Thornhill v. Walker-Hill Envtl.

• Court: Mississippi Court of Appeals
• Writing for the Court: WILSON, P.J.
• Decision Date: 19 October 2021
• Docket Number: 2020-CA-01181-COA
• Parties: JEREMY THORNHILL APPELLANT v. WALKER-HILL ENVIRONMENTAL AND ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS APPELLEES

JEREMY THORNHILL APPELLANT v. WALKER-HILL ENVIRONMENTAL AND ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS APPELLEES

No. 2020-CA-01181-COA

Court of Appeals of Mississippi

October 19, 2021

DATE OF JUDGMENT: 09/11/2020

MARION COUNTY CIRCUIT COURT HON. ANTHONY ALAN MOZINGO TRIAL JUDGE

ATTORNEYS FOR APPELLANT: RAYNETRA LASHELL GUSTAVIS ROGEN K CHHABRA DARRYL MOSES GIBBS

ATTORNEYS FOR APPELLEES: OLIVIA YEN TRUONG DORIS THERESA BOBADILLA NATHAN L. BURROW

BEFORE WILSON, P.J., McCARTY AND SMITH, JJ.

WILSON, P.J.

¶1. Jeremy Thornhill alleged that he injured his back while working for Walker-Hill Environmental. He sought workers' compensation benefits from Walker-Hill and its insurance carrier, Zurich American Insurance Company of Illinois (collectively, "the Employer/Carrier"), but the Employer/Carrier denied that Thornhill had sustained a compensable injury. The parties eventually entered into a compromise settlement, which the Mississippi Workers' Compensation Commission approved. After the Commission approved the settlement, Thornhill sued the Employer/Carrier in circuit court, alleging that they had denied his claim in bad faith. The Employer/Carrier filed a motion to dismiss, arguing that Thornhill had not exhausted his administrative remedies-and that the circuit court lacked jurisdiction-because the Commission never made a factual finding that he was entitled to workers' compensation benefits. The circuit court agreed and dismissed the case. Onappