Lambert v. Liberty Mutual Fire Insurance Company et al, No. 2:2014cv00521 - Document 164 (D. Ariz. 2016)
Court Description: ORDER granting in part and denying in part 111 Motion for Summary Judgment; granting in part and denying in part 111 Motion for Partial Summary Judgment. It is denied as to Plaintiff's claim for bad faith, but granted as to Plaintiff's claim for punitive damages. Signed by Judge John W Sedwick on 5/19/16. (JWS)
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Lambert v. Liberty Mutual Fire Insurance Company et al Doc. 164 1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF ARIZONA 5 SCOTT LAMBERT, 6 7 8 9 10 ) ) Plaintiff, ) ) vs. ) ) LIBERTY MUTUAL FIRE INSURANCE ) COMPANY; ELITHA STOCKETT, ) ) Defendants. ) ) 2:14-CV-00521 JWS ORDER AND OPINION [Re: Motion at doc. 111] 11 12 I. MOTION PRESENTED 13 Defendants Liberty Mutual Fire Insurance Company (“Liberty”) and Elitha 14 Stockett (“Stockett”; collectively “Defendants”) filed a motion for summary judgment at 15 docket 111, with supporting statement of facts at docket 112 and supporting 16 documentation at docket 117 and docket 118. Plaintif f Scott Lambert (“Plaintiff”) 17 responded at docket 140 with his responsive supporting statement of facts at docket 18 139 and supporting documentation at docket 161. Defendants’ reply is at docket 158, 19 and their response and objections to Plaintif f’s statement of facts is at docket 159. Oral 20 argument was requested, but it would not be of additional assistance to the court. 21 II. BACKGROUND 22 Plaintiff is a pilot who worked for Airline Training Center Arizona, Inc. (“ATCA”). 23 In late 2012 Plaintiff had surgery on his right knee and arm and was on medical leave 24 until the spring of 2013. Shortly after returning from leave, on April 28, 2013, Plaintiff 25 injured himself while stepping out of an aircraft following a training flight. No one 26 witnessed the incident. Plaintiff initially reported that the accident happened while 27 “stepping off the aircraft wing” and that “his knee gave out.”1 He also filled out a lesson 28 1 Doc. 117-3 at p. 7. Dockets.Justia.com 1 cancellation report that day, noting that he “hurt [his] knee getting out of [a] plane.”2 He 2 saw a nurse practitioner the next day, and her notes indicate his injury was to the right 3 knee.3 The injury was reported to Liberty, ATCA’s workers’ compensation insurance 4 provider. Stockett was the assigned adjuster. 5 Within a few days, Plaintiff later expounded on his injury when describing it to 6 doctors and to Stockett. He stated that the work incident involved a fall. Stockett’s 7 notes indicate that Plaintiff reported to her that his right knee buckled and he fell to the 8 ground on his right knee and wrist.4 One of his doctor’s reports from a visit shortly after 9 the incident indicates that Plaintiff thought his left knee may have hit the ground as 10 well.5 He complained of pain in his right knee, wrist, and elbow, as well as pain or 11 soreness in his left knee.6 He continued to see various doctors for the injuries 12 throughout May of 2013. On May 31, Stockett wrote in the case file notes that she was 13 denying the workers’ compensation claim because his reported injuries were prior 14 injuries, but she also indicated that her decision could be rescinded upon additional 15 investigation.7 She filled out an Industrial Commission of Arizona (“ICA”) form—a 16 “Notice of Claim Status”—to deny the claim, but she did not send the form to the ICA 17 that day.8 18 19 In early June, Plaintiff filled out another ICA injury report about the incident, explaining that his right knee gave out and then he fell on his left knee and arm and 20 21 22 2 Doc. 117-3 at p. 8. 3 23 Doc. 118-2 at pp.19-35, 37. 4 24 25 Doc. 161 at p. 69. 5 Doc. 161-3 at p. 30. 26 6 27 7 28 8 Doc. 161-3 at p. 30; Doc. 161 at p. 69; Doc. 118-4 at p. 23; Doc. 118-5 at p. 75. Doc. 161 at p. 64. Doc. 117-4 at p. 4 (dated May 31, 2013, but not faxed until June 28, 2013). -2- 1 right wrist.9 The insurance case file at this time noted that the claim status as “denial 2 pending complete investigation.”10 Plaintiff continued to see various doctors for his 3 injuries throughout June. He obtained a MRI of his right knee and elbow on June 24. 4 While there had been two doctors who had recommended a left knee MRI and 5 indicated as much in their medical reports, that MRI was not obtained. Liberty never 6 received a formal request for the left knee MRI authorization. In late June, Stockett 7 requested an independent medical examination (“IME”) of Plaintiff.11 Before an IME 8 could take place, Stockett filed her Notice of Claim Status form with the ICA, officially 9 denying the claim.12 10 Plaintiff went back to modified work duty on July 1, 2013, after his orthopedic 11 surgeon issued a work release.13 In July, Plaintiff filed paperwork with the ICA to 12 request a hearing regarding his claim. Stockett was no longer working on Plaintiff’s 13 claim. Liberty again noted the need for an IME, which took place on July 23. The IME 14 doctor recommended a MRI of Plaintiff’s left knee and right wrist and a consult for his 15 left and right hands, but nonetheless indicated that Plaintif f could work unrestricted as 16 to his left knee and with modifications as to his right hand.14 He cleared Plaintiff as to 17 his right knee and right elbow.15 Liberty eventually authorized the left knee MRI in late 18 August after some back and forth between the new adjuster assigned to the claim, 19 Leona Fox, and Plaintiff regarding whether the left knee was appropriately included as 20 21 22 9 Doc. 117-4 at p. 2. 10 23 Doc. 161 at p. 63. 11 24 25 Doc. 161 at p. 63. 12 Doc. 117-4 at p. 4. 26 13 27 14 28 15 Doc. 161-3 at p. 28. Doc. 161-2 at p. 7. Doc. 161-2 at p. 7. -3- 1 part of the work-place injury. The left knee MRI indicated that Plaintiff had suffered a 2 tear.16 He was again taken off work on September 3, 2013, and scheduled for surgery 3 on his knee.17 Liberty eventually filed notice with the ICA that it was accepting the 4 workers’ compensation claim, and in September Liberty issued payment of temporary 5 disability benefits for the period of April 29, 2013 to June 30, 2013, as well as payment 6 for medical expenses incurred.18 7 Plaintiff filed a complaint against Liberty and Stockett for insurance bad faith. 8 Plaintiff alleges that Defendants denied timely payment of his workers’ compensation 9 benefits without a reasonable basis or adequate investigation. Plaintiff concedes that 10 Liberty’s handling of his workers’ compensation claim as of September 4, following its 11 acceptance of the claim, complied with the covenant of good faith and fair dealing.19 12 Therefore, the dispute centers around Defendants’ conduct from the date of injury, 13 April 28, 2013, to the time it filed its notice of claim acceptance with the ICA on 14 September 4, 2013. 15 16 III. STANDARD OF REVIEW Summary judgment is appropriate where “there is no genuine dispute as to any 17 material fact and the movant is entitled to judgment as a matter of law.”20 The 18 materiality requirement ensures that “only disputes over facts that might affect the 19 outcome of the suit under the governing law will properly preclude the entry of summary 20 judgment.”21 Ultimately, “summary judgment will not lie if the . . . evidence is such that 21 22 16 23 Doc. 117-1 at p. 4. 17 24 25 Doc.161-3 at p. 26. 18 Doc. 139 at ¶¶ 72, 73, 88. 26 19 27 20 28 21 Doc. 139 at ¶ 77. Fed. R. Civ. P. 56(a). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). -4- 1 a reasonable jury could return a verdict for the nonmoving party.”22 However, summary 2 judgment is mandated “against a party who fails to make a showing sufficient to 3 establish the existence of an element essential to that party’s case, and on which that 4 party will bear the burden of proof at trial.”23 5 The moving party has the burden of showing that there is no genuine dispute as 6 to any material fact.24 Where the nonmoving party will bear the burden of proof at trial 7 on a dispositive issue, the moving party need not present evidence to show that 8 summary judgment is warranted; it need only point out the lack of any genuine dispute 9 as to material fact.25 Once the moving party has met this burden, the nonmoving party 10 must set forth evidence of specific facts showing the existence of a genuine issue for 11 trial.26 All evidence presented by the non-movant must be believed for purposes of 12 summary judgment, and all justifiable inferences must be drawn in favor of the 13 non-movant.27 However, the non-moving party may not rest upon mere allegations or 14 denials, but must show that there is sufficient evidence supporting the claimed factual 15 dispute to require a fact-finder to resolve the parties’ differing versions of the truth at 16 trial.28 17 18 19 20 21 22 22 Id. 23 23 Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 24 24 25 Id. at 323. 25 Id. at 323-25. 26 26 27 27 28 28 Anderson, 477 U.S. at 248-49. Id. at 255. Id. at 248-49. -5- 1 2 IV. DISCUSSION “The tort of bad faith arises when the insurer ‘intentionally denies, fails to 3 process or pay a claim without a reasonable basis.’” 29 A bad-faith claim is a combination 4 of a negligence action and an intentional tort and theref ore is comprised of an objective 5 and a subjective element. An insured must show that the insurer (1) acted 6 unreasonably, and (2) knew or recklessly disregarded the fact that its conduct was 7 unreasonable. 30 8 9 As to the objective element, the issue is whether “the insurance company [acted] in a manner consistent with the way a reasonable insurer would be expected to act 10 under similar circumstances.”31 An insurer is liable for bad faith if it unreasonably 11 denies a clearly legitimate claim; that is, if it denies a claims that was “not fairly 12 debatable.”32 An insurer can also be liable for bad faith if it acted unreasonably in 13 processing the claim.33 Therefore, even if a claim is ultimately accepted, an insurer can 14 nonetheless be liable for bad faith if it handled the claim in an unreasonable manner.34 15 As for the subjective element, negligence or inadvertence is not enough.35 The insurer 16 17 18 19 20 21 29 Zilisch v. State Farm Mut. Auto. Ins. Co., 995 P.2d 276, 279-80 (Ariz. 2000) (citing Noble v. Nat’l Am. Life Ins. Co., 624 P.2d 866, 868 (Ariz. 1981)). 22 30 23 31 24 32 25 Lukes v. Am. Family Mut. Ins. Co., 455 F. Supp. 2d 1010, 1016 (D. Ariz. 2006). Id. Zilisch, 995 P.2d at 279; see also Young v. Liberty Mut. Grp. Inc., No. 12-cv-2302, 2015 WL 1209621, at *3(D. Ariz. 2015). 26 33 27 34 28 35 Zilisch, 995 P.2d at 279-80; see also Young, 2015 WL 1209621, at *3-*4. Zilisch, 995 P.2d at 280. Trus Joist Corp. v. Safeco Ins. Co. of Am., 735 P.2d 125, 134 (Ariz. Ct. App. 1986). -6- 1 must intend the unreasonable act. 36 The subjective element is met if the insurer lacked 2 a “founded belief” in the propriety of its conduct toward the insured.37 3 The question of whether an insurer was objectively reasonable is not 4 automatically a question of fact. On a motion for summary judgment, “the appropriate 5 inquiry is whether there is sufficient evidence from which reasonable jurors could 6 conclude that in the investigation, evaluation, and processing of the claim, the insurer 7 acted unreasonably and either knew or was conscious of the fact that its conduct was 8 unreasonable.” 