Summers v. Zurich American Ins. Co.

• Decision Date: 26 May 2009
• Docket Number: No. 105,617.,105,617.
• Citation: 2009 OK 33,213 P.3d 565
• Parties: Nancy R. SUMMERS, Appellant, v. ZURICH AMERICAN INSURANCE COMPANY, Appellee.
• Court: Oklahoma Supreme Court

213 P.3d 565

2009 OK 33

Nancy R. SUMMERS, Appellant, v. ZURICH AMERICAN INSURANCE COMPANY, Appellee.

No. 105,617.

Supreme Court of Oklahoma.

May 26, 2009.

Rehearing Denied June 22, 2009.

CERTIORARI TO THE COURT OF CIVIL APPEALS, Division 3

¶ 0 Injured worker brought an action in the district court alleging workers' compensation insurer's bad faith in refusing to comply with an award of benefits from the Workers' Compensation Court. The trial court, Honorable Bryan C. Dixon, granted the insurer's motion for summary judgment and the Court of Civil Appeals affirmed.

CERTIORARI PREVIOUSLY GRANTED; OPINION OF COURT OF CIVIL APPEALS VACATED; TRIAL COURT REVERSED.

Jim Loftis, Greg Bernard, Loftis & Barnard, Norman, OK, for Appellant.

Bryan N.B. King, Brooks A. Richardson, Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, OK, for Appellee.

COLBERT, J.

¶ 1 Certiorari review of this matter has been granted to describe the proper application of this Court's decision in Sizemore v. Continental Cas. Co., 2006 OK 36, 142 P.3d 47, to monetary and non-monetary workers' compensation benefits. This Court today delineates the parameters of Sizemore's requirement that an award of workers' compensation benefits be certified as unpaid before a claimant may proceed in the district court on a claim against a workers' compensation insurer for its failure to exercise its duty of good faith and fair dealing. Because the certification requirement was met in this matter, the claimant may proceed in the district court in her action for the insurer's alleged bad faith in refusing to authorize medical treatment which had been ordered by the Workers' Compensation Court.

FACTS AND PROCEDURAL HISTORY

¶ 2 Claimant, Nancy R. Summers, was employed by Walgreens Drug Store in Ardmore, Oklahoma and was an insured under a workers' compensation policy issued by Insurer, Zurich American Insurance Company. She sustained a compensable work-related injury to her back, head, neck, and jaw on March 31, 2004.

¶ 3 Several orders from the Workers' Compensation Court directed that medical and wage benefits be provided to Claimant. By an order of May 6, 2005, the Workers' Compensation Court determined Claimant to be temporarily and totally disabled as a result of "an accidental personal injury to the BACK (THORACIC AND LUMBAR), HEAD, NECK, and JAW arising out of and in the course of [her] employment." The issue of permanent disability was reserved for future hearing. The order directed that Claimant be provided with "reasonable and necessary medical treatment by Dr. Douglas Kaplan and Dr. John Munneke including any necessary referral to Dr. David Johnsen." No appeal was sought and the order became final as to the responsibility to provide medical treatment.

¶ 4 On January 27, 2006, the Workers' Compensation Court ordered that temporary total disability (TTD) payments continue and that Claimant be evaluated for "TMJ" in her jaw. An Order Authorizing Medical Treatment was entered on May 3, 2006, which included treatment to Claimant's teeth by Dr. Edmonds. Another Order Authorizing Medical Treatment was entered on September 25, 2006, in which "respondent is ordered to provide claimant with an implant crown to TOOTH # 30 as previously recommended by Dr. Brooks Edmonds with reasonable and necessary follow-up care by Dr. Edmonds ... [and] to provide an implant of TOOTH # 30 by oral surgeon, Dr. Ron Graves, as recommended by Dr. Edmonds."

¶ 5 On October 16, 2007, the Workers' Compensation Court again entered an Order Authorizing Medical Treatment which recited the prior authorizations in 2004, 2005, and 2006. The Workers' Compensation Court ordered compliance with those authorizations and the continuation of those treatments. It required "reasonable measures" to facilitate Claimant's treatment within thirty days.¹ No appeal was taken from this final order or any order of the Workers' Compensation Court regarding this claim.

¶ 6 Thirty days after the filing of the order Claimant filed this action in district court asserting that Insurer's "refusal to comply with the Court's order and provide benefits in a timely manner constitutes a breach of contract resulting in a willful and intentional violation of its duty of good faith and fair dealing." Insurer moved for summary judgment, urging that this Court's decision in Sizemore required "a claimant to seek and obtain relief under 85 O.S.2001 § 42(A) as a necessary precondition to a claim for alleged `bad faith'."² Claimant responded noting the "factual dispute as to whether [Insurer] has paid what it was ordered to pay" and asserting that there is no requirement of a certification prior to the filing of a bad faith claim. The district court granted Insurer's Motion for Summary Judgment and a divided panel of the Court of Civil Appeals affirmed.

