Southern Farm Bureau Cas. Ins. Co. v. Holland, 54413

Decision Date12 December 1984
Docket NumberNo. 54413,54413
Citation469 So.2d 55
PartiesSOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY v. Hollis HOLLAND, Administrator of Estate of Clara J. Holland, Deceased.
CourtMississippi Supreme Court

Jerry O. Terry, Greaves, Terry & Sheely, Gulfport, for appellant.

Robert P. Shepard, Murphy & Shepard, Lucedale, for appellee.

Before WALKER, P.J., and PRATHER, SULLIVAN and SUGG, JJ.

PRATHER, Justice, for the Court:

The subject of this appeal is whether the exclusive remedy provision of the Workers' Compensation Act bars an action by an injured worker against the carrier, predicated upon the carrier's intentional refusal to pay workers' compensation medical and weekly compensation benefits notwithstanding an admitted residual permanent disability.

Plaintiff Clara J. Holland 1 (Holland) filed her complaint in the Circuit Court of Greene County seeking damages from the defendant, Southern Farm Bureau Casualty Insurance Company (Farm Bureau), for tortious breach of contract, breach of fiduciary duties and intentional infliction of mental distress based upon the defendant's refusal to pay workers' compensation benefits. Farm Bureau is the workers' compensation insurance carrier for Mrs. Holland's employer; however, this suit does not join the employer as it alleges an independent tort committed by the carrier outside of the scope of plaintiff's employment.

Defendant moved to dismiss the complaint on the ground that, under the exclusiveness of remedies provision of the Mississippi Workers' Compensation Act, jurisdiction over the matter was vested exclusively in the Mississippi Workers' Compensation Commission. The Circuit Court, Darwin M. Maples presiding, overruled the motion. The court then granted defendant's motion for an interlocutory appeal to this Court on the dispositive issue of the application of the exclusivity of remedies provision of the Mississippi Workers' Compensation Act to a workers' compensation insurance carrier.

I.

On October 6, 1977, Ms. Holland, a meat wrapper at the K & B Slaughter House, suffered a back injury while lifting a 50 pound tray of meat. As a result of the injury, Ms. Holland underwent back surgery in December of 1977.

The carrier paid Ms. Holland's medical bills and temporary total benefits until July 26, 1979, when it terminated her benefits on medical advice. This interlocutory appeal on motion to dismiss does not develop any facts relating to the termination procedure by the carrier. Following an order of the Mississippi Workers' Compensation Commission of September 8, 1981, the carrier resumed payment of temporary total disability benefits to Ms. Holland. This suit was then filed.

Ms. Holland alleges that the intentional refusal of the insurance carrier to pay workers' compensation benefits was calculated to force her into an inadequate settlement of her claim and constituted a tortious breach of contract, a breach of fiduciary duties and the intentional infliction of mental distress, for which she seeks compensatory ($1,000,000) and punitive ($5,000,000) damages.

II.

The sole issue presented by this appeal is whether the exclusive remedy clause of the Mississippi Workers' Compensation Act bars a claimant, who has sustained an injury covered by the Act, from maintaining an action against the insurance carrier for the commission of intentional torts in the processing of a worker's compensation claim.

The exclusive remedy provision of the Mississippi Workers' Compensation Act provides that "the liability of an employer to pay compensation shall be exclusive and in place of all other liability of such employer to the employee ... on account of such injury or death, ...." Miss.Code Ann. Sec. 71-3-9 (1972).

Subsequent to the initiation of the present appeal, this Court, in Taylor v. U.S. Fidelity & Guaranty Co., 420 So.2d 564 (Miss.1982), held that section 71-3-9 barred a common law tort action by an employee against the compensation carrier based upon the negligent failure to pay workers' compensation benefits by the carrier. Farm Bureau contends that Taylor disposes of the present appeal. Appellee Holland, on the other hand, argues that the immunity granted to the carrier in Taylor applies only to a tort action based on negligence and does not bar an action against the carrier based upon an intentional tort.

The declaration in Taylor charged that the carrier:

"negligently, carelessly, wrecklessly [sic], willfully and hazardiously [sic], failed, refused and neglected to process legitimate medical claims...." Other allegations are to the effect that the defendant in like manner declined responsibility for the hospitalization and other expenses related to Taylor's injury and needful treatment. For his resulting "fright, grief, shame, humiliation ... worry ... physical pain ... emotional stress", the plaintiff demanded $5,000,000 in damages.

