McKim v. Meritor Automotive, Inc., 4:00-CV-90385.
| Decision Date | 07 August 2001 |
| Docket Number | No. 4:00-CV-90385.,4:00-CV-90385. |
| Citation | 158 F.Supp.2d 944 |
| Parties | James McKIM, Plaintiff, v. MERITOR AUTOMOTIVE INC., Defendant. |
| Court | U.S. District Court — Southern District of Iowa |
Christopher D. Spaulding, Donald G. Beattie, Des Moines, IA, for plaintiff.
Randall H. Stefani, Steven M. Nadel, Des Moines, IA, for defendant.
ORDER ON MOTIONS FOR SUMMARY JUDGMENT
On July 25, 2000, Plaintiff James McKim ("Plaintiff") filed a Complaint before this Court alleging that Defendant Meritor Automotive Inc. ("Meritor"), in bad faith, denied or otherwise failed to pay workers' compensation benefits that were due him. Specifically, McKim alleges that Meritor, in bad faith: (1) wrongfully denied permanent partial disability benefits payable to the Plaintiff; (2) failed to pay the Plaintiff permanent partial disability benefits without a valid basis for denial; (3) attempted to obtain medical opinions supporting their denial after their authorized treating physician had already given his opinion on permanency; the entire time failing to pay the weekly permanent partial disability benefits as they accrued in violation of Iowa law; and (4) failed to pay interest on accrued benefits in violation of Iowa law. See Compl. at 2.
On March 23, 2001, Defendant Meritor filed a motion for Summary Judgment as to all four counts of bad faith in the Complaint. Plaintiff McKim moved for partial summary judgment on the issue of failure to pay interest on June 4, 2001. Briefs and resistances were duly filed and a hearing was held on the matter on July 25, 2001. At the hearing, Plaintiff withdrew his motion for partial summary judgment. The Court will, therefore, only consider Defendant's motion for summary judgment. The matter is fully submitted.
This present action is founded on diversity of citizenship, 28 U.S.C. § 1332. Plaintiff McKim is a citizen of the State of Iowa. Defendant Meritor is a corporation incorporated under the laws of the State of Nevada and has its principal place of business in the State of Michigan. Meritor is self-insured for purposes of workers' compensation claims. There is no dispute between the parties that Iowa law is controlling in this matter.
On January 27, 1999, Plaintiff McKim suffered a crush injury and laceration to his hand when a piece of metal fell on it during the course of his employment with Meritor. See Compl. at 2; Def.'s Br. in Supp. of Summ. J. at 1; Pl.'s App., Tab 1 at 1. Plaintiff was taken to the Fairfield, Iowa clinic where his hand was x-rayed and the laceration was sutured. See Pl.'s App., Tab 1 at 1. On February 2, 1999, Plaintiff received follow-up care for swelling and impaired movement of his hand and finger from Thomas Wallace, M.D., a physician approved by Meritor. See Pl.'s Statement of Undisputed Material Facts at 1; Pl.'s App., Tab 1 at 1. In March of 1999, Dr. Wallace issued a letter to Defendant Meritor in which Dr. Wallace stated the following:
Dr. Brian Adams [a hand surgery specialist who consulted on the case] feels that Mr. McKim should have near complete recovery, with perhaps a minimal limitation such as a[sic] extensor lag in his finger. This is all secondary to his crush injury with a laceration involving his left hand at work.... In discussing with Dr. Adams, we feel that he should have complete recovery within 4 to 6 months of the time of surgery, and should have [sic] should be back to his normal position in a much shorter time than that, perhaps within another 3 to 5 weeks. This, however, is dependent upon Mr. McKim carrying through his rehabilitation and ongoing occupational therapy.
App. to Def.'s Mot. for Summ. J.
The letter from Dr. Wallace was received on March 30, 1999 by Kenneth Kinsey, Meritor's in-state designated representative in Iowa. Mr. Kinsey admitted in his deposition that, based on Dr. Wallace's letter, he knew Plaintiff "was going to sustain a permanent injury in some amount or some percent that was going to be compensable in some percent." Pl.'s App., Tab 9 at 31-32. It appears from the record that Plaintiff saw Dr. Wallace throughout February and March, 1999, and saw Dr. Adams on March 10 and April 21, 1999. See id., Tab 1 at 3.
