbursement from
Defendants directly but rather only sent requests for reimbursement to McLaurin, who failed to
notify them of the request. Defendants also claim that while notice of the ALJ’s oral ruling
regarding certain benefits, prescriptions, and medical aids was sent on November 24, 2014, it
was not received until January 22, 2015, due to a fax error. Thus, Reeder never had actual notice
that a motion to compel had been filed, that it was set for hearing, or that it had been heard until
January. Reeder’s claim note indicates that she received a letter from McLaurin, but that the last
6 Again, Defendants do not concede that any unreasonable delays occurred, only that if there were
unreasonable delays, the fault lay with McLaurin.
pages were distorted. There is no indication that she contacted McLaurin to inquire about the
content of the distorted pages. Defendants note that while the Form B-18 was initially erroneous,
Plaintiff continuously received his weekly benefits payments—and the error was corrected
without interrupting payments. As to the Parkwood bills, Defendants claim the bills originally
submitted by Parkwood were insufficient for processing and evaluation so they sought a more
detailed billing. When Reeder requested an itemized billing, Parkwood refused, absent Plaintiff’s
written authorization. Plaintiff refused to comply, therefore contributing to the delay.7
The parties have thus demonstrated the existence of a genuine issue of material fact as to
whether NHI, acting through Sedgwick, unreasonably delayed its investigation of Plaintiff’s
claim—including whether it abdicated its investigation to its attorney—with no legitimate or
arguable reason for the delays. See AmFed, 34 So. 3d at 1185. See also Cospelich v. Hurst Boiler
& Welding Co., Inc., 2009 WL 10676857, *2 (S.D. Miss. July 7, 2009) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)) (“A genuine dispute about a material fact exists
when the evidence is such that a reasonable jury could return a verdict for the non-moving
party.”). Therefore, the motion for summary judgment filed by NHI and Sedgwick, as well as the
motion for partial summary judgment filed by Plaintiffs, are DENIED.8
Conclusion
For the reasons fully explained above,
7 Defendants contrast Parkwood with Methodist Le Bonheur of Olive Branch, which submitted sufficiently
detailed billing forms and were promptly paid.
8 Also before the Court is NHI and Sedgwick’s [130] Motion to Strike certain exhibits attached to
Plaintiffs’ response to Defendants’ Motion for Summary Judgment and/or in support of Plaintiffs’ Motion for Partial
Summary Judgment. No response was filed within the time allotted by the rules, which has long since passed. The
Court, having considered the motion, finds that it is well-taken and should be GRANTED as unopposed.
1. Plaintiffs’ [106] Motion for Partial Summary Judgment is DENIED.
2. NHI and Sedgwick’s [109] Motion for Summary Judgment is DENIED.
3. Mueller Copper Tube Company, Inc.’s [110] Motion for Summary Judgment is
GRANTED.
4. NHI and Sedgwick’s [130] Motion to Strike is GRANTED.
This case shall PROCEED TO TRIAL.
THIS the 24th day of January, 2018.
/s/ David A. Sanders
UNITED STATES MAGISTRATE JUDGE
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