38 However, the insurer’s “founded belief” in its conduct is more typically 9 an issue for the jury given the subjective nature of the inquiry, but the plaintiff must 10 nonetheless offer some probative evidence that calls into question the insurer’s belief in 11 the reasonableness of its conduct.39 Evidence of a lack of founded belief consists of 12 evidence showing the insurer knew its position was baseless or evidence showing that 13 the insurer “fail[ed] to undertake an investigation adequate to determine whether its 14 position [was] tenable.”40 15 The court has considered Liberty’s numerous objections to Plaintiff’s statement 16 of facts. The court has concluded that the evidence relevant to the pending motion is 17 the information Liberty acquired in processing the claim and the information that it 18 should have sought while processing the claim. In evaluating the parties’ arguments, 19 the court has applied that standard in its analysis. For example, many of Liberty’s 20 objections to Plaintiff’s declaration relate to the fact that it attempts to provide Plaintiff’s 21 own spin on what the medical diagnoses were and how the insurance claim was 22 23 36 24 37 25 38 26 27 28 Id. Rawlings v. Apodaca, 726 P.2d 565, 576 (Ariz. 1986). Zilisch, 995 P.2d at 280. 39 Milhone v. Allstate Ins. Co., 289 F. Supp. 2d 1089, 1102 (citing Knoell v. Metro. Life Ins. Co., 163 F. Supp. 2d 1072, 1077 (D. Ariz. 2001)). 40 Rawlings, 726 P.2d at 576. -7- 1 processed. The court relies on the medical reports and the insurance file. It only relies 2 on Plaintiff’s declaration as to his averment of harm and his assertion that he placed 3 numerous calls to Liberty asking for a status update. Also, Liberty objects to Plaintiff’s 4 expert’s declaration, primarily as improperly offering his opinion as to the ultimate legal 5 issue. The court only relies on the expert’s declaration and report as evidence of what 6 is standard conduct in a claim investigation, not as determinative of the ultimate legal 7 issue. As a result, the court finds it unnecessary to rule separately on each objection 8 made by Liberty. 9 A. Objective reasonableness 10 1. Fairly debatable 11 Liberty argues that an insurer’s denial or delay in paying a claim “is not 12 unreasonable when the claim’s validity is fairly debatable.”41 It argues that the record 13 shows that Plaintiff indisputedly had a prior right knee surgery just months before the 14 incident at issue, and thus Plaintiff’s claim for injury to that knee was at least fairly 15 debatable as a pre-existing condition. Furthermore, it argues that the record shows that 16 the left knee claim was also fairly debatable because Plaintiff’s initial injury report did 17 not include his left knee and his account of the work incident and his injuries evolved 18 and was inconsistent. Indeed, given the record, Liberty’s act of questioning the claim in 19 and of itself was not unreasonable, but that does not end the inquiry. “While it is clear 20 that an insurer may defend a fairly debatable claim, all that means is that it may not 21 defend one that is not fairly debatable. But, in defending a fairly debatable claim, an 22 insurer must exercise reasonable care.” 42 The insurer must act reasonably during its 23 investigation and processing of the claim. Thus, Liberty is incorrect to assert that “fair 24 debatability” of the merits of Plaintiff’s claim is the beginning and the end of the 25 analysis. 26 27 41 28 42 Doc. 111 at p. 10. Zilisch, 995 P.2d at 279. -8- 1 2. Inadequate investigation 2 Plaintiff’s allegations focus on Liberty’s actions during its investigation of his 3 claim. Plaintiff asserts that Liberty, through Stockett, failed to investigate his claim, 4 forcing him “through a litany of unnecessary hoops,”43 and causing a delay in payment 5 of benefits and treatment. Relatedly, he argues Stockett was predisposed to deny his 6 claim. An insurer “has an obligation to immediately conduct an adequate investigation” 7 into a claim.44 Part of that duty entails diligently searching for evidence.45 It also entails 8 giving due weight to all evidence; an insurer cannot ignore evidence supporting a 9 claim.46 In late May, Stockett made a notation in her case file stating that she was 10 going to deny the claim because Plaintiff alleged that “he injured all of the same body 11 parts that he has been treating for just one month prior to his injury, other than the left 12 knee.”47 She noted that the decision could be rescinded. She formally denied the claim 13 a few weeks later. The issue is whether