Fehring v. State Ins. Fund

• Citation: 2001 OK 11,19 P.3d 276
• Decision Date: 06 February 2001
• Docket Number: No. 92,828.,92,828.
• Parties: Ralph FEHRING and Dorothy Fehring, Plaintiffs/Appellants, v. STATE INSURANCE FUND, Defendant/Third Party Plaintiff/Appellee, and Crawford & Company, Third Party Defendant.
• Court: Supreme Court of Oklahoma

19 P.3d 276

2001 OK 11

Ralph FEHRING and Dorothy Fehring, Plaintiffs/Appellants, v. STATE INSURANCE FUND, Defendant/Third Party Plaintiff/Appellee, and Crawford & Company, Third Party Defendant.

No. 92,828.

Supreme Court of Oklahoma.

February 6, 2001.

Rick W. Bisher of Boettcher, Ryan & Martin, Oklahoma City, Oklahoma for Appellants.

Jeff L. Hartman, Oklahoma City, Oklahoma for Appellee.

LAVENDER, J.

¶ 1 We decide whether the Governmental Tort Claims Act (GTCA), 51 O.S.1991, § 151 et seq., as amended, immunizes appellee, State Insurance Fund (SIF), from liability for the alleged post-award bad faith conduct of failure to timely pay a workers' compensation award. Like the trial judge, who gave summary judgment to SIF based on GTCA immunity, and the Court of Civil Appeals (COCA) that upheld the immunity, we hold SIF is entitled to GTCA immunity.

¶ 2 In addition, we must decide if a majority of the COCA panel erred by going on to rule SIF was still amenable to suit in contract and subject to liability for the same damages potentially recoverable in tort, but for the GTCA immunity. As to this ruling, we hold the COCA majority erred. The damages recoverable under a tort theory of liability for breach of the implied duty of good faith and fair dealing are not coextensive with damages recoverable under a contractual theory. Further, to allow appellants, Ralph Fehring (injured worker) and Dorothy Fehring (spouse) to proceed on a contractual theory would thwart and/or eviscerate the exclusivity provisions of the Oklahoma Workers' Compensation Act (WCA), 85 O.S.1991, § 1, et seq., as amended.¹ Simply, appellants may not avoid the GTCA immunity provided to SIF merely by recasting their tort theory of liability into a contractually-based one. Thus, the COCA majority erred by reversing in part the trial court judgment and remanding for further proceedings. Instead, the trial court judgment should have been affirmed because, as the trial judge ruled, SIF was entitled to summary judgment.

PART I. STANDARD OF REVIEW.

¶ 3 Summary judgment is reviewed de novo [Carmichael v. Beller, 1996 OK 48, 914 P.2d 1051, 1053] because the ultimate decision turns on purely legal determinations, i.e. whether a party is entitled to judgment as a matter of law because no material disputed factual questions exist. Id. An appellate court, like a trial court, examines the pleadings and evidentiary materials submitted by the parties to determine if there is a genuine issue of material fact. Id. Just as in the trial court, all inferences and conclusions drawn from the evidentiary materials are viewed in a light most favorable to the non-moving party. Id. The de novo review is a plenary, independent and non-deferential re-examination of the trial court's ruling. Manley v. Brown, 1999 OK 79, ¶ 22 f.n. 30, 989 P.2d 448. Here, de novo review shows no material disputed facts precluding summary judgment in favor of SIF.

PART II. FACTUAL RECORD AND PROCEDURAL HISTORY.

¶ 4 Appellants sued SIF for bad faith failure to timely pay a workers' compensation award. Their petition, in effect, alleged: 1) by order, an Oklahoma Workers' Compensation Court (WCC) judge awarded Mr. Fehring permanent partial disability benefits; 2) the order became final and was not timely paid by SIF-employer's workers' compensation insurer; 3) another WCC order issued because of the failure to timely pay the first order; 4) the second order became final and SIF failed to timely pay amounts due under it; and 5) SIF's failure to timely pay was in bad faith, entitling appellants to damages for emotional distress, pain, suffering and detriment to their economic status.² ¶ 5 SIF's answer to the petition, in effect, denied any bad faith conduct and pled affirmative defenses unnecessary for us to detail.³ It then moved for summary judgment, relying on the interplay between 1) the necessity for appellants to prove bad faith conduct on the part of SIF employees in failing to timely pay the award to have a viable claim for breach of the implied duty of good faith and fair dealing, and 2) the GTCA requirement that a State agency may only be held liable for the torts of its employees committed within the scope of their employment—the GTCA definition of "scope of employment" including a requirement the employees acted in good faith. 51 O.S. Supp.1994, § 152(9)[now 51 O.S. Supp.2000, § 152(9)].⁴

¶ 6 Appellants responded to the summary judgment quest by asserting SIF was not a State entity covered by the GTCA. They also argued, in effect, the "bad faith" conduct required to be shown by an insured to recover for an insurer's breach of the implied duty of good faith and fair dealing is not the opposite of the "good faith" required to have a viable tort suit against a State agency under the GTCA. In essence, they argued a "bad faith" claim against a workers' compensation insurer is viable without showing some malicious or reckless conduct on the part of the insurer's employees.

