McGehee v. State Ins. Fund, 83292

Decision Date18 July 1995
Docket NumberNo. 83292,83292
Citation1995 OK 85,904 P.2d 70
PartiesTony Ray McGEHEE, Appellant, v. STATE INSURANCE FUND, Appellee.
CourtOklahoma Supreme Court

Wayne Wells, Edmond, for appellant.

Thomas L. Spencer, Oklahoma City, for appellee.

KAUGER, Vice Chief Justice:

The only issue addressed on certiorari is whether the employee's bad faith denial of a workers' compensation claim against the State Insurance Fund (the Fund) was timely brought. We find that the employee's bad faith claim is untimely under either 12 O.S.1991 § 95 1 or the Governmental Tort Claims Act, 51 O.S.1991 § 151, et seq.

FACTS

This cause concerns the assertion by the appellant, Tony McGehee (McGehee/the employee), that the appellee, the State Insurance Fund (the Fund), in bad faith, denied his claim for benefits. 2 On November 8, 1988, McGehee injured his head and neck while working on an oil well. He sought workers' compensation benefits alleging that he was employed by Alliance Temporary Service (Alliance/the employer) and naming the Fund as Alliance's insurance carrier.

On August 24, 1989, the Fund answered McGehee's claim, denying that he was employed by Alliance, and denying coverage under Alliance's insurance policy. The Workers' Compensation Court found that McGehee was an employee of Alliance, and that the Fund was estopped from denying workers' compensation coverage. 3 The Fund appealed, and the Court of Appeals sustained the Workers' Compensation Court. 4 After the mandate was issued, the Fund paid McGehee his awarded benefits, attorney's fees, and interest.

On September 17, 1993, McGehee filed a petition in district court against the Fund, seeking actual and punitive damages. He alleged that since November 8, 1988, the Fund had, in bad faith, denied his workers' compensation claim. The Fund moved to dismiss, arguing that the employee's failure to comply with the Governmental Tort Claims Act, 51 O.S.1991 § 151 et seq. (the Act), and the expiration of the statutes of limitations which govern either the Act or tort actions in general barred McGehee's lawsuit.

The trial court granted the Fund's motion to dismiss. Although the employee conceded that he did not comply with the Act, he appealed arguing that the Act did not apply to bad faith claims brought against the Fund. The Court of Appeals affirmed, and we granted certiorari on October 25, 1994.

THE EMPLOYEE'S BAD FAITH CLAIM IS UNTIMELY UNDER EITHER 12 O.S.1991 § 95 OR THE GOVERNMENTAL TORT CLAIMS ACT.

The Fund asserts: 1) that an action for the bad faith denial of a claim for workers' compensation benefits accrues when the insurer initially denies the claim; 2) that the latest possible point in which it could be found to have denied the employee's claim is when it filed an answer to the employee's workers' compensation suit in August of 1989, denying that McGehee was employed by Alliance and denying insurance coverage; and 3) that McGehee's claim expired under either the Act or the two-year tort limitations period. 5 The employee counters that his bad faith tort claim was timely because his cause of action did not arise until he knew or should have known that the denial was improper or in bad faith. The employee contends that he could not have known that the Fund's denial was in bad faith until he won on appeal, and that because until the Fund's denial of his workers' compensation claim was upheld, a bad faith cause against the Fund could not have arisen. 6

The employee alleged that since November of 1988, the Fund acted in bad faith in denying his claim. In his brief opposing the Fund's motion to dismiss, the employee argued that his evidence would demonstrate that the Fund unreasonably denied his claim. McGehee asserted that, in the workers' compensation proceeding: 1) although the Fund admitted that McGehee sustained an on-the-job injury and that he was employed by Alliance and covered under the Workers' Compensation Act, it continued to deny McGehee's claim for workers' compensation benefits; 2) the Fund offered no evidence that McGehee was not employed by Alliance; and 3) the Fund denied that McGehee was employed by Alliance and covered by its insurance policy, yet the Fund had considered McGehee an employee of Alliance and covered by the same policy when it paid other compensation that McGehee had filed on several occasions prior to McGehee's injury in November of 1988.

The Workers' Compensation Court issued its order on September 26, 1989, four years before McGehee filed the present cause. The limitations period for a tort claim, if brought pursuant to the Act, is governed by 51 O.S.1991 § 156 B which requires notice of a tort claim to be filed within one year of loss. 7 Here, it is undisputed that McGehee did not bring his claim within the confines of the Act. The Act requires that a plaintiff give notice and commence an action within the statutory time limits. 8 A bad faith tort claim which is not brought under the Act is governed by 12 O.S.1991 § 95, the two-year tort limitation period. 9 We find that the employee's attempted bad faith claim is untimely under either 12 O.S.1991 § 95 or the Governmental Tort Claims Act, 51 O.S.1991 § 151, et seq.

CONCLUSION

Assuming that the employee's alleged bad faith claim arose at the latest possible date when he knew or should have known that the Fund was acting in bad faith when it denied his claim, it accrued sometime prior to the Workers' Compensation Court's issuance of its order finding that the Fund was estopped from denying McGehee's coverage under the Alliance policy. The Workers' Compensation Court issued its order on September 26, 1989, four years before McGehee filed the present cause. Because the employee's alleged bad faith tort claim was brought after either the Act's limitations period or the two-year tort limitation period expired, it was untimely.

CERTIORARI PREVIOUSLY GRANTED; COURT OF APPEALS OPINION VACATED; TRIAL COURT AFFIRMED.

ALMA WILSON, C.J., and HODGES, SIMMS, OPALA and WATT, JJ., concur.

LAVENDER and SUMMERS, JJ., concur in result.

HARGRAVE, J. dissents.

1 Title 12 O.S.1991 § 95, see note 9, infra, and accompanying discussion.

2...

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