McCutchen v. Liberty Mut. Ins. Co.

• Decision Date: 12 October 1988
• Docket Number: Civ. No. H86-398.
• Citation: 699 F. Supp. 701
• Parties: Vonda McCUTCHEN, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Indiana

699 F. Supp. 701

Vonda McCUTCHEN, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant.

Civ. No. H86-398.

United States District Court, N.D. Indiana, Hammond Division.

October 12, 1988.

Richard A. Mayer of Spangler, Jennings, Spangler & Dougherty, P.C., Merrillville, Ind., for plaintiff.

Edward N. Kalamaros, South Bend, Ind., for defendant.

ORDER

MOODY, District Judge.

This matter comes before the court on three motions for summary judgment filed by defendant Liberty Mutual Insurance Co. ("Liberty"). The first motion for summary judgment was filed February 27, 1987. Plaintiff responded to the motion on April 20, 1987. Liberty filed a reply to plaintiff's response on June 1, 1988, to which McCutchen filed a supplementary response on June 16, 1988. Liberty filed a second motion, for partial summary judgment, on July 23, 1987 and plaintiff responded on September 18, 1987. On March 21, 1988, Liberty filed a third motion for summary judgment to which the plaintiff responded on April 5, 1988. For reasons discussed below, defendant's motions for summary judgment are all DENIED.

I.

In a summary judgment motion, the movant must demonstrate, by way of pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, that (1) no genuine issue of material fact exists for trial, and (2) the movant is entitled to judgment as a matter of law. Munson v. Friske, 754 F.2d 683 (7th Cir. 1985). If the nonmoving party would bear the burden of proof at trial on the matter that forms the basis of the summary judgment motion, the burden of proof shifts to the nonmoving party if the movant makes its initial showing, and the nonmoving party must come forth and produce affidavits, depositions or other admissible documentation to show what facts are actually in dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment should be granted only if no reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

When the parties dispute the facts, the parties must produce proper documentary evidence to support their contentions. The parties cannot rest on mere allegations in the pleadings, Posey v. Skyline Corp., 702 F.2d 102 (7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983), or upon conclusory statements in affidavits. First Commodity Traders, Inc. v. Heinold Commodities, Inc., 766 F.2d 1007 (7th Cir. 1985). A party need not try its case by affidavit, but it must set forth some facts from which the court reasonably can infer that the party would be able to produce some evidence at trial to support its theory. In Re Morris Paint and Varnish Co., 773 F.2d 130 (7th Cir.1985).

Any permissible reasonable inferences from the documentary evidence must be viewed in the light most favorable to the nonmoving party. Matsushita Electronics Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

II.

The parties, while not disputing the basic facts giving rise to this litigation, disagree considerably over the inferences to be drawn from those basic facts. The basic facts, with reasonable inferences drawn in favor of Vonda McCutchen, the nonmoving party, are as follows:

On January 29, 1985, Vonda McCutchen was injured while working at Globe Industries, Inc. ("Globe") in Lake County, Indiana. An explosion occurred while she was spraying an apron of a proctor dryer with chemicals, causing second degree burns to her arms, face and chest. She claims that she also sustained psychological and/or psychiatric injuries secondary to the accident consisting of a depressive neurosis, severe anxiety and a phobic reaction.

After the accident, Globe notified its worker's compensation carrier insurer, Liberty, of claims being made by McCutchen under Globe's worker's compensation benefits policy. The claims consisted of:

(a) the payment of all medical expenses associated with her bodily or psychiatric injuries;

(b) "temporary total disability benefits";

(c) "permanent partial impairment benefits" to compensate McCutchen for the permanent losses of bodily functions, whether physical or psychological in nature, stemming from the accident.

On February 25, 1985, the parties reached an agreement on the claims which required Liberty to pay temporary total disability benefits at the legal rate of $166.00 per week from and after January 30, 1985, until terminated in accordance with the provisions of the Indiana Workmen's Compensation law. Liberty began paying disability benefits pursuant to the agreement.

During the course of her treatment, McCutchen was seen and treated by several health care providers, of whom one, Dr. Rinck, prescribed that McCutchen consult Dr. S.L. Prasad Babu for psychological and emotional injuries sustained in the industrial accident. On March 7, 1985, Dr. Babu submitted a medical report to Liberty stating that the plaintiff had Depressive Neurosis with Severe Anxiety and Phobic Reaction" related to the work incident and she would need an indefinite period of time for treatment. Dr. Babu advised plaintiff to "stay off work until further advised".

When deposed, Liberty's rehabilitation nurse, Bonnie Moore, said that she informed Sherry Stewart, Liberty's supervisor, prior to Liberty's terminating plaintiff's benefits, that plaintiff was being treated by Dr. Babu, was having psychological problems related to the industrial accident, and was in need of funds to pay her apartment rent. Stephen Bannwart, a Liberty supervisor, also testified that Sherry Stewart knew in March 1985 that McCutchen was seeing a psychiatrist for work-related injuries. However, a Liberty interoffice memo dated March 12, 1985 recommends:

(a) Hold TTD payments;

(b) Not find any psychiatrist for the plaintiff;

(c) Let her (the plaintiff) get an attorney.

At about this same time, plaintiff called Liberty and spoke with Jim Koenig, an adjuster, to inquire if Dr. Babu's treatment was covered by workers' compensation. Koenig told her that Liberty's policy was not to pay for psychological injuries and that the Indiana workers' compensation law did not provide for such compensation. Plaintiff contends that he laughed at her when she inquired about psyhological care payments.

When deposed, Fred Swan, a Liberty claims manager, said that it was wrong for a Liberty employee to represent to plaintiff that there were no benefits due her under the Liberty policy. He then stated that as a general rule, Liberty does not deny worker's compensation claims without some legal back-up. Furthermore, both Swan and Moore stated that it is not proper to force an injured party to get an attorney.

On March 25, 1985, over McCutchen's objections, Liberty elected to terminate payment of any further benefits. As a result, on March 28, 1985, McCutchen filed a "Form 9" application with the Industrial Board of Indiana naming herself as plaintiff and Globe as defendant and alleging "psychological trauma". In that application, McCutchen raised several issues:

(a) Globe's liability for compensation;

(b) the parties disagreement as to the rate of compensation;

(c) the parties disagreement as to the amount of compensation payable; and

(d) the parties disagreement as to the duration of the time for which compensation is payable.

McCutchen's claims before the Industrial Board continue to pend final administrative adjudication there.

After the filing of her claim before the Industrial Board, Liberty took steps to reevaluate or confirm whether McCutchen was entitled to further benefits. On January 7, 1986, Liberty had McCutchen examined by Dr. Barbara Rosenfeld, who recommended that plaintiff, having suicidal tendencies, needed immediate care and treatment. Plaintiff hoped to have Dr. Rosenfeld treat her, but Liberty refused to pay for her care. Liberty then sent McCutchen to another doctor, Dr. Arieff, who recommended that plaintiff be treated by a psychiatrist.

Liberty's refusal to provide such care led McCutchen to believe that, rather than attempting to resolve the dispute, Liberty was looking for a reason not to pay benefits. As a result, she commenced the present action by filing a three count complaint on May 6, 1986, which was amended by leave of court on June 20, 1988. Plaintiff claims that she was injured and damaged by fraudulent, tortious, outrageous, malicious and intentional misconduct of Liberty in denying her benefits to which she was entitled under Indiana workers' compensation law. She does not seek as damages the value of the denied benefits: that claim pends before the Industrial Board. She instead seeks damages for the emotional distress and psychological injuries caused by the denial.

III.

Liberty's first motion for summary judgment asserts that an Indiana administrative body has "exclusive jurisdiction" over McCutchen's action. The defendant alleges that the Indiana Workmen's Compensation Act provides an "exclusive remedy provision" and thus, this suit must be brought in front of the Indiana Industrial Board. While that may be the ultimate result, Liberty's jurisdictional argument is wrong. This is a diversity case, and as Mr. Kalamaros, Liberty's attorney, has been told in another case:

28 U.S.C. § 1332 affords the courts of the United States subject matter jurisdiction over suits between citizens of different states in which the amount in controversy exceeds $10,000.00. State law cannot enlarge or contract that grant of jurisdiction. Beach v. Owens-Corning Fiberglas Corp., 728 F.2d 407 (7th Cir. 1984); Begay v. Kerr-McGee Corp., 682 F.2d 1311 (9th Cir.1982). State law may provide that plaintiff can state no claim for relief under Indiana law from any entity other than the Industrial Board; if Indiana law so provides, this court will be bound to so hold. Erie R. Co. v.

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