¶ 7 The trial judge ruled SIF was covered by the GTCA and it was impossible to prove both a valid claim of bad faith failure to timely pay the compensation award and that SIF employees acted in good faith within the scope of their employment. He gave summary judgment to SIF based on GTCA immunity. Appellants appealed.

¶ 8 All three judges of the COCA division handling the appeal agreed SIF was entitled to GTCA immunity. However, a majority held, sua sponte, SIF was still subject to suit on a contract theory and potentially liable for the same damages potentially recoverable in tort, but for the GTCA immunity. One judge dissented from the latter ruling(s), thinking it improper to address the issue(s) because appellants had not sought recovery in contract or, on appeal, alleged trial court error as to any contract claim. He also believed the WCA set forth the proper remedial methodology for enforcing a workers' compensation award not paid in a timely manner.

¶ 9 Both appellants and SIF sought certiorari—appellants as to the immunity ruling; SIF as to the reversal and remand to allow appellants to proceed on a contractually-based theory of liability. We granted both petitions for certiorari.

PART III. THE GTCA PROVIDES IMMUNITY TO SIF FOR ANY POST AWARD BAD FAITH CONDUCT OF ITS EMPLOYEES OF FAILING TO TIMELY PAY A WORKERS' COMPENSATION AWARD.

A. SIF IS A STATE ENTITY COVERED BY THE GTCA.

¶ 10 The issue of whether SIF is a State entity covered by the GTCA is a first impression question.⁵ A review of pertinent GTCA provisions, statutes creating SIF, other relevant statutes and our prior case law lead to the conclusion it is a State entity intended to be covered by the GTCA, notwithstanding the fact SIF has certain characteristics of a private insurance carrier. The GTCA defines "agency" as: "[ ] any board, commission, committee, department or other instrumentality or entity designated to act in behalf of the state or a political subdivision[.]" 51 O.S. Supp.1994, § 152(2)[now 51 O.S. Supp.2000, § 152(2)]. State is defined in the GTCA as: "[ ] the State of Oklahoma or any office, department, agency, authority, commission, board, institution, hospital, college, university, public trust created pursuant to Title 60 of the Oklahoma Statutes of which the State of Oklahoma is the beneficiary, or other instrumentality thereof[.]" § 152(10).

¶ 11 SIF's purpose, powers, duties and structure are primarily set out in 85 O.S. 1991, § 131 et seq., as amended—part of our workers' compensation laws. It was created by 1933 legislation [O.K. Constr. Co. v. Burwell, 1939 OK 248, 93 P.2d 1092, 1093] to satisfy the need for workers' compensation insurance for employers unable to procure coverage from private insurance companies and in high risk industries. Moran v. State ex rel. Derryberry, 1975 OK 69, 534 P.2d 1282, 1284. Today, SIF's general purpose is simply to insure employers against liability for workers' compensation claims and to assure employees entitled to benefits under our workers compensation laws that they receive such benefits through the insurance. 85 O.S. Supp.1995, § 131.⁶ SIF provides such insurance to both private and public employers. Also, SIF's governing statutes plainly indicate, although it is to be fairly competitive with private insurance carriers providing such insurance, SIF is generally a non-profit endeavor [§ 131(c)], and its ability to decline to insure an employer for purposes of the employer's workers' compensation liability is restricted. 85 O.S. Supp.1996, § 134(A)(2).

¶ 12 Supervision over administration/operation of SIF is conducted by a Board of Managers. 85 O.S. Supp.1996, § 131a. The nine Board members are: Director of State Finance or a designee; Lieutenant Governor or a designee; State Auditor and Inspector or a designee; Director of Central Purchasing of the Department of Central Services; and five other members-one appointed by the Governor and two each by the Speaker of the Oklahoma House of Representatives and the President Pro Tempore of the Oklahoma Senate. The members are entitled to reimbursement for proper expenses under the State Travel Reimbursement Act, 74 O.S. 1991, § 500.1 et seq., as amended. § 131a(C).

¶ 13 Day-to-day management is handled by the State Insurance Fund Commissioner, whom the Board of Managers appoints. 85 O.S.1991, § 131b and § 132; § 134. The Commissioner is expressly recognized as a state officer or employee for purposes of the surety bond required by 74 O.S. Supp.1994, § 85.29, part of the Oklahoma Central Purchasing Act (OCPA), 74 O.S.1991, § 85.1 et seq., as amended. The Oklahoma Attorney General has opined that SIF is a State agency for purposes of the OCPA. Okl. A.G. Opin. No. 88-61, 20 Okl. Op. Atty. Gen. 142, 1988 WL 424296 (Okl.A.G.).⁷

¶ 14 The operational expenses of SIF and the payment of compensation awards to injured workers are funded through premiums charged to covered employers and any investment income received by SIF. § 131(a) & (b)....