Cornelison v. TIG Ins.

• Decision Date: 12 August 2016
• Docket Number: Supreme Court No. S–15647
• Citation: 376 P.3d 1255
• Parties: Floyd and Judy Cornelison, Appellants, v. TIG Insurance, Crawford & Company/Broadspire Services, Griffin & Smith, Robert Griffin, Christi Niemann, Northern Investigative Associates, Dennis Johnson, Denara, Inc. and Joel Seres, M.D., Appellees.
• Court: Alaska Supreme Court

376 P.3d 1255

Floyd and Judy Cornelison, Appellants

v.TIG Insurance, Crawford & Company/Broadspire Services, Griffin & Smith, Robert Griffin, Christi Niemann, Northern Investigative Associates, Dennis Johnson, Denara, Inc. and Joel Seres, M.D., Appellees.

Supreme Court No. S–15647

Supreme Court of Alaska.

August 12, 2016

Floyd and Judy Cornelison, pro se, Wasilla, Appellants.

Adolf V. Zeman, Landye Bennett Blumstein LLP, Anchorage, for Appellees TIG Insurance and Crawford Company/Broadspire. Ray R. Brown, Jessica Dillon, and Michelle Nesbett, Dillon & Findley, P.C., Anchorage, for Appellees Griffin & Smith, Robert Griffin, and Christi Niemann.

Matthew D. Regan and Alex Vasauskas, Holmes Weddle & Barcott, PC, Anchorage, for Appellees Northern Investigative Associates, Dennis Johnson, and Denara, Inc. Scott Leuning, Leuning & Renner, LLC, Sioux Falls, South Dakota, for Appellee Joel Seres, M.D.

Before: Fabe, Winfree, and Bolger, Justices.

OPINION

BOLGER, Justice.

I. INTRODUCTION

An employer and its workers' compensation insurer challenged a former employee's continuing eligibility for workers' compensation, relying on surreptitious video surveillance and a doctor's report issued after the doctor viewed an edited surveillance video. The employee and his wife sued the employer's workers' compensation carrier and a number of others involved in the attempt to terminate benefits; they alleged several causes of action, contending that the video had been purposely edited to provide a false picture of the employee's physical abilities and that the defendants had participated to varying degrees in a scheme to defraud the Alaska Workers' Compensation Board. The trial court granted summary judgment or dismissal as to all of the defendants on all counts. We affirm in part, reverse in part, and remand for further proceedings.

II. FACTS AND PROCEEDINGS

Floyd Cornelison injured his back at work in 1996 while shoveling dirt. He had back surgery later that year, but it did little to improve his condition. The Board found he was permanently and totally disabled (PTD) in 2001 under the odd-lot doctrine.¹ TIG Insurance, the workers' compensation insurer for Floyd's employer, did not contest that he was PTD; it reclassified his workers' compensation benefits as PTD in 2000. Floyd also received Social Security disability payments, and the employer received an offset for those payments.

In 2007 TIG began an investigation into Floyd's claim; in pleadings before the superior court, TIG said it sought “potential evidence to show that the benefits being paid [to Floyd] may be excessive.” TIG hired a private investigation firm, Northern Investigative Associates, to conduct surveillance and search for information about Floyd. Dennis Johnson was the president and owner of Northern Investigative Associates and an officer of Denara, Inc., which did business under the name Northern Investigative Associates. After investigators employed by the firm surreptitiously filmed Floyd, Johnson created edited videos and presented those videos to TIG. Johnson also wrote reports based on the investigators' notes.

Floyd and his wife, Judy, alleged that Johnson edited the video to create a false impression of Floyd's physical capacities, making him look more capable than he was in reality and editing out behaviors that showed he was in pain, and contended that Johnson knew from prior experience in workers' compensation cases what type of evidence he needed to produce. They alleged Johnson created this false video to bolster his own business because he knew that if he did not provide sufficient evidence to terminate Floyd's benefits, the insurer would likely not use his investigative services in the future.

After Johnson reported that Floyd was more active than he claimed to be and provided the edited video, TIG required Floyd to attend an employer's medical evaluation (EME) in 2008 with Dr. Joel Seres, who had previously conducted other EMEs related to Floyd's workers' compensation case.² In a 1999 report Dr. Seres told the employer that Floyd had “a significant pain problem that precludes his ability to sit or stand for any significant length of time”; Dr. Seres thought Floyd had “a legitimate source for his pain,” relating it to “the remarkable scarring and sclerosis of musculature that has occurred in his lower back as the direct result of his surgical procedures.” That same year, a neuropsychologist associated with Dr. Seres administered a psychological assessment of Floyd and concluded that Floyd provided a reasonable effort in the evaluation and had “a considerable pain problem.” And in a 2001 report, Dr. Seres wrote that Floyd had “[p]ersisting mechanical low back pain” and “[m]arked scarring of the musculature of the low back.”