Stockett thoroughly investigated the foundation 14 for her denial and gave “equal consideration” to Plaintiff’s needs.48 15 Plaintiff primarily argues that Stockett did not investigate his claim as it related to 16 his left knee injury. While Liberty stresses that Plaintiff’s primary complaint at the time 17 of the incident was his right knee, there is nonetheless evidence in the record to show 18 that he did mention left knee pain to multiple doctors shortly after the incident. He also 19 reported to Stockett that his left knee was sore. Indeed, two doctors referred Plaintiff 20 for a left knee MRI in May of 2013. Although Liberty points to evidence to show that the 21 22 43 23 Doc. 140 at p. 12. 44 24 25 Zilisch, 995 P.2d at 280. 45 Estate of Parker v. AIG Life Ins., 317 F. Supp. 2d 1167, 1171 (C.D. Cal. 2004). 26 46 27 47 28 48 Id. Doc. 161 at p. 64 (emphasis added). Demetrulias v. Wal-Mart Stores, 917 F. Supp. 2d 993, 1004, 1005 (D. Ariz. 2013). -9- 1 doctors failed to send Liberty a formal request for the left knee MRI authorization, the 2 doctors’ referrals were in their medical reports, and Liberty’s claim file notes 3 acknowledge that there had been a diagnosis related to the left knee.49 The record 4 shows that Stockett made her decision to deny the claim before discussing the injury 5 with doctors or following up on whether a left knee MRI had been conducted. Plaintiff 6 submits evidence from which a jury could infer that failure to consult with doctors before 7 denial based on the status of the insured’s medical condition is not standard practice 8 and thus is unreasonable conduct. 50 Moreover, while Stockett indicated in her claim 9 notes that an IME would be necessary, she then filed her formal denial before that IME 10 happened. Drawing all inferences in favor of Plaintiff, a juror could conclude that 11 Stockett had predetermined her decision and failed to conduct a sufficient investigation. 12 Stockett’s deposition testimony only raises further issues for the jury. Her claim 13 notes state that she was “denying [the] claim . . . [because Plaintiff alleges] he injured 14 all of the same body parts that he has been treating for just one month prior to his 15 injury, other than the left knee.”51 There is no reason articulated as to why the left knee 16 injury did not support the workers’ compensation claim. In her deposition, Stockett 17 mentions that she denied the claim subject to investigation because she needed more 18 medical records to make sure Plaintiff did not have a pre-existing injury to his left knee. 19 Again, there is nothing in the record to document efforts taken to resolve that issue. 20 Indeed, in her deposition she admitted that she did not think she found any evidence of 21 a pre-existing condition before her denial.52 Even if there had been a pre-existing 22 condition, Plaintiff presents evidence to support his theory that Stockett should have 23 contacted his doctors to determine whether his reported injuries had been aggravated 24 25 49 Doc. 161 at p. 65. 26 50 27 51 28 52 Doc. 139-2 at pp. 18, 19. Doc. 161 at p. 64 (emphasis added). Doc. 118-8 at p. 10 (Stockett deposition at p. 95). -10- 1 by the work incident.53 Stockett explains in her deposition that her denial was primarily 2 based on Plaintiff’s inconsistent positions and not on any medical information.54 She 3 does not describe, and the record does not otherwise show, efforts she took before 4 denial to investigate her suspicion that Plaintiff was being untruthful or to clarify any 5 inconsistencies. Plaintiff puts forth evidence to support his argument that failure to 6 clarify inconsistencies constitutes bad faith insurance practice. 55 Therefore, the record, 7 when viewed in favor of Plaintiff, could support a jury’s finding of inadequate 8 investigation and unnecessary delay. 9 Liberty stresses that on the day of the incident, Plaintiff did not report any injury 10 to his left knee and otherwise highlights facts in the record that might call into doubt 11 Plaintiff’s credibility regarding the injuries suffered as a result of the work incident. 