Seguro-Suarez by and through Connette v. Key Risk Ins. Co.

• Decision Date: 04 September 2018
• Docket Number: No. COA17-697,COA17-697
• Citation: 261 N.C.App. 200,819 S.E.2d 741
• Parties: Mario SEGURO-SUAREZ, BY AND THROUGH his Guardian Ad Litem, Edward G. CONNETTE, Plaintiff, v. KEY RISK INSURANCE COMPANY, Joseph J. Abriola, Sharon Sosebee, Suzanne Mcauliffe, Cheryl Gless, Robert E. Hill and Carolina Investigative Services, Inc., Defendants.
• Court: North Carolina Court of Appeals

261 N.C.App. 200

819 S.E.2d 741

Mario SEGURO-SUAREZ, BY AND THROUGH his Guardian Ad Litem, Edward G. CONNETTE, Plaintiff,

v.KEY RISK INSURANCE COMPANY, Joseph J. Abriola, Sharon Sosebee, Suzanne Mcauliffe, Cheryl Gless, Robert E. Hill and Carolina Investigative Services, Inc., Defendants.

No. COA17-697

Court of Appeals of North Carolina.

Filed: September 4, 2018

Edwards Kirby L.L.P., Raleigh, by David F. Kirby and William B. Bystrynski, for Plaintiff-Appellee.

Hedrick Gardner Kincheloe & Garofalo LLP, by Mel J. Garofalo, Charlotte, C. Rob Wilson, Linda Stephens, Raleigh, and M. Duane Jones, Charlotte, for Defendant-Appellants Key Risk Insurance Company, Joseph J. Abriola, Sharon Sosebee, Suzanne McAuliffe, and Cheryl Gless.

INMAN, Judge.

When a North Carolina worker is hurt on the job, his injury is within the exclusive scope of the Workers’ Compensation Act and he can obtain relief only by pursuing a claim before the North Carolina Industrial Commission (the "Commission"). But when, after the Commission awards the injured worker benefits, an employer's insurance company knowingly provides false information to police to frame him for insurance fraud, resulting in his arrest, incarceration, and indictment on felony charges, the worker's claims for malicious prosecution, abuse of process, and unfair and deceptive trade practices ("UDTP") exceed the scope of the Workers’ Compensation Act and are properly before the General Court of Justice.

Plaintiff Mario Seguro-Suarez ("Plaintiff") brought suit against Defendants Key Risk Insurance Company ("Key Risk"), Joseph J. Abriola, Sharon Sosebee, Suzanne McAuliffe, and Cheryl Gless (collectively the "Individual Defendants" together with Key Risk as "Defendants")¹ for malicious prosecution, abuse of process, UDTP, bad faith, willful and wanton conduct, conspiracy, and punitive damages. Defendants appeal the denial of their motions to dismiss all of Plaintiff's claims pursuant to Rules 12(b)(1) and 12(b)(6) of the North Carolina Rules of Civil Procedure. After careful review of the record and applicable law, we hold that the trial court did not err in denying the motions to dismiss pursuant to Rule 12(b)(1), but that it did err in failing to dismiss Plaintiff's bad faith and civil conspiracy claims under Rule 12(b)(6). We therefore affirm the trial court's order in part, reverse in part, and remand for further proceedings.

I. FACTUAL AND PROCEDURAL HISTORY

The record below, consisting primarily of the allegations in Plaintiff's complaint, indicates the following:

In 2003, Plaintiff was working for his employer, Southern Fiber, when he fell from a height of approximately 18 feet onto concrete, striking his head. As a result of the fall, Plaintiff suffered several broken bones and severe traumatic brain injury. He was rendered comatose, required intubation and ventilation support to breathe, and underwent emergency neurosurgery at Carolinas Medical Center in Charlotte, North Carolina, to relieve pressure on his brain. He eventually emerged from his coma but the brain injury changed his personality, required physical, speech, and occupational therapy, and Plaintiff currently suffers from significant behavioral and memory deficits, including deficits in executive functioning, problem solving, planning, and balance. Plaintiff's injuries have rendered him dependent on others for: (1) dressing ; (2) feeding; (3) toileting; (4) assistance in daily activities; (5) grooming; (6) bathing; and (7) home management. Southern Fiber and Key Risk, as Southern Fiber's insurance carrier, admitted that Plaintiff's injuries were compensable.

While Plaintiff was in inpatient care, Key Risk was informed multiple times that Plaintiff would require 24-hour care upon discharge. Rather than provide for care at an assisted living center or by an at-home professional caregiver, Key Risk and its employees arranged for Plaintiff's 18-year-old daughter, who had immigrated to the United States only two months prior, to assume all home care for Plaintiff. After approximately 11 weeks, Plaintiff's daughter moved him into the home of a family friend, who assumed caregiving duties. Key Risk did not pay Plaintiff's daughter or friend for assuming the 24-hour care of Plaintiff.

