McFadden v. Liberty Mut. Ins. Co.

• Citation: 803 F. Supp. 1178
• Decision Date: 07 October 1992
• Docket Number: Civ. A. No. WC 91-91-D-D.
• Parties: John McFADDEN, M.D., Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY and Benchcraft, Inc., Defendants.
• Court: U.S. District Court — Northern District of Mississippi

803 F. Supp. 1178

John McFADDEN, M.D., Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY and Benchcraft, Inc., Defendants.

Civ. A. No. WC 91-91-D-D.

United States District Court, N.D. Mississippi, W.D.

October 7, 1992.

Jim Waide, Luther C. Fisher, IV, Tupelo, Miss., for plaintiff.

John B. Clark, Robert J. Arnold, III, Daniel Coker Horton and Bell, Jackson, Miss., for defendants.

MEMORANDUM OPINION

DAVIDSON, District Judge.

I. INTRODUCTION

Disposition of the above-captioned case follows orders of dismissal from Chief Judge L.T. Senter in two other lawsuits filed by either plaintiff, Dr. McFadden, or his patient, James McCullough, against a different workers' compensation provider, American Motorist Insurance Company ("American"): McFadden v. American Motorists Insurance Company, Civ. Act. No. EC90-203-S-D (N.D.Miss. September 6, 1991) and McCullough v. American Motorist Insurance Company, Civ. Act. No. WC91-37-S-D (N.D.Miss. August 30, 1991). In his previous suit, plaintiff charged American with tortiously refusing to pay him for the medical care and treatment of McCullough, an employee allegedly entitled to workers' compensation benefits under a workers' compensation policy, which American issued to McCullough's employer at the time, Universal Furniture Company.¹ McCullough's suit against American complained of tortious "termination of his workers' compensation benefits in retaliation for, among other things," selecting "Dr. McFadden as his treating physician." McCullough, supra at 1. Both cases were dismissed, as neither party had met the requirement of exhausting the available administrative remedies. Although McCullough had initiated proceedings before the MWCC, no decision had been issued. Thus, the court concluded that McCullough had not "fully exhausted his administrative remedies" before the Mississippi Workers' Compensation Commission ("MWCC"), and could not, therefore, pursue a "lawsuit for bad faith" McCullough, supra at 7.

As to plaintiff's action, Judge Senter would not permit Dr. McFadden to bypass the MWCC either. Unlike his patient, plaintiff had launched no campaign to collect payment for his medical services through a MWCC proceeding, although he had brought ancillary claims before the agency in other past instances. McFadden, supra at 2. Instead, he proceeded directly to state court, whereupon American removed his action against it pursuant to 28 U.S.C. § 1441, et seq. In view of plaintiff's complete avoidance of an administrative remedy, the court was in no position to even possibly "entertain any action for bad faith refusal to pay workers' compensation benefits." McFadden, supra at 4.

In his third attempt to have the court hear his bad faith claim, plaintiff is on somewhat better footing, though it remains shaky. At least this time, the administrative phase is finished. It is evident, however, that plaintiff learned no valuable lessons from the two prior dismissals; the good doctor filed no ancillary claim for payment with the MWCC in precedence to the instant suit against defendant Liberty Mutual Insurance Company ("Liberty Mutual") for alleged bad faith refusal to pay. Only plaintiff's patient McCullough sought preliminary relief through a MWCC proceeding,² in which he successfully recovered payment for all his medical bills, including those incurred while under plaintiff's care. Consistent with the MWCC outcome, defendant Liberty Mutual remitted payment to plaintiff for his services rendered to McCullough.

With the payment issue settled, it is obvious that plaintiff's larger concern throughout the payment controversy has been to obtain a court ruling on his bad faith allegations. Assuming that administrative proceedings were still underway, the court opines that plaintiff would not allow that fact to deter him from pursuing his bad faith claim. When presented to the Senter court, the issue was not ripe for decision. Making its latest appearance in the adjacent chambers of the undersigned, the issue has advanced to a level where it can now be addressed. In the wake of all the evidence and authority before the court, it appears that plaintiff lacks the requisite standing for advancing a bad faith claim against defendant carrier. Moreover, even if the court assumes plaintiff possesses standing to sue, defendant's refusal to pay for plaintiff's services carries no bad faith connotations. Set out below is the court's opinion.

II. PROCEDURAL AND FACTUAL BACKGROUND

James McCullough, age twenty-seven, injured³ his back on the job as an upholstery worker for Bench Craft, Incorporated, a division of Universal Furniture Industries, Incorporated, located in New Albany, Mississippi. At the time of McCullough's accident, August 11, 1987, Benchcraft held workers' compensation insurance coverage with defendant Liberty Mutual. McCullough was initially seen by Dr. Russell, who referred him to Dr. Eckman, an orthopedic specialist with a practice in Tupelo, Mississippi. (Plaintiff's Telephone Deposition of David Hart, March 16, 1992, pg. 24.) Ultimately, McCullough sought treatment from Dr. Engelberg, a neurosurgeon in Memphis who hospitalized⁴ him and surgically removed one of his discs.⁵ Following his surgery and postoperative treatment,⁶ McCullough was released by Dr. Engelberg on December 7, 1987 and allowed to "resume his work." (Engelberg's medical file on McCullough at 9 (of unnumbered pages) attached as "exh. E" to MSJ Resp.) In Engelberg's opinion, he had reached maximum medical improvement. (Hart Dep. at 26; MWCC Transcript of McCullough v. Benchcraft & Liberty Mutual, Wkrs' Comp. No.: 87-11671-D-3211, attached to "Pl.'s Resp. to Defs.' MSJ" as "exh. I."⁷)

On December 8, 1987, the very next day after his release from the care of Dr. Engelberg, McCullough made his "first visit to the Tupelo Pain Clinic," see Defendants' Deposition of John W. McFadden, M.D., March 12, 1992, pg. 83, attached as "exh. E" to Defs.' MSJ, on referral from Jim Waide (plaintiff's counsel in the instant matter). Id. at 86. When requested by Waide to authorize plaintiff's treatment of McCullough, defendant Liberty Mutual refused. (Hart Dep. at 26.) In a letter to Waide, dated December 22, 1987, defendant's claims department advised him, "We will not pay for" McCullough to visit plaintiff, "a family practitioner," ... after being "released by a neurosurgeon." ("Exh. 1" of Hart Dep., "exh. D" of MSJ.) The defendant insurer issued similar correspondence to plaintiff, advising him that it "would not pay for his medical treatment rendered to McCullough...." ("Exh. 2" of Hart Dep., "exh. D" of MSJ.)

On the basis of defendant's refusal to pay McCullough's medical bills from plaintiff, McCullough petitioned the MWCC to order payment.⁸ His case was heard before an ALJ, who ordered defendant to cover the cost of McCullough's treatment from plaintiff.⁹ This prompted defendants to appeal to the Commission, which affirmed the ALJ in an order issued on December 10, 1990. McCullough, 87-11671-D-3211 (Commission Order attached as "exh. H." to Defs.' MSJ.) Rather than appeal the Commission's ALJ affirmance to the Mississippi Supreme Court, defendants complied with the order and paid McCullough's bills from plaintiff on December 21, 1990.¹⁰

Despite receiving full payment for his services rendered to McCullough, plaintiff filed an action for compensatory¹¹ and punitive¹² damages against defendants in the Circuit Court of Union County, Mississippi on June 15, 1991.¹³ (Complaint at 1.) Shortly thereafter, the case was removed to this court, via 28 U.S.C. § 1441, at defendant insurer's behest and co-defendant employer's joinder.¹⁴ Pursuant to Fed. R.Civ.P. 56(c), defendants move this court for summary judgment; in support thereof, defendants offer plaintiff's lack of standing to bring an independent tort claim of bad faith. If, for hypothetical purposes, plaintiff's standing is assumed, defendants alternatively argue that the existence of a legitimate arguable basis for denying payment absolves them from plaintiff's bad faith lawsuit. Both of the arguments which defendants collectively assert are correct.¹⁵ Accordingly, summary judgment relief against plaintiff is appropriate.¹⁶ Arrival at this conclusion is the result of an extensive, detailed and thorough examination of the parties' pleadings, briefs and authorities cited therein, numerous pages of deposition testimony, affidavits, the court's own research and the record as a whole. With the utmost confidence, the court hereby grants summary judgment in defendants' favor. Set out below is the opinion of the court.

III. LEGAL DISCUSSION

A. Ancillary Claimant Standing to Sue for Payment

Albeit without an express statutory provision, see Miss.Code Ann. § 71-3-15, Mississippi law undoubtedly affords medical providers a means through the MWCC to recoup fees for treating work-related injuries of employees entitled to workers' compensation insurance benefits. Consistently, the Commission holds that physicians and the like¹⁷ have standing to assert ancillary actions for payment.¹⁸ Furthermore, an ancillary claimant's standing does not hinge on whether the employee-patient files a petition to controvert with the Commission. The only standing prerequisite is notice to the employer; once the injured employee notifies the employer of the work-related injury, an ancillary claimant has standing. See Redwine v. City of Coffeeville, MWCC No. 83-07194-C-4952 (June 13, 1985); Hill v. Butane Gas Co., MWCC No. 82-10525-C-4955 (June 17, 1985) (Ancillary Claimant William F. Johnson, chiropractor, entitled to file and prosecute action against patient's employer and employer's insurer for payment of charges for treating injured worker).

Apart from Commission rulings, it is evident from Mississippi case law that health-care providers may file claims for payment of services rendered to injured workers: "Whoever may succor the injured employee by providing hospital and medical care shall be paid...