Kuykendall v. Gulfstream Aerospace Tech.

Decision Date17 December 2002
Docket NumberNo. 97,036.,97,036.
Citation66 P.3d 374,2002 OK 96
CourtOklahoma Supreme Court

Louis P. Falsetti, Brady, Schaulat & Falsetti, Oklahoma City, OK, for Appellant.

Gary C. Pierson, Shawn E. Harrell, Nathan L. Whatley, McAfee & Taft a Professional Corporation, Oklahoma City, OK, for Appellee.


¶ 1 The issue before us is whether Oklahoma will recognize a tort for bad faith against a self-insured employer who failed to pay for medicine prescribed for its employee as ordered by a Workers' Compensation Court. We decline to create a common law remedy when the legislature has provided a statutory remedy in the Workers' Compensation Act.

¶ 2 On August 14, 2001, the appellant, C.C. Kuykendall, filed a petition in district court naming Gulfstream Aerospace Technologies, the appellee, as defendant. The petition alleged that Kuykendall filed pleadings in Workers' Compensation Court to reopen a prior court order for a change of condition, the worsening of a neck injury he had suffered. An order for permanent partial disability was filed on September 8, 2000, which was appealed to the Workers' Compensation Court En Banc. That court affirmed the trial court's order on November 29, 2000. The trial court's order provided that Gulfstream, a self-insured employer, should provide the claimant, Kuykendall, with continuing prescription medication from Dr. Steve Drabek to maintain Kuykendall's condition.

¶ 3 Kuykendall forwarded these prescription receipts to Gulfstream for reimbursement in January 2001. The total amount for the prescriptions was $2,629.78. Without an explanation, Gulfstream forwarded a check to Kuykendall for $1,311.89, and refused to pay the balance of the prescriptions, all of which were prescribed by Dr. Drabek. On January 18, 2001, Kuykendall filed pleadings in Workers' Compensation Court to revoke Gulfstream's "own risk" permit. The court denied Kuykendall's request for revocation, but required Gulfstream to pay for the treatment. However, Gulfstream has continued to refuse to pay the balance for the prescriptions. Kuykendall subsequently filed his petition in district court.

¶ 4 The petition alleged that Gulfstream's actions were in bad faith and malicious, and that its disregard for the orders of the Workers' Compensation Court were without reason or justification. The petition asked for the balance for the prescriptions in the amount of $1,317.89, plus punitive damages. Gulfstream answered with a motion to dismiss claiming that the district court did not have subject matter jurisdiction, and that Kuykendall failed to state a claim against Gulfstream upon which relief could be granted. After Kuykendall responded, the trial court dismissed the case with prejudice. The court found that Kuykendall had failed to state a claim upon which relief could be granted because no viable cause of action existed for bad faith post-award conduct arising out of a workers' compensation case in Oklahoma. The Court of Civil Appeals reversed and remanded. We previously granted certiorari.

¶ 5 Gulfstream, in its petition for writ of certiorari, argues that the Court of Civil Appeals' opinion has created a new tort for bad faith post-award conduct in a workers' compensation case despite decisions by this Court to the contrary. Gulfstream cites three cases, Fehring v. State Ins. Fund, 2001 OK 11, 19 P.3d 276, Anderson v. U.S. Fidelity and Guar. Co., 1997 OK 124, 948 P.2d 1216, and Goodwin v. Old Republic Ins. Co., 1992 OK 34, 828 P.2d 431. Gulfstream quotes Fehring: "To date this Court has not unequivocally sanctioned the viability of a tort suit against a workers' compensation insurer for the bad faith post-award conduct of failing to timely pay a workers' compensation claim." Fehring, 2001 OK 11, ¶ 26, 19 P.3d at 284. To support that observation this Court cited the specially concurring and dissenting opinions in Anderson.

¶ 6 Kuykendall answers that the issue in Fehring was narrow. In that case a claimant and his wife sued the State Insurance Fund (SIF) for bad faith failure to pay a workers' compensation award. Their petition alleged that the Workers' Compensation Court awarded Fehring permanent partial disability benefits. After the order became final, the benefits were not timely paid by the SIF. Another Workers' Compensation Court order issued because the SIF had not paid. After that order became final, SIF still refused to pay. The Court found that the Governmental Tort Claims Act (GTCA) protected the SIF against a bad faith cause of action. For an agency to be liable under the GTCA, the plaintiff must prove that the conduct of the agency's employee was within the employee's scope of employment. To be within the scope of employment, the employee's actions must be in good faith. If an agency's employee acted in bad faith, the employee would not be acting within the scope of employment and the agency would be immune under the act. Kuykendall concludes that Fehring did not exclude future recognition of a cause of action for bad faith post-award conduct. He urges that Fehring assumed such a cause of action existed, as had all prior decisions of this Court.

