Maxwell v. Aig Domestic Claims Inc.

• Decision Date: 30 June 2011
• Docket Number: SJC–10757.
• Citation: 950 N.E.2d 40,460 Mass. 91
• Parties: Jesse MAXWELLv.AIG DOMESTIC CLAIMS, INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

460 Mass. 91

950 N.E.2d 40

Jesse MAXWELL

v.AIG DOMESTIC CLAIMS, INC.

SJC–10757.

Supreme Judicial Court of Massachusetts, Suffolk.

Submitted Feb. 7, 2011.Decided June 30, 2011.

Myles W. McDonough (Christopher M. Reilly with him), Boston, for the defendant.Chester L. Tennyson, Jr., Brockton, for the plaintiff.E. Michael Sloman, for Insurance Fraud Bureau, amicus curiae, submitted a brief.David D. Dowd, Boston, for Property Casualty Insurers Association of America, amicus curiae, submitted a brief.Present: IRELAND, C.J., SPINA, CORDY, BOTSFORD, & GANTS, JJ.SPINA, J.

In this proceeding we consider the appeal of AIG Domestic Claims, Inc. (AIGDC), from the denial of its motion for summary judgment. Jesse Maxwell, a workers' compensation claimant, brought suit against AIGDC regarding the company's conduct in referring his claim to the insurance fraud bureau (IFB), communicating with fraud investigators and prosecutors regarding his activity and claim, and using criminal processes to gain leverage in dealings with him. Maxwell sought recovery on theories of malicious prosecution, infliction of emotional distress, abuse of process, and violation of G.L. c. 93A and G.L. c. 176D. In July, 2007, AIGDC filed a special motion to dismiss the suit pursuant to G.L. c. 231, § 59H, the so-called “anti-SLAPP” statute. That motion was denied and AIGDC's appeal was unsuccessful. See Maxwell v. AIG Domestic Claims, Inc., 72 Mass.App.Ct. 685, 893 N.E.2d 791 (2008). On remand, the parties conducted discovery and AIGDC filed a motion for summary judgment in August, 2009. Summary judgment was denied. AIGDC appealed under the doctrine of present execution, and we granted its application for direct appellate review.¹

We conclude that AIGDC enjoys qualified immunity regarding its reporting of potentially fraudulent activity but that summary judgment is inappropriate because all of Maxwell's claims rely, at least in part, on conduct falling outside the scope of the immunity. We also conclude that portions of Maxwell's claims may be barred by workers' compensation exclusivity under G.L. c. 152, but that not one of Maxwell's counts is barred entirely such that the Superior Court would be without subject matter jurisdiction. Accordingly, we affirm the order of the Superior Court denying summary judgment and remand the case for further proceedings consistent with this opinion.

1. Background. In the light most favorable to Maxwell, the nonmoving party, the materials submitted on summary judgment support the following.

On October 8, 2000, Maxwell sustained an injury in the course of his employment, reported the injury, and filed a workers' compensation claim. AIGDC denied the claim, citing Maxwell's failure to provide medical documentation substantiating his injury, his disability, and the causal relation between the two. In response, Maxwell filed medical documentation and challenged AIGDC's denial through the administrative procedures of the Department of Industrial Accidents (DIA). A DIA conference regarding Maxwell's claim was scheduled for April 30, 2001.

Without workers' compensation benefits and unable to work, Maxwell became homeless while waiting for the DIA conference and began living in various shelters. As a condition of his residence at the Boston YMCA, Maxwell was required to participate in a training program operated by Community Work Services (CWS), a charitable organization that provides disabled and challenged individuals with vocational and rehabilitative training. CWS placed Maxwell in a commercial cleaning training program in which he performed limited janitorial functions in a controlled environment. In connection with the program, Maxwell received a stipend administered by the city of Boston and funded through a grant from the United States Department of Housing and Urban Development. CWS did not consider Maxwell to be an employee, did not consider his stipend to be wages or earnings, and did not believe that his participation in the training program indicated that he was capable of working in the open market. Further, various governmental agencies, including State and Federal revenue departments, do not consider the stipend to be earnings or wages.

The DIA conference ultimately was scheduled for April 30, 2001. Prior to the conference Maxwell attended an impartial medical examination on April 25, 2001, at which he signed a form reporting that he was not presently working. AIGDC had arranged for a private investigator to undertake surveillance of Maxwell and informed the investigator of Maxwell's scheduled appointment. The investigator followed Maxwell from the examination to the Naval Reserve Recruitment Center in Quincy, where Maxwell had been assigned pursuant to the CWS training program. The investigator observed and videotaped Maxwell performing janitorial functions at the center. The private investigator then filed a report with AIGDC concluding that “Maxwell is currently employed as a janitor at the Naval Reserve Recruitment Center in Quincy.”

