Lowman v. Piedmont Executive Shirt Mfg. Co.

Decision Date02 June 1989
Citation547 So.2d 90
CourtAlabama Supreme Court

Jake B. Mathews, Jr. of Merrill, Merrill, Mathews & Allen, Anniston, for appellant.

Jerry B. Oglesby of Sides, Oglesby, Held & Dick, Anniston, for appellees.


Ms. Mildred Lowman appeals from a summary judgment in favor of the defendants, Piedmont Executive Shirt Manufacturing Company ("Piedmont") and Ms. Carol Hart, in Lowman's action based on alleged fraud, conspiracy to defraud, and outrage. We affirm in part; reverse in part; and remand.

On June 21, 1985, Ms. Lowman sustained a back injury while working for Piedmont, and in July she filed a workmen's compensation claim. Ms. Hart, a co-employee, processed Ms. Lowman's claim. Piedmont's insurance carrier began paying Ms. Lowman's benefits for a temporary total disability sometime in October. She is no longer receiving benefits.

In 1986, Ms. Lowman brought this action against Piedmont and Ms. Hart, seeking damages for fraud, conspiracy to defraud, and outrage. She predicated these tort claims on the alleged mishandling of her workmen's compensation claim. In her complaint, Ms. Lowman also included a claim for further workmen's compensation benefits, alleging that her disability had become permanent.

The trial court severed the workmen's compensation claim from the other claims, and Piedmont and Ms. Hart moved for summary judgment as to the tort claims.

The facts most favorable to Ms. Lowman show that Ms. Hart was aware that Ms. Lowman had been injured on the job, having been advised of this by Ms. Lowman's supervisors and by Ms. Lowman herself on the day the injury occurred. Ms. Hart, however, refused to process Ms. Lowman's claim and, instead, told Ms. Lowman to fill out another claim form and to state that she had been injured at home. Several days later, Ms. Hart visited a hospitalized Ms. Lowman and "threatened" Ms. Lowman with being "stuck with a big [medical] bill" if Ms. Lowman did not file her disability claim as for an off-the-job injury.

The trial court granted the defendants' motion for summary judgment and made the judgment final pursuant to Rule 54(b), A.R.Civ.P. Ms. Lowman appeals from this judgment, arguing that the exclusive remedy provisions of the Alabama Workmen's Compensation Act do not bar her tort claims and that the defendants' handling of her workmen's compensation claim constituted legal misrepresentation and outrageous conduct.

Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), A.R.Civ.P.; Fountain v. Phillips, 404 So.2d 614 (Ala.1981).

Appellees make two arguments. First, citing Waldon v. Hartford Ins. Group, 435 So.2d 1271 (Ala.1983), and Garnett v. Neumann, 507 So.2d 496 (Ala.1987), they argue that Ms. Lowman's fraud claim is barred by the exclusivity provisions of the Act. Alabama Code 1975, §§ 25-5-11, -52, -53, and -59. Second, appellees contend that there is no evidence tending to show that their conduct was outrageous under the standard set out in American Road Service Co. v. Inmon, 394 So.2d 361 (Ala.1980). We agree with the appellees with respect to the claim based on the tort of outrage; we disagree with respect to the claim based on fraud. Therefore, we affirm in part and reverse in part.

The main issue here presented is how far the exclusivity provisions of the Workmen's Compensation Act extend. After examining the relevant statutes and case law, we hold that the exclusive remedy provisions were not designed to shield an employer or its insurer from the entire field of tort law. These provisions apply only to limit the liability of an employer or its insurer to the statutorily prescribed claims for job-related injuries.

Section 25-5-51 restricts the coverage of the Act to

"every case of personal injury or death of [an] employee caused by an accident arising out of and in the course of his employment."

Appellate decisions interpreting this section have clarified the requirements for falling under the coverage of this Act:

"We note at the outset, however, that in order for an accident or death to be compensable under the Workmen's Compensation Act, the following two requirements must be met: (1) the accident or death must arise out of the employment and (2) the accident or death must occur in the course of employment. McKnight v. Consolidated Concrete Co., 279 Ala. 430, 186 So.2d 144 (1966); Anderson v. Custom Caterers, Inc., 279 Ala. 360, 185 So.2d 383 (1966)."

Slimfold Mfg. Co. v. Martin, 417 So.2d 199, 200 (Ala.Civ.App.1981), writ quashed, 417 So.2d 203 (Ala.1982).

"But it is usually said that the phrase 'arise out of' employment refers to employment as the cause and source of the accident.... We have said that the phrase 'in the course of his employment' refers to the time, place and circumstances under which the accident took place. An injury to an employee arises in the course of his employment when it occurs within the period of his employment, at the place where he may reasonably be and while he is reasonably fulfilling the duties of his employment or engaged in some incident to it."

Massey v. United States Steel Corp., 264 Ala. 227, 230, 86 So.2d 375, 378 (1955) (quoted as authority in Lauderdale County Coop., Inc. v. Shook, 376 So.2d 199, 201 (Ala.Civ.App.), cert. denied, 376 So.2d 202 (Ala.1979)).

It logically follows that if an accident is not compensable because it is outside the coverage of the Act, then the exclusive remedy provisions of the Act are also inapplicable. Thus, an employer is protected from tort liability only as to injuries expressly covered by the language of the Act. In discussing this issue, Professor Larson has stated:

"If ... the exclusiveness defense is a 'part of the quid pro quo by which the sacrifices and gains of employees and employers are to some extent put in balance' it ought logically to follow that the employer should be spared damage liability only when compensation liability has actually been provided in its place, or, to state the matter from the employee's point of view, rights of action for damages should not be deemed taken away except when something of value has been put in their place.

"A distinction must be drawn, however, between an injury which does not come within the fundamental coverage provisions of the act, and an injury which is in itself covered but for which, under the facts of the particular case, no compensation is payable. In the former class are, of course, all the cases in which the relation of employment did not exist, or in which plaintiff or his employer was within an excluded category, or in which there was no 'injury by accident arising out of and in the course of the employment.' "

2A A. Larson, The Law of Workmen's Compensation, § 65.40, at p. 12-41-42 (1988).

Such a position is clearly in line with prior decisions of the Alabama appellate courts:

"The Alabama Workmen's Compensation Act makes it clear that it is an exclusive remedy only in situations where an employee is suing his employer for injury in the course of his employment. See, Ala.Code 1975, §§ 25-5-51, -53; Owens v. Ward, 49 Ala.App. 293, 271 So.2d 251 (1972). In order to come within the terms of the Act, and, therefore, have liability limited to the benefits paid thereunder, it is essential that the person seeking to limit the remedy of the injured party be in an employer-employee relationship with that party."

Kilgore v. C.G. Canter, Jr. & Assoc., 396 So.2d 60, 63 (Ala.1981). See, also, Gentry v. Swann Chemical Co., 234 Ala. 313, 174 So. 530 (1937).

Having determined that the exclusivity provisions of the Act do not afford protection for injuries not caused by a job-related accident, we must now apply this rule to the facts of the present case. The allegedly tortious conduct in question occurred while Ms. Lowman was hospitalized as a result of the initial injury to her back. Undoubtedly, this tortious conduct is not an "accident" compensable under workmen's compensation. The relationship between the original accident, which led to Ms. Lowman's hospitalization, and the subsequent actions of Piedmont and Ms. Hart, which are the subject matter of this action, is entirely too tenuous to bring the later activities under the coverage of workmen's compensation. Professor Larson has discussed such a "boot-strapping" approach and concluded that it is untenable:

"To say that the second injury was only an aggravation or extension of the first, because the investigation was related to the first injury, one would have to accept a kind of but-for theory that could lead to preposterous results."

2A A. Larson, The Law of Workmen's Compensation, § 68.34(b), at p. 13-123 (1988). Because the actions of Piedmont and Ms. Hart are not covered by workmen's compensation, the exclusivity provisions of the Act are irrelevant to the present causes of action. See Brazier v. Travelers Ins. Co., 602 F.Supp. 541 (N.D.Ga.1984), citing Reed v. Hartford Accident & Indemnity Co., 367 F.Supp. 134 (E.D.Pa.1973).

While recognizing that a cause of action for fraud is not prohibited by the exclusivity provisions of the Act, we are at the same time compelled to emphasize that a mere delay in payment of workmen's compensation benefits is not actionable as a separate tort claim. The penalty for untimely payment of workmen's compensation benefits is provided in § 25-5-59. Indeed, under the provisions of § 25-5-59, it is not necessary to allege or prove any element beyond the statutorily proscribed delay in payment of benefits, in order to recover the prescribed penalty. Again, we agree with the reasoning of Professor Larson:

"It seems clear that a compensation claimant cannot transform a simple delay in payments into an actionable tort by merely invoking the magic words 'fraudulent, deceitful and intentional' or 'intentional...

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