Plaintiff saw an authorized treating physician, Dr. Flora Hammond, throughout 2003, 2004, and 2005. Dr. Hammond performed multiple tests on Plaintiff to discern the nature and extent of his condition, with each test showing symptoms consistent with traumatic brain injury. Dr. Hammond also requested an occupational home therapy evaluation, as she recognized that Plaintiff continued to suffer injuries as a result of several falls stemming from his balance issues. Key Risk denied the request and refused to provide the evaluation. Dr. Hammond later requested an evaluation by a neurologist, which Key Risk again declined to provide; instead, Plaintiff was evaluated by Dr. Thomas Gaultieri, a neuropsychologist. Key Risk refused to authorize continued treatment by Dr. Hammond after Plaintiff was referred to Dr. Gaultieri.

Dr. Gaultieri treated Plaintiff from 2005 to mid-2007. Though he first believed Plaintiff was legitimately suffering from the conditions described above, Key Risk eventually provided Dr. Gaultieri with video footage that convinced him otherwise. The video, cut from 9 hours of surveillance footage taken by Key Risk over a six-month period and edited down to 45 minutes, led Dr. Gaultieri to opine that Plaintiff was willfully exaggerating his symptoms and that he needed no further treatment.

The above conduct by Key Risk in administering Plaintiff's care for an admittedly compensable injury led to considerable litigation. In 2008, a deputy commissioner of the Commission ordered Key Risk to authorize further treatment by Dr. Hammond, and Plaintiff returned to her care. In 2010, after Key Risk argued that Plaintiff's benefits should be cut off for fraud and misrepresentation, a deputy commissioner entered an opinion and award requiring Key Risk to pay continued compensation for Plaintiff's care. On 29 April 2011, the Full Commission entered its own opinion and award in Plaintiff's favor (the "Opinion and Award"). Not only did the Full Commission award Plaintiff continued benefits, but it concluded as a matter of law that "[Key Risk and Southern Fiber] brought and defended this claim without reasonable grounds. ... [Key Risk's and Southern Fiber's] position is not based upon reason." As a result, the Full Commission awarded Plaintiff attorney's fees, continued Key Risk's payment obligations in the amount of $345.35 per week "until further Order of the [Commission,]" and ordered that Plaintiff's daughter and family friend be reimbursed for their caregiving services, finding that Key Risk's refusal to pay prior to the entry of the Opinion and Award "was unreasonable and ... constituted stubborn, unfounded litigiousness." Key Risk filed an untimely appeal of the Full Commission's decision to this Court, which was dismissed by order. Order, Seguro-Suarez v. Southern Fiber , COA12-238-1 (N.C. Ct. App. May 15, 2012). Key Risk next petitioned the North Carolina Supreme Court for writ of certiorari, but its petition was denied. Seguro-Suarez v. Southern Fiber , 366 N.C. 408, 735 S.E.2d 324 (2012).

Following its losses before the Commission, and after exhausting its appeal efforts, Key Risk, by and through its employees Individual Defendants, hired Carolina Investigative Services and Robert E. Hill (the "Investigator") to surreptitiously surveil and record Plaintiff for several weeks. Key Risk also arranged for an independent medical exam of Plaintiff on 10 June 2013 in order to determine whether his symptoms were legitimate and if Plaintiff actually required ongoing care.

The forensic psychiatrist who examined Plaintiff observed Plaintiff's "childlike" demeanor and concluded he was suffering from dementia, traumatic brain injury, chronic dizziness, and chronic headaches—all stemming from his workplace injury. Key Risk's chosen examiner further opined that Plaintiff's "symptoms appeared to be valid. There was no apparent malingering, in [her] opinion."

The mounting medical evidence and full-throated rebuke from the Commission left Key Risk undeterred in its efforts to undermine Plaintiff's medical diagnosis and continued care. After the independent medical exam, Key Risk directed its Investigator to convince the Lincolnton Police Department (the "LPD") to bring criminal charges against Plaintiff under the theory that he was obtaining his workers’ compensation benefits by false pretenses, i.e. , by faking his diagnosed symptoms from his traumatic brain injury. The Investigator provided the LPD with an extensively edited videotape similar to that shown to Dr. Gaultieri in the proceeding before the Commission; as a result, the LPD arrested and jailed Plaintiff on 24 October 2013. On 10 March 2014, Plaintiff was indicted on 25 counts of obtaining property by false pretenses and one count of insurance fraud, all for accepting the checks ordered paid to him by the Commission.

After his first appearance in criminal court, Plaintiff was ordered to undergo a psychological examination at Central Regional Hospital in Butner, North Carolina to determine his competency to stand trial. The examining psychologist noted that Plaintiff "exhibited cognitive deficit consistent with his documented history, including memory impairment [,]" and concluded that Plaintiff was mentally incapable of both proceeding to trial and effectively assisting counsel. The State ultimately dismissed all charges against Plaintiff after a hearing in which the trial court asked the State if it "really want[ed] to assist in the establishment of a malicious prosecution claim[,]" and expressed "some real concerns when a man is drawing a check pursuant to an order, in effect, pursuant to a court order, and one side doesn't like the court order and decides to take out criminal charges because...