12 Again, the issue here is not the ultimate merits of Plaintiff’s claim, but rather, whether 13 Liberty’s efforts in reviewing the merits of the claim were adequate given the 14 circumstances, and at this summary judgment stage the court does not make credibility 15 determinations but merely determines whether there are enough disputed issues of fact 16 to submit to the jury. While the facts related to Plaintiff’s credibility in this matter might 17 sway a jury in favor of Liberty on the issue of reasonable investigation, the evidence 18 related to the investigation discussed above places reasonableness in dispute. That is, 19 there is support in the record from which a juror could conclude that Liberty, through 20 Stockett, failed to adequately investigate the left knee injury before her decision to deny 21 Plaintiff’s claim. 22 23 24 25 26 53 Doc. 139-2 at p. 19. Indus. Indem. Co. v. Indus. Comm’n of Ariz., 731 P.2d 90, 94 (Ariz. Ct. App. 1986) (explaining how workplace injuries can aggravate pre-existing injuries and be compensable). 27 54 28 55 Doc. 118-8 at pp. 13, 14, 18, 20 (Stockett deposition at pp. 98, 99, 106, 108). Doc. 139-2 at pp. 18-19. -11- 1 3. Left knee MRI authorization 2 Plaintiff also argues that Liberty engaged in an act of bad faith when it denied 3 authorization of a diagnostic MRI on his left knee. As noted above, the record shows 4 that Liberty never received a request to authorize that particular procedure. It appears 5 from the record that while two doctors recommended a left knee MRI and indicated as 6 much in their reports, both sent the formal request for authorization to Plaintiff’s health 7 insurance provider.56 While there is a note in one of the doctor’s records indicating that 8 the request was supposed to be rebilled to Liberty, nothing in the record shows that was 9 ever done.57 Thus, the record shows confusion on the part of the doctors’ offices as to 10 the proper way to obtain approval and payment for such a procedure. It does not 11 support a finding that Liberty ignored any specific request for authorization. However, 12 while the delayed authorization is not a separate ground for bad faith, the record 13 surrounding the left knee MRI is nonetheless relevant to whether Liberty adequately 14 followed up and investigated Plaintiff’s left knee claim, as discussed above. 15 4. Misrepresentations and responsiveness 16 Plaintiff argues that Liberty was unresponsive to his inquiries regarding his claim 17 and failed to communicate honestly with him about his claim. Under Arizona law “the 18 duty of good faith encompasses some obligation to inform the insured about the extent 19 of coverage and his or her rights under the policy and to do so in a way that is not 20 misleading.”58 Plaintiff puts forth evidence to show that he called Liberty multiple times 21 to inquire about his claim status after his doctor had ordered a left knee MRI.59 Liberty 22 again focuses on the fact that the MRI approval request was never formally made, but 23 24 56 25 57 Doc. 114-1 at p. 32; doc. 118-5 at pp. 39-45 (Knowles deposition at pp. 153-159). Doc. 117-1 at pp. 30. 26 27 28 58 Nardelli v. Metro. Grp. Prop. and Cas. Ins. Co., 277 P.3d 789, 800 (Ariz. Ct. App. 2012). 59 Doc. 139-1 at p. 2. -12- 1 that fails to address the argument that Liberty did not respond to Plaintiff’s inquiry and 2 at least inform him that it did not have request for authorization from the doctor and 3 that Liberty did not inform Plaintiff as to what was needed to properly request 4 authorization. Plaintiff also points to the fact that Stockett had decided to deny the 5 claim on May 31, but she nonetheless told Plaintiff that she had not made a decision 6 yet.60 Looking at all the evidence in the record and drawing all inferences in favor of 7 Plaintiff, a reasonable juror could conclude that Liberty failed to accurately 8 communicate its denial or reasons supporting the denial to Plaintiff. 