¶ 7 The Goodwin and Anderson cases, which are cited in Fehring, discuss bad faith refusal to pay an employee's workers' compensation award. Both cases assume for the purpose of resolving the issues that a workers' compensation insurance company may be subjected to liability in tort for willful, malicious, and bad faith refusal to pay. Goodwin, 1992 OK 34, ¶ 1, 828 P.2d at 431-432, Anderson, 1997 OK 124, ¶ 6, 948 P.2d at 1217. The discussion of bad faith in Goodwin led to a conclusion in Whitson v. Oklahoma Farmers Union Mut. Ins. Co., 1995 OK 4, ¶ 8, 889 P.2d 285, 287, that Goodwin actually recognized an insurer's duty of good faith and fair dealing to the injured workers' compensation claimant. Fehring corrected that conclusion and observed that Goodwin merely assumed such a claim existed. Goodwin, 1992 OK 34, ¶¶ 1, 15, 17, 828 P.2d at 431-432, 435, 436; Fehring, 2001 OK 11, ¶ 26, n. 20, 19 P.3d at 284, n. 20.

¶ 8 No Oklahoma case holds that a workers' compensation insurer has a duty of good faith in paying a workers' compensation award, the violation of which is a tort. A holding of a case declares the conclusion of law reached by the court as to the legal effect of the facts disclosed. Black's Law Dictionary 658, (5th ed.1979). "Holding" may be contrasted with obiter dictum, which is a statement in a decision that is unnecessary to support the conclusion reached. American Trailers v. Walker, 1974 OK 89, ¶ 18, 526 P.2d 1150, 1154. Ratio decidendi is the ground or reason of the decision and refers to a statement in a decision necessary to support the holding. Black's Law Dictionary 1135, (5th ed.1979). In Goodwin and Anderson, assumptions concerning a bad faith tort were made for the purpose of deciding the issues in the two workers' compensation cases, but no conclusion of law was reached regarding such a tort.

¶ 9 Even if this Court were to recognize an insurer's duty to exercise good faith and fair dealing toward a worker's compensation claimant, that duty would not apply equally to a self-insured employer. The cited cases draw a distinction between workers' compensation insurers and self-insured employers. In Goodwin the Court cited the exclusivity provision, now codified as 12 O.S. 2001, § 12, which provides in pertinent part: "The liability prescribed in Section 11 of this title shall be exclusive and in place of all other liability of the employer ... at common law or otherwise, for such injury, loss of services, or death ...." (Emphasis added.) The Court then contrasted the potential liability of an insurer with the liability of an employer and commented, "It should be noted that the exclusivity provision of the statute relates to the liability of the employer— not that of the insurer." (Emphasis in original.) Goodwin, 1992 OK 34, ¶ 5, 828 P.2d at 432. Goodwin continues, "Section 12 provides an exclusive remedy for one type of claim—work-related injuries i.e., the liability of the employer." Goodwin, 1992 OK 34, ¶ 12, 828 P.2d at 434. The case notes that a bad faith refusal to pay an insurance contract under its terms may be an intentional tort, but it will not extend to the employer, which is in a subclass entitled to protection. Goodwin, 1992 OK 34, ¶ 15, n. 17, 828 P.2d at 435, n. 17.

¶ 10 In Whitson, the claimant argued that his employer, which happened to be an insurance company, but not the carrier for workers' compensation, had a duty of good faith toward him tantamount to that owed by an insurance company to its insured. After citing the exclusivity provision, the Court referred to Goodwin and concluded that "an employer's liability to an injured worker is limited to that created by § 12 of the Workers' Compensation Act. Whitson, 1995 OK 4, ¶ 8, 889 P.2d at 287.

¶ 11 Harter Concrete Products v. Harris, 1979 OK 38, 592 P.2d 526, describes the purpose and effect of the Workers' Compensation statutes. These statutes were enacted to provide a substitute remedy to an employee for accidental injuries received during covered employment. The burden of proving negligence was removed. In exchange, the employer is protected from any other liability to the employee. Harter held that this protection extended to all liability, whether direct or indirect, resulting from the employee's injuries. Harter, 1979 OK 38, ¶ 7, 592 P.2d at 528. Accordingly, the self-insured employer's liability is limited to that provided by the Workers' Compensation statutes.

¶ 12 The Workers' Compensation Act provides remedies available to employees when their employers or insurance companies violate a provision. Section 42 sets forth the sole remedy available when there is a failure to pay compensation due under the terms of an award. Lum v. Lee Way Motor...

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