DeMarco v. Federal Ins. Co.

• Decision Date: 02 February 1984
• Citation: DeMarco v. Federal Ins. Co., 472 N.Y.S.2d 464, 99 A.D.2d 114 (N.Y. App. Div. 1984)
• Parties: Connie A. DeMARCO et al., Appellants, v. FEDERAL INSURANCE COMPANY, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 464

472 N.Y.S.2d 464

99 A.D.2d 114

Connie A. DeMARCO et al., Appellants, v. FEDERAL INSURANCE COMPANY, Respondent.

Supreme Court, Appellate Division Third Department.

Feb. 2, 1984.

Sanford Rosenblum, Albany (Jon H. Levenstein, Albany, of counsel), for appellants.

Ainsworth, Sullivan, Tracy & Knauf, Albany (John E. Knauf, Albany, of counsel), for respondent.

Before MAHONEY, P.J., and KANE, CASEY, WEISS and LEVINE, JJ.

OPINION FOR REVERSAL

LEVINE, Justice.

In 1978, plaintiff Connie A. DeMarco suffered an accidental injury to her lower back in the course of her employment. Defendant was her employer's compensation carrier. She sought and was given an award of workers' compensation benefits. Subsequently, she and her husband brought the instant action based on allegations that defendant improperly denied her compensation benefits, deprived her of necessary medical treatment and refused to honor claims for medical services rendered her. Their complaint seeks compensatory damages for the resultant aggravation of her back injuries, loss of credit standing, distress and her husband's derivative losses.

Defendant answered by a general denial and an affirmative defense that the Workers' Compensation Board has exclusive jurisdiction over plaintiffs' claims. Defendant then moved to dismiss for failure of the complaint to state a cause of action and because of its workers' compensation defense. Plaintiffs submitted affidavits and exhibits in opposition. Special Term discerned a possible entitlement to recovery in tort in plaintiffs' showing. Nevertheless, it read this court's decision in Penn v. Standard Acc. Ins. Co., 4 A.D.2d 796, 164 N.Y.S.2d 618, as holding that workers' compensation is the exclusive remedy in a case such as this and, on that basis, granted the motion to dismiss. This appeal ensued.

Preliminarily, we note that we are authorized freely to consider plaintiffs' affidavits and exhibits submitted in opposition to dismissal in order to determine whether they have a potentially meritorious case (Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635-636, 389 N.Y.S.2d 314, 357 N.E.2d 970). Based upon the composite of the complaint and those papers, we agree with Special Term's assessment that one or more causes of action in civil tort were spelled out. Plaintiffs' allegations describe a history of several years during which both plaintiffs' and defendant's examining physicians and psychiatrist unequivocally found a bona fide serious disc injury and that plaintiff's complaints were neither feigned nor psychosomatic. Despite such reports, defendant repeatedly refused to authorize the surgery that both sets of experts unanimously recommended. Additionally, defendant's adjustor refused to authorize payments for one of plaintiff's resultant hospitalizations stating only that "she was not interested in details". Upon psychiatric examination, plaintiff displayed genuine depression and distress because of the disabilities claimed to have been prolonged by defendant's conduct. Ultimately, she was required to find other resources to obtain the necessary surgery. This partly alleviated her condition, but she was told by her physician that her permanent disability was more severe because of the delay.

Defendant's persistent, protracted refusal to make payments of authorized or ordered benefits, its dilatory tactics, harassment and arbitrary rejection of requests for authorization for treatment, refusing even to entertain consideration of the justification therefor, goes significantly beyond the kind of wrongful refusal by an insurer to pay benefits constituting only a breach of the insurance contract (cf. Halpin v. Prudential Ins. Co. of Amer., 48 N.Y.2d 906, 425 N.Y.S.2d 48, 401 N.E.2d 171; John C. Supermarket, Inc. v. New York Prop. Ins. Underwriting Assn., 60 A.D.2d 807, 400 N.Y.S.2d 824). If proved at trial, these allegations could be the basis of inferences supporting recovery for intentional tort or for fraudulent breach of an insurer's duty of good faith and fair dealing (see Board of Educ. of Farmingdale Union Free School Dist. v. Farmingdale Classroom Teachers Assn., Local 1889, AFT AFL-CIO, 38 N.Y.2d 397, 406, 380 N.Y.S.2d 635, 343 N.E.2d 278; Macey v. New York State Elec. & Gas Corp., 80 A.D.2d 669, 670, 436 N.Y.S.2d 389; Greenspan v. Commercial Ins. Co. of Newark, N.J., 57 A.D.2d 387, 388, 395 N.Y.S.2d 519; 15A Couch, Insurance 2d, § 58:3, pp. 255-261).

The appeal thus reduces itself to whether plaintiffs' otherwise cognizable tort claim is precluded under the Workers' Compensation Law and, more particularly, whether this court's holding in Penn v. Standard Acc. Ins. Co., 4 A.D.2d 796, 164 N.Y.S.2d 618, supra,...