Before the 2008 EME, TIG supplied Dr. Seres with copies of the edited video and Johnson's reports. In his 2008 report, Dr. Seres had a completely different impression of Floyd, writing, “His exaggerated physical limitations as demonstrated in today's evaluation are in sharp contrast to the movements recorded in the surveillance reports and videos.” Dr. Seres concluded Floyd had “an exaggerated pain syndrome, which is not supported adequately by the physical findings and is virtually invalidated by the surveillance study.” Dr. Seres's report raised “the possibility of drug diversion” and mentioned the edited videos multiple times. According to an email between the insurance adjuster and the law firm representing the employer, Dr. Seres “strongly indicate[d] he [did] not believe [Floyd] is permanently and totally disabled based on the information contained in the surveillance video and the inconsistencies in the evaluation.”

TIG subsequently authorized more surveillance by Johnson; the adjuster's notes record a conversation with one of Johnson's investigators in which the investigator reported that Floyd was “active in his shop and yard on a level of 10 hours a day every day.” Johnson created another edited video, which TIG again sent to Dr. Seres. In a 2009 report, Dr. Seres noted that the new edited video contained “remarkable new material ... that strongly argues that [Floyd] is actually not impaired in any significant way from a physical standpoint.” Dr. Seres also commented, “I have never seen a more remarkable discrepancy between the severe disability that the patient demonstrates when he is seen by me, in comparison to the remarkably normal behavior and physical abilities seen in these surveillance films.” He then proceeded to present his “conclusions based upon [his] medical review of the patient's physical capacities demonstrated during the surveillance.” Dr. Seres concluded Floyd was “capable of returning to any type of work without restrictions on a full time basis.” After acknowledging that he had been retained to give an opinion on Floyd's PTD benefits, Dr. Seres included the following comment in his report: “[Floyd] has indicated to me in the past that he is receiving Social Security Disability (SSDI) income as well. If this is true I believe that the [edited videos] demonstrate Social Security [f]raud.”

In April 2009 TIG filed a petition asking the Alaska Workers' Compensation Board to terminate Floyd's PTD benefits; the law firm of Griffin & Smith represented the insurer, with a paralegal, Christi Niemann, signing the petition itself. Although the petition alleged “new evidence” supported terminating Floyd's benefits, no evidence accompanied the petition, and the petition did not set out any specific facts to support the assertion that Floyd was no longer PTD. Floyd filed a pro se opposition to the petition, denied that he was no longer PTD, and said, “There was no evidence stated or attached in the Petition.” The next month, Griffin & Smith filed Dr. Seres's 2008 and 2009 reports with the Board.

The Board proceedings progressed toward a hearing. Floyd eventually obtained representation, but for a portion of the Board proceedings a non-attorney represented him. In 2012 the employer filed an amended petition to terminate Floyd's benefits in which it set out the factual bases for its petition, including Dr. Seres's reports from 2008 and 2009. In the petition the employer stated that the date Floyd's disability ended was “a date in the future when the ... Board determines that [Floyd] is not permanently and totally disabled.” Floyd continued to receive PTD benefits during the course of the Board proceedings to terminate them.³

In 2011 both Floyd and Judy, representing themselves, filed suit in superior court against some of those involved in the attempt to terminate Floyd's benefits.⁴ In their initial complaint they sued only TIG; its adjusters, Crawford & Company and Broadspire Services, Inc.; Griffin & Smith; and two of Griffin & Smith's employees, Niemann and attorney Robert Griffin. The Cornelisons alleged several tort claims and requested damages in excess of $100,000. About a month later they filed an amended complaint, adding as defendants Dr. Seres, Johnson, Northern Investigative Associates, and Denara, Inc. They filed a second amended complaint in October 2011; this is the latest complaint they filed. An out-of-state attorney, appearing with local counsel, represented the Cornelisons when they filed the second amended complaint.

In the second amended complaint, the Cornelisons' causes of action included tortious interference with contract rights; negligent infliction of emotional distress (NIED); intentional infliction of emotional distress (IIED); abuse of process; fraud, false light, defamation, libel, slander, and “other misrepresentations”; breach of professional obligations on the part of the defendants; and violations of the Alaska Unfair Trade Practices and Consumer Protection Act (UTPA). The Cornelisons sought damages in excess of $100,000 and some type of injunctive relief against the defendants to prevent a situation like theirs from occurring again. The defendants answered, denying all claims and raising...