General Acc. Ins. Co. v. Blank

Decision Date03 December 1993
Docket NumberNo. 92-CA-2548-MR,92-CA-2548-MR
Citation873 S.W.2d 580
PartiesGENERAL ACCIDENT INSURANCE COMPANY, Appellant, v. Kenneth R. BLANK, II, Appellee.
CourtKentucky Court of Appeals

Gerald R. Toner, Emily A. Hoffman, O'Bryan, Brown & Toner, Louisville, for appellant.

Dale Golden, Rudloff, Golden & Evans, Bowling Green, for appellee.

Before GARDNER, HOWERTON and JOHNSTONE, JJ.

OPINION

HOWERTON, Judge.

General Accident Insurance Company (GA) appeals from a jury verdict and judgment of the Warren Circuit Court awarding Kenneth R. Blank, II $160,698.07 and 100 percent of the taxable court cost. In a post-judgment proceeding, the court also awarded an attorney fee of $68,000. Blank was being paid benefits for a workers' compensation claim, but when GA refused to pay for questionable surgery and stopped his temporary total disability payments, Blank filed this action in the Warren Circuit Court seeking $1,000,000 for pain and suffering, $5,000,000 for punitive damages, $3,000,000 for mental anguish, $5,575 for lost house payments, $5,200 for lost disability payments, $800 for the fair market value of a car, and $9,327.55 for medical expenses. Part of his claim was based on GA's alleged violation of the Consumer Protection Act (CPA) and the Unfair Claims Settlement Practices Act (UCSPA). The case was allowed to go to the jury, which awarded $405 for the value of the car, $5,575 for house payments, $5,200 for disability payments, $8,973.07 for medical expenses, $40,000 for mental anguish, $25,000 for pain and suffering, and $75,000 for punitive damages.

The dispositive issue presented by GA is whether the exclusive provisions of the Workers' Compensation Act preclude this action in circuit court. We agree that workers' compensation is the exclusive remedy for Blank, and we therefore reverse every award granted by the circuit court, including the attorney fee which was not a specific issue raised on appeal. If the court had no jurisdiction to try this case, it had no jurisdiction to do anything. GA also argues that the CPA and the UCSPA are not applicable to this action, and we agree.

The remaining allegations by GA can generally be summarized as follows: even if the CPA and the UCSPA are applicable, Blank did not prove bad faith; the instructions to the jury were erroneous; comments by the trial judge invaded the province of the jury; and the trial court improperly excluded evidence. We have no need to resolve these issues, and we decline to do so.

This saga began June 18, 1991, when Blank alleged that he hurt his back while washing out an exhaust flue at a Cracker Barrel Restaurant in Hilton Head, South Carolina. He was employed by Cone's Industrial Wash, Inc. and was treated in South Carolina and subsequently in Bowling Green, Kentucky. A Bowling Green orthopedic surgeon, Dr. Lynn Olson, reported that Blank had a history of chronic back pain dating back 20 years. When he scheduled Blank for back surgery, GA requested a second opinion. Blank was seen by Dr. John Burch, another orthopedic surgeon, who reported that Blank denied any history of back problems. Dr. Burch conducted a physical exam on August 8, 1991, and concluded that Blank's symptoms had improved since Dr. Olson had seen him, and that he should be treated conservatively with physical therapy and medication rather than surgery.

Since the medical opinions conflicted, GA sent Blank to a third orthopedic surgeon on October 9, 1991. Dr. John McInnis reviewed the records and examined Blank, and he reported that the chances of surgery improving Blank's symptoms were "probably less than 50-50." Dr. McInnis was also reluctant to recommend surgery.

Nevertheless, Blank allowed Olson to perform the surgery on November 5, 1991. GA had paid temporary total disability to Blank until November 5, at which time it stopped payments. GA also refused to pay the expense of the surgery. Blank never returned to work for Cone's, but instead obtained a job with a landscape company in May 1992.

Procedurally, Blank filed his workers' compensation claim on September 10, 1991. He filed a motion for interlocutory relief on November 27, seeking to have GA pay his surgery bills and resume payment of temporary total disability benefits. The administrative law judge (ALJ) denied this request in an order dated February 25, 1992. The ALJ believed that the employer had raised "a sufficient issue ... as to the appropriateness of the surgery undertaken."

Blank filed this tort action on January 22, 1992, alleging violation of UCSPA, KRS 304.12-230, citing malicious, fraudulent, and oppressive conduct. Blank also alleged a breach of duty of good faith and fair dealing, breach of contract, and engaging in unfair, false, misleading, or deceptive acts in violation of CPA. KRS 367.170, .220.

In general, the Workers' Compensation Act is the exclusive remedy for the payments of lost wages and medical benefits. KRS 342.690. In Brown Badgett, Inc. v. Calloway, Ky., 675 S.W.2d 389 (1984), our Supreme Court held that the trial court erred in not dismissing, for lack of jurisdiction, a proceeding pursuant to KRS 342.305 for enforcement of a medical portion of an award. Citing Brown Badgett, our Supreme Court wrote in Zurich Ins. Co. v. Mitchell, Ky., 712 S.W.2d 340, 342 (1986), "With the exception of failing to secure the payment of benefits as provided in KRS 342.690(2) or a willful and unprovoked physical aggression, the exclusive liability provisions of the act cannot be waived."

The opinion in Zurich Ins. discusses the positions in other jurisdictions where the courts have allowed bad faith claims concerning termination or delay of benefits, noting that the majority view is that the exclusive remedy provisions of the Workers' Compensation Act bar a separate tort action. See also Michael A. Rosenhouse, Annotation, Tort Liability of Workers Compensation Insurer for Wrongful Delay or Refusal to Make Payments Due, 8 A.L.R.4th 902 (1981). Zurich Ins. notes that the majority of courts considering the question have refused to create a common law remedy for termination or delay of benefits. Id. at 343.

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