McDowell v. Citicorp U.S.A.

• Decision Date: 06 June 2007
• Docket Number: No. 23925.,23925.
• Citation: 734 N.W.2d 14,2007 SD 53
• Court: South Dakota Supreme Court
• Parties: Pamela McDOWELL, Plaintiff and Appellant, v. CITICORP U.S.A.; Citibank of South Dakota, N.A.; Crawford & Company, Defendants and Appellees, and Wayne Kinonen, Defendant.

734 N.W.2d 14

2007 SD 53

Pamela McDOWELL, Plaintiff and Appellant, v. CITICORP U.S.A.; Citibank of South Dakota, N.A.; Crawford & Company, Defendants and Appellees, and Wayne Kinonen, Defendant.

No. 23925.

Supreme Court of South Dakota.

Argued on October 4, 2006.

Decided June 6, 2007.

Chet Grosclose, Sioux Falls, South Dakota, Attorney for plaintiff and appellant.

Lon J. Kouri, Scott R. Swier, of May & Johnson, P.C., Sioux Falls, South Dakota, Attorneys for appellees, Citicorp, USA & Citibank of SD, N.A.

Steven W. Sanford, Michael A. Henderson, of Cadwell, Sanford, Deibert & Garry, Sioux Falls, South Dakota, Attorneys for appellee, Crawford & Company.

KONENKAMP, Justice.

[¶ 1.] Pamela McDowell suffered a work-related injury while employed at Citibank of South Dakota. She was paid workers' compensation benefits and eventually entered into a settlement agreement. The agreement required Citibank's insurer to pay all future necessary and reasonable medical expenses causally related to her injury. McDowell later brought suit against Citibank and other defendants alleging that they acted in bad faith by unreasonably delaying payment of her medical bills. Defendants moved for summary judgment. After two hearings, the circuit court granted defendants' motion. McDowell appeals, and we affirm.

Background

[¶ 2.] In 1991, McDowell suffered a work-related injury while employed at Citibank of South Dakota, a subsidiary of Citigroup, Inc. Her job required her to use her hands in a repetitive manner, and, after some time, she began to experience shooting pains up both her arms. When the pain increased, she visited Dr. Walter Carlson, an orthopedic surgeon. He performed carpal tunnel surgery on both her wrists. After the surgery, her pain did not subside, and Dr. Carlson referred her to the Mayo Clinic in Minnesota. There, doctors diagnosed her as having a dorsal sensory neuropathy condition of the radial nerve. They recommended that she obtain treatment and not return to work at that time.

[¶ 3.] Citibank's workers' compensation insurance carrier at the time of McDowell's injury was Planet Insurance Company a division of Reliance Insurance Company. After McDowell was injured, Planet paid the medical bills related to her injury. In January 1993, McDowell filed a petition with the Department of Labor (Department), alleging that as a result of her injury she had become permanently and totally disabled and was entitled to workers' compensation benefits. In 1995, the parties began discussing the possibility of a settlement, and, on March 14, 1996, McDowell, Citibank, and Planet entered into a "Compromise Agreement." McDowell accepted a lump sum payment and released all past, existing, and future claims against Citibank and Planet. They, in return, agreed to pay her future necessary and reasonable medical expenses connected to her work injury. The Department later approved the settlement.

[¶ 4.] Under a contractual agreement with Planet, Crawford & Company was responsible for administering all the workers' compensation claims for Citibank. Thus, Crawford was responsible for managing McDowell's workers' compensation file and processing and paying claims submitted by her medical care providers. According to McDowell, before the settlement agreement, defendants Crawford and Citibank unreasonably delayed payment of her medical bills. She recognized, however, that because of the settlement agreement she had waived any potential bad faith claims relating to pre-settlement conduct. Nonetheless, she alleged that after the settlement defendants continued to unreasonably delay payment of her medical bills. She maintained that because defendants were not paying her bills, her medical care providers started demanding payment from her personally. She also claimed that she received letters from a collection agency demanding payment, and because of the unreasonable delays, the Mayo Clinic refused to continue treating her until she resolved her delinquent bills.

[¶ 5.] On February 11, 2000, McDowell petitioned the Department to reopen her settlement agreement. One allegation in her petition was that defendants "exhibited a pattern of consistently paying outstanding medical bills in an untimely fashion or not paying them at all." She sought to "compel Employer/Insurer to pay all outstanding medical bills."¹ In March 2000, McDowell's attorney sent a letter to defendants informing them that because McDowell's bills remained unpaid "we are looking at a potential bad faith action for failure to pay."