¶ 7 This matter demonstrates confusion as to the procedure to follow in certifying an award of compensation pursuant to section 42(A). That confusion was compounded in this matter by the fact that the bad faith claim is premised on allegations of Insurer's refusal to authorize court-ordered medical treatment, not on a refusal to pay monetary benefits. This Court granted certiorari review to identify the procedure for complying with Sizemore's certification requirement and to address Sizemore's application to non-monetary awards of workers' compensation benefits.

ANALYSIS

¶ 8 As this Court explained in Sizemore, "Section 42(A) addresses late payment of workers' compensation benefits.... [It provides] a mechanism for enforcement of an unpaid award in district court. An insurer's bad faith in outright refusing to pay an award is beyond the purview of that incentive." Id. ¶ 25, 142 P.3d at 53-54. The remedy for an insurer's bad faith is a common law action in district court and the "bad faith conduct by a workers' compensation insurer in refusing to pay an award of benefits to an injured worker is judged by the same standard as bad faith conduct by any other insurer." Id. citing Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 28, 121 P.3d 1080, 1094 ("the minimum level of culpability necessary for liability against an insurer to attach is more than simple negligence, but less than the reckless conduct necessary to sanction a punitive damage award against said insurer").

¶ 9 In the context of an alleged refusal to pay a final award of monetary benefits in Sizemore, this Court required that "[a] claimant seeking to enforce an award must first utilize the mechanism provided in section 42(A) of the [Workers' Compensation] Act and have the award certified for enforcement." 2006 OK 36, ¶ 26, 142 P.3d at 54. Although the federal question answered in Sizemore dealt with the payment of monetary benefits, the decision encompasses an insurer's bad faith refusal to provide any benefits which (1) have been ordered in a final order of the Workers' Compensation Court and (2) have been certified as having not been provided as ordered.

¶ 10 The procedure for having an award certified as unpaid³ pursuant to section 42(A) is provided by Rule 58 of the Rules of the Workers' Compensation Court. It provides:

An application for an order directing certification to district court of any workers' compensation award may be heard after notice to the respondent and insurance carrier has been given at least ten (10) days before the scheduled trial thereon. At such trial the respondent and insurance carrier shall be afforded an opportunity to show good cause why the application should not be granted.

Okla. Stat. tit 85, ch. 4, Rule 58 (Supp.2008). Under this post-judgment procedure, the insurer is given ten days notice of its opportunity to demonstrate good cause why the application should not be granted to certify that a final workers' compensation award (1) remains unpaid or (2) benefits have not been provided as ordered.

¶ 11 If the insurer fails to demonstrate good cause to the Workers' Compensation Court, a certification order will issue identifying the benefits which have not been provided as ordered. The certification order will make specific findings as to the basis for the court's determination that the insurer has not demonstrated good cause why the award should not be certified. See Dunkin v. Instaff Personnel, 2007 OK 51, 164 P.3d 1057. If the insurer's noncompliance with the award is based on its failure to provide monetary benefits, the amount of benefits owed will be reduced to a sum certain and any applicable penalty and interest provided by section 42(A) will be assessed. If the unsatisfied award involves non-monetary benefits, such as insurer's authorization of court-ordered medical treatment, the certification order will identify the unprovided court-ordered benefits.

¶ 12 At this point, a claimant with a certification order from the Workers' Compensation Court that complies with section 42(A) and Rule 58 which determines that an award of monetary benefits remains unpaid without good cause has two options. The claimant may (1) file a certified copy of the certification order, with the award attached, in the district court as a judgment and proceed to execution pursuant to section 42(A) or (2) the claimant may file a claim in tort for the insurer's bad faith. Sizemore, 2006 OK 36, ¶ 26, 142 P.3d at 54. In the latter option, the amount of unpaid benefits listed in the certification order becomes an element of the claimant's damages in the bad faith claim.

¶ 13 A claimant who has obtained an order certifying that non-monetary benefits have not been provided as ordered does not have the option of enforcing the award as a judgment in the district court. See Okla. Stat. tit. 85, § 42(A). That claimant's remedy is to proceed with a tort claim for bad faith in district court.

¶ 14 The purpose of Sizemore's certification requirement is twofold. First, it is the legislatively provided incentive for prompt payment of claims for monetary benefits within workers'...