9 B. Subjective reasonableness 10 As noted above, the tort of bad faith also requires Plaintiff to prove a subjective 11 element of unreasonableness. He must show that Liberty knew or was reckless as to 12 whether its conduct was reasonable. This element can be proven with evidence that 13 Liberty either actually knew its position was baseless or that it “fail[ed] to undertake an 14 investigation adequate to determine whether its position [was] tenable.”61 Therefore, 15 “[a] failure to investigate theory may result in some overlap in the first two elements of 16 the bad faith analysis.”62 Evidence that supports objective unreasonableness in failing 17 to investigate a claim also supports the existence of the subjective element of bad 18 faith.63 Consequently, there is sufficient evidence from which a jury could conclude that 19 Stockett’s conduct constituted bad faith. 20 C. 21 22 Damages and causation While Plaintiff has presented sufficient evidence to sustain a claim of unreasonable conduct, the tort of bad faith, like any tort, also requires proof of 23 24 25 60 Doc. 161 at p. 64; doc. 139-1 at p. 3. 26 61 27 62 28 63 Rawlings, 726 P.2d at 576. Demetrulias, 917 F. Supp. 2d at 1006-07. Id. -13- 1 causation and damages.64 Liberty argues that Plaintiff has failed to put forth any 2 evidence of harm. Liberty points to the undisputed fact that all of Plaintiff’s medical bills 3 and compensation for the period he was off work was ultimately paid in September of 4 2013. They argue that the delay did not cause him financial harm because the record 5 shows that his wife had a good salary.65 Plaintiff does not respond specifically to this 6 argument. His complaint and affidavit simply state that he experienced added pain and 7 suffering from the delay.66 One of his treating doctors, Dr. Dewanjee, testified at his 8 deposition that given the type of left knee injury Plaintiff suffered, a delay would not 9 make the injury worse but would nonetheless extend Plaintiff’s pain.67 Plaintiff also 10 asserts that he experienced financial harm because of the delay, but he did not provide 11 evidence demonstrating any specific financial harm, except by averring that he had to 12 hire a lawyer to obtain his benefits.68 This court finds the question of damages to be a 13 close call and notes that Plaintiff’s case for damages is certainly weak. However, the 14 court finds that Plaintiff’s assertion that he suffered extended pain and pecuniary losses 15 from the delay and the doctor’s supporting testimony is sufficient to withstand a motion 16 for summary judgment.69 17 18 64 19 20 21 22 23 24 25 26 27 28 Id. at 1010. 65 Doc. 117-6 at p. 2 (McBride deposition at p. 112). 66 Doc. 1 at p. 5; doc. 139-1 at p. 6. 67 Doc. 139-7 at p. 4 (Dewanjee deposition at p. 72). Liberty has filed a motion in limine challenging Dr. Dewanjee’s ability to offer his opinion as to causation because of Plaintiff’s failure to comply with Rule 26(a)(2)(C). The court relies on Dr. Dewanjee’s deposition only for evidence on the type of tear Plaintiff suffered and what the consequences would be for failing to treat such a tear. The motion in limine does not challenge this opinion, and the court finds that it is properly considered here. 68 Doc. 139-1 at p. 6. 69 See Rawlings, 726 P.2d at 577 (a bad faith claimant “may recover all the losses caused by [the] defendant’s conduct, including damages for pain, humiliation and inconvenience, as well as for pecuniary losses.”). -14- 1 Liberty also argues that Plaintiff cannot demonstrate that it was the cause of his 2 harm. It again points to the fact that his doctors failed to properly file a request for the 3 left knee MRI and, therefore, the failure to diagnose and treat the left knee was the 4 result of his medical care providers and not a result of Liberty’s conduct. It also points 5 to the fact that his doctors released him for work at the end of June. Indeed, there are 6 facts that support Liberty’s argument that it did not cause Plaintiff any harm and, again, 7 Plaintiff’s case on the causation element is weak given the record, but it is nonetheless 8 disputed as to whether Stockett’s investigation was reasonable, and viewing the 9 evidence in favor of Plaintiff, a jury could possibly infer that Liberty’s conduct in 10 investigating the claim and communicating with Plaintiff was a substantial contributing 11 factor to the treatment delay. 12 D. Punitive damages 13 Punitive Damages are appropriate “when, and only when, the facts establish that 14 defendant’s conduct was aggravated, outrageous, malicious or fraudulent.”70 A plaintiff 15 seeking punitive damages for insurance bad faith must put forth evidence that “reflects 16 ‘something more’ than the conduct necessary to establish the tort.” 71 While facts 17 showing a failure to investigate can establish the tort of bad faith, those same facts 18 alone will not support a claim for punitive damages. Punitive damages require 19 additional evidence showing that the insurer was “guided by an evil mind which either 20 consciously sought to damage the insured or acted intentionally, knowing that its 21 conduct was likely to cause unjustified, significant damage to the insured.” 72 Such 22 23 24 25 26 27 28 70 Id. at 578. 71 Id. (citing Farr v. Transamerica Occidental Life Ins. Co., 699 P.2d 376, 380 (Ariz. Ct. App. 1984)). 72 Id. -15- 1 evidence is usually shown through circumstantial evidence, such as evidence showing 2 a pattern of similar practices on the part of the insurer.73 3 Here, there is no direct evidence of Liberty’s intent to harm Plaintiff. Plaintiff 4 argues that all the circumstantial evidence presented in the record taken in total 5 demonstrates that there is at least a disputed issue regarding Liberty’s “evil mind.” 6 Plaintiff cites to Mendoza v. McDonald’s Corporation,74 Newman v. Select Specialty 7 Hospital-Arizona, Inc.,75 and Temple v. Hartford Insurance Co. of Midwest76 in support. 8 The court agrees with Liberty that these three cases involve much more egregious 9 conduct than has been presented here. In Mendoza, there was evidence of intentional 10 doctor shopping to find a doctor who would support a denial. In Temple, there was 11 evidence of the insurer trying to persuade medical providers to remove work restrictions 12 and the insurer hiring surveillance and asking the investigator to look for a reason to 13 deny the workers’ compensation claim. In Newman, there was evidence that the 14 defendants ignored explicit medical orders despite knowing that the plaintiff’s condition 15 could worsen and could place the plaintiff at risk of serious harm. The court concludes 16 that the evidence Plaintiff presents in support of his bad-faith claim does not sustain a 17 reasonable inference that Liberty acted egregiously and with the requisite intent to 18 harm. Moreover, Plaintiff has not provided any evidence to show that Liberty has a 19 pattern of similar unfair practices from which a jury could infer malicious intent. 20 21 V. CONCLUSION AND RECOMMENDATION Based on the preceding discussion, Defendant’s motion for summary judgment 22 is GRANTED IN PART AND DENIED IN PART. It is denied as to Plaintiff’s claim for 23 bad faith, but granted as to Plaintiff’s claim for punitive damages. 24 25 73 Hawkins v. Allstate Ins. Co., 733 P.2d 1073, 1081 (Ariz. 1987). 26 74 27 75 28 76 213 P.3d 288, 307-08 (Ariz. 2009). No. 13-cv-0665, 2016 WL 1377634, at *3-*4 (Ariz. Ct. App. April 7, 2016). 40 F. Supp. 3d 1156, 1171 (D. Ariz. 2014). -16- 1 As suggested above, the court’s present view is that Plaintiff’s compensation 2 damage claim is weak and of modest dimension. The court highly recommends that 3 the parties explore settlement prospects with that preliminary view in mind. 4 DATED this 19th day of May 2016 5 6 /s/ JOHN W. SEDWICK SENIOR UNITED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -17-
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