AIGDC thus had reason to believe Maxwell was working when, at the DIA conference on April 30, 2001, he completed a DIA-mandated earnings report in which he declared no wages. AIGDC did not present the DIA administrative judge with information regarding the private investigator's findings, and the administrative judge ordered that AIGDC pay workers' compensation benefits to Maxwell. The same day, AIGDC formally opened an internal fraud investigation.

The company's investigation concluded that “[Maxwell] works for a temp agency called Community Work Services, located 174 Portland Street in Boston.” Because Maxwell was receiving workers' compensation benefits while apparently working, AIGDC's investigation concluded that Maxwell may be committing insurance fraud and, accordingly, referred the case to the IFB.² The IFB conducted its own investigation, received updates and additional information from AIGDC, and concluded that it should recommend charges of larceny and workers' compensation fraud. The IFB then referred the matter to the Suffolk County district attorney who, after meeting with AIGDC officials on at least one occasion, charged Maxwell in October, 2001, with workers' compensation fraud pursuant to G.L. c. 152, § 14, and larceny over $250 pursuant to G.L. c. 266, § 30.³

In December, 2001, AIGDC's complex claims specialist, Alice M. Hathaway, began corresponding with Maxwell's counsel seeking voluntary relinquishment of the benefits awarded Maxwell at the DIA conference.⁴ In the same period, Maxwell attempted suicide for the first time and began a series of hospitalizations. These hospitalizations necessitated a number of postponements in the criminal proceeding against Maxwell. In January, 2002, Hathaway offered on AIGDC's behalf to settle Maxwell's claim for one dollar in exchange for a waiver of AIGDC's right to seek costs and penalties under G.L. c. 152, § 14. When Maxwell refused the offer, AIGDC moved in the DIA proceeding to redetermine Maxwell's benefits, to recoup benefits already paid, and for penalties pursuant to G.L. c. 152, § 14.

In addition to delaying the criminal proceeding, Maxwell's hospitalizations also delayed the DIA proceeding under which AIGDC sought to terminate his workers' compensation benefits. Aware that Maxwell was on probation for an unrelated drug offense and that an insurer may discontinue payment of benefits to an incarcerated claimant, Hathaway contacted Maxwell's probation officer and sought to have his probation surrendered. When the probation officer refused to cooperate, Hathaway wrote a letter to the district attorney, alleging that Maxwell “conveniently signs himself into McLean's Hospital” when he is scheduled to appear in court. Hathaway explained her predicament (“Unfortunately, I am still paying this gentleman ...”) and requested that prosecutors assist AIGDC in securing the surrender of Maxwell's probation should he, as Hathaway expected, “be conveniently an in-patient at McLean's Hospital” on the date of the next criminal hearing.⁵ Maxwell's probation was not surrendered.

The DIA hearing was ultimately held on April 25, 2002. A number of witnesses testified regarding the nature of the CWS training program and the Federal grant funding Maxwell's stipend. The administrative judge took the matter under advisement and, more than two years later on May 7, 2004, issued a decision and order finding that Maxwell “was totally disabled within the meaning of the [workers' compensation] Act,” “[his] activities for [CWS] did not constitute employment and are not evidence that he could have obtained work in the open labor market,” “the stipend paid [him] ... does not constitute ‘earnings' within the meaning of the Act,” and “[he] had no intention of defrauding the insurer.” AIGDC's motion for penalties was denied. Further, AIGDC was ordered to pay to Maxwell his attorney's fees, costs and expenses, workers' compensation benefits for the entire period from his injury through the present, interest on any unpaid benefits, and the costs of surgery on Maxwell's shoulder should he elect to undergo the procedure.

There was a two-year gap, however, between the DIA hearing and the issuance of the order, during which time the criminal proceeding continued. Trial in the Boston Municipal Court was scheduled for November 13, 2003, and despite the evidence introduced at the DIA hearing and being represented by counsel in the criminal proceeding, Maxwell pleaded guilty prior to the trial. Maxwell's pleas were accepted and he was sentenced to one year in prison for each offense, suspended for three years, with probation. Restitution to AIGDC in the amount of $9,013 subsequently was ordered.⁶

The record does not indicate what steps, if any, AIGDC took in pursuit of restitution between November, 2003, and the issuance of the DIA decision in May, 2004. Nearly one year after receipt of that decision, however, an AIG fraud...