On June 17, 1999, Plaintiff was seen by Patrick Hartley, M.D., another physician in Dr. Wallace's office. In his notes, Dr. Hartley expressed concern about Plaintiff's compliance with his rehabilitation program, stating, "I think he is likely to continue to have significant functional limitation which at least in part is due to his suboptimal compliance with his recommended hand therapy program." Pl.'s App., Tab 2 at 2. Dr. Hartley recommended a follow-up visit in one month and indicated that if no change was apparent at that time, he would consider an impairment rating. On July 15, 1999, Plaintiff again saw Dr. Hartley who opined in his notes that Plaintiff had reached maximal medical improvement. Id., Tab 2 at 4. On July 29, 1999, Dr. Hartley made a functional impairment rating of Plaintiff's hand, finding a nineteen percent permanent impairment. Id. at 5. Dr. Hartley's impairment rating did not, however, indicate whether, or to what extent, Plaintiff's noncompliance with therapy contributed to the impairment rating of 19%. The July 15 progress notes were received by Meritor on August 11, 1999 and the July 29 impairment rating was received by Meritor on August 16, 1999. It is undisputed that Meritor did not make any additional inquiries about Plaintiff's condition between the March, 1999 letter from Dr. Wallace and its receipt of the July 29, 1999 impairment rating by Dr. Hartley. See Def.'s Resp. to Pl.'s Statement of Undisputed Material Fact at 2.
Upon receiving Dr. Hartley's nineteen percent impairment rating on August 16, Meritor sought legal counsel and began an investigation of the issue of permanent impairment. See Def.'s App. at 30-31. On September 15, 1999, Steven M. Nadel, counsel for Meritor, spoke with Dr. Wallace who opined that Plaintiff would have had a 2-5% impairment rating if he had been compliant with therapy recommendations. See Def.'s App. at 16. Based on Dr. Wallace's opinion, Mr. Nadel informed Plaintiff that Meritor would issue a check for permanency benefits in the amount of three and one half percent. Id. Dr. Wallace formally expressed his opinion regarding an impairment rating in a letter to Mr. Nadel dated February 22, 2000, though the range given in the letter was 3-5% impairment rather than 2-5% impairment. See Def.'s App. at 18. On September 17, 1999, Meritor issued a check to Plaintiff in the amount of $2648.97 Def.'s App. at 20. On February 22, 2000, Meritor told Plaintiff that an additional one-half percent permanent partial disability benefits would be paid, though Meritor "inadvertently did not make the payment" until September 22, 2000. Def.'s Resp. to Pl.'s Statement of Undisputed Material Facts at 6. No portion of the original three and one-half percent payment or of the one-half percent additional payment was designated as interest. Id. at 6-7.
There is no dispute in the record that Meritor claims its payment of three and one-half percent permanent partial disability to the hand is based on noncompliance with therapy. See Def.'s Resp. to Pl.'s Statement of Undisputed Material Facts at 3. There is also no dispute that Denise Gallagher, Plaintiff's treating occupation therapist, and Dr. Adams, the consulting surgeon, both rated Plaintiff's compliance with therapy to be "reasonable." Pl.'s App., Tab 3 at 28, Tab 4 at 29-30.1 Denise Gallagher also opined that Plaintiff's limitations were due to the original injury and not to any lack of compliance. Id., Tab 4 at 29. Additionally, Plaintiff alleges that Dr. Hartley stated on January 20, 2000 that, based on a reasonable degree of medical certainty, he could not say whether Mr. McKim's functional impairment would have been different if he had been fully compliant. See Pl.'s App., Tab 2 at 18. Dr. Hartley reiterated this position in a letter to Mr. Nadel on February 17, 2000. Id. at 20. Finally, there is no dispute that Dr. Wallace did not personally examine or evaluate Plaintiff to measure his functional impairment. See Pl.'s App., Tab 1 at 1112.
Plaintiff claims that Meritor owed permanent partial disability benefits to McKim in March, 1999, when Kenneth Kinsey was admittedly aware that some permanent partial disability benefits would be owed. Thus, Plaintiff charges that Defendant was unreasonable and acted in bad faith by failing to investigate the issue until after it received Dr. Hartley's nineteen percent impairment rating on July 29, 1999. Plaintiff additionally contends that Meritor was unreasonable in allowing a seven month delay in paying the additional one-half percent permanent partial disability benefits it promised and in allowing one full year to elapse between the time Kenneth Kinsey first knew benefits would be payable to the time Meritor received a written report on impairment from Dr. Wallace. Finally, Plaintiff claims that Meritor's failure to pay interest from the date of injury on January 27, 1999 constitutes bad faith and a "willful and wanton disregard" for Plaintiff's rights.
In its Brief in Support of Summary Judgment, Meritor counters that Plaintiff's claims must be dismissed as a matter of law because Meritor had a reasonable basis to investigate the extent, if any, of compensable permanent impairment. Meritor further claims that it had a reasonable basis for paying the permanent partial disability benefits that it did and to deny any further benefit payments, thus entitling Meritor to judgment as a...
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