[¶ 6.] In March 2003, McDowell brought suit in circuit court against Citicorp USA, Inc., Citibank of South Dakota, N.A., Crawford & Company, and Wayne Kinonen (a Crawford representative) averring bad faith refusal to pay her bills for necessary health care, negligence, negligent infliction of emotional distress, vexatious denial of claim, and entitlement to punitive damages. In her complaint, she alleged that defendants delayed payment on bills from Avera McKennan Hospital and Anesthesiology Associates for care on August 23, 1999, and on a bill from the Mayo Clinic years earlier.² She amended her complaint in August 2004, to include causes of action for fraud and deceit, intentional infliction of emotional distress, and intentional interference with business relations.

[¶ 7.] After discovery was conducted, defendants jointly moved for summary judgment. Following the hearing, but while the motion for summary judgment was still pending, defendants learned that when McDowell and her husband filed for voluntary Chapter 7 Bankruptcy in October 2000, they did not list the present lawsuit on their schedule of potential assets. Nor did they list the healthcare providers as creditors. As a result, defendants filed a supplemental appendix in support of their motion for summary judgment and argued that McDowell should be judicially estopped from now using the pre-bankruptcy conduct in support of her claims. Defendants requested that the circuit court take judicial notice of the bankruptcy proceeding and related filings. At the hearing, McDowell conceded that there could be no cause of action founded on the bills preceding the bankruptcy filing. However, she argued that the bills should nevertheless be admissible as evidence.

[¶ 8.] McDowell served her second amended complaint in May 2005. She again alleged the defendants' pre-bankruptcy bad faith. However, she acknowledged that such conduct was "not now actionable by [her]." Thus, she asserted that "[a]fter October 1, 2000 the defendants persisted in the prior practice of delaying unreasonably the payment for necessary medical services. . . ." She identified specific bills that she believed supported her claim for bad faith.³ She also asserted additional causes of action for both intentional and negligent infliction of emotional distress, and entitlement to punitive damages.⁴

[¶ 9.] In June 2005, the circuit court granted partial summary judgment, specifically precluding McDowell from pursuing her bad faith claim based on the pre-bankruptcy events. The court ruled that because she filed a petition to reopen her settlement agreement in February 2000, in part because of defendants' failure to timely pay bills, and because in March 2000, her counsel sent correspondence to defendants warning of the possibility of a bad faith claim, she was aware of her potential lawsuit when she filed for bankruptcy in October 2000. The court found that she failed to list the present lawsuit as a potential asset on her bankruptcy schedule and "did not bring any claim to the attention of the trustee, nor did she attempt to amend the schedules." Therefore, it ruled that the doctrine of judicial estoppel precluded her "from asserting any claims against these defendants for events prior to January 17, 2001." Moreover, the circuit court held that because she was judicially estopped from pursuing a claim based on pre-bankruptcy conduct, it was as though the facts occurring pre-bankruptcy legally did not exist. Consequently, McDowell was also barred from using pre-bankruptcy facts as evidence in support of her present claim.

[¶ 10.] In October 2005, the court issued a letter decision granting defendants' motion for summary judgment on McDowell's claims for bad faith, intentional and negligent infliction of emotional distress, and punitive damages. It noted that McDowell "continues to urge that she was denied prompt payment of her medical bills thereby supporting her claim of damages."⁵ The court reiterated that the doctrine of judicial estoppel precluded it from considering conduct before the bankruptcy, and therefore, it only examined the specific instances of unreasonable post-bankruptcy delay alleged by McDowell in her second amended complaint.⁶

[¶ 11.] According to the court, even assuming, as alleged by McDowell, that "defendants had a duty to perform a reasonable investigation into [her] health care needs and to provide for the health care by promptly paying reasonable charges of health care providers," she failed to show that the payments made by defendants were untimely or unreasonably delayed. Defendants, the court found, while admitting that medical services were provided to McDowell, denied the length of delay with "specific factual references[.]" McDowell, on the other hand, failed to contradict defendants' responses, and instead relied on her pleadings and conclusions. As a result, the court granted defendants' motion for summary judgment on McDowell's claim for bad faith.

[¶ 12.] The court also granted defendant's motion for summary judgment on McDowell's claims of fraud and deceit and interference with business relations. McDowell does not challenge those rulings on appeal. The claims for intentional and negligent infliction of emotional distress were dismissed because the court found that there was no showing that the "defendants were engaged in extreme and outrageous conduct." Further, the court...