420 So.2d at 564.

Appellant, while conceding that the declaration in Taylor did not explicitly allege an intentional tort, argues that both the basis of the claim (malicious refusal to pay benefits) and the quality of damage alleged (emotional stress, mental stress, worry), are virtually identical to the claim of Ms. Holland; therefore, it is argued, Holland's action is barred under the holding of Taylor.

A review of the Taylor record discloses without question that the pleading sounds in negligence. No intentional tort is alleged, as is present in the allegation of this case. The rule in Taylor is accordingly limited to cases where the injured worker attempts to sue the carrier for negligent refusal to pay. In the case sub judice the pleading alleges the withholding of compensation for no legitimate or arguable reason and in an effort to force a settlement for an inadequate amount, harassment regarding an auto insurance policy issued by the same company, refusal to pay medical bills, using economic pressure to force a settlement, all such acts with "grossness and recklessness" as to evince utter indifference to the plaintiff. The comparison of the pleading factually distinguishes the cases. This Court, therefore, concludes that Taylor does not control this case and has no application to cases alleging independent, intentional torts between a worker and the employer's compensation carrier.

The Taylor court reached its conclusion by analogy to other third party situations which, significantly, all involved actions based on negligence. McCluskey v. Thompson, 363 So.2d 256 (Miss.1978) (action by employee against co-employee based upon negligence barred by exclusivity provision); Trotter v. Litton Systems Inc., 370 So.2d 244 (Miss.1979) (action by employee against doctor selected by employer based upon negligence barred by exclusivity provision); Brown v. Estess, 374 So.2d 241 (Miss.1979) (action by employee against officer of corporation acting within scope of corporate authority based upon negligence barred by exclusivity provision); Noe v. Travelers Insurance Co., 172 Cal.App.2d 731, 342 P.2d 976 (1959) (action by employee against Carrier based upon negligent delay in providing medical care barred by exclusivity provision).

The argument for a distinction between actions based upon negligence and those based upon intentional torts is supported by this Court's prior decisions. In McCluskey, supra, this Court recognized expressly such a distinction:

Our Act and the common law right to sue a fellow employee for negligence, as opposed to an intentional tort, cannot coexist, so the common law right to sue a fellow employee where the injured employee is covered by the Act must give way.

363 So.2d at 264.

An analagous situation was discussed by this Court in Miller v. McRae's Inc., 444 So.2d 368 (Miss.1984) when the Court distinguished between an accidental injury "arising out of and in the course of employment" and an "injury sustained as the result of a false imprisonment". This Court held that injuries from false imprisonment were not the result of an "accidental injury", and the Workers' Compensation Act is not the exclusive remedy available to the injured party. Miller, supra, at page 370-371. The Miller decision stated that in resolving the exclusivity of remedy question in workers' compensation cases, the answer is determined by asking (1) whether the injury arose out of and in the course of employment, and (2) is the injury compensable under the Act. "[I]f the injury is not compensable under the Act, the Act does not provide the exclusive remedy." Miller, supra.

The majority of courts that have addressed the question have held that exclusivity provisions do not bar an action by an injured worker against the compensation carrier where the basis of the action is an intentional tort. Hollman v. Liberty Mutual Ins. Co., 712 F.2d 1259 (8th Cir.1983) (bad faith refusal to pay claim); Hayes v. Aetna Fire Underwriters, 609 P.2d 257 (Mont.1980) (refusal to pay benefits and medical bills); Coleman v. American Universal Ins. Co., 86 Wis.2d 615, 273 N.W.2d 220 (1979) (bad faith refusal to pay claim, intentional infliction of emotional distress); Gibson v. National Ben Franklin Ins. Co., 387 A.2d 220 (Me.1978) (intentional infliction of mental distress); Stafford v. Westchester Fire Ins. Co. of New York, Inc., 526 P.2d 37 (Alaska 1974) (intentional infliction of mental distress); Unruh v. Truck Ins. Exchange, 7 Cal.3d 616, 102 Cal.Rptr. 815, 498 P.2d 1063 (1972) (assault and battery, intentional infliction of emotional distress).

The employee's right to sue the carrier for intentional torts has been upheld on several grounds. First, in committing intentional torts, the insurance carrier ceases to be the "alter ego" of the employer. Rather, the carrier is involved in an independent relationship with the employee when committing such tortious acts. Gibson, 387 A.2d at 222-223; Martin, 497 F.2d at 330-331; Stafford, 526 P.2d at 43; Unruh, 498 P.2d at 1073; Coleman, 273 N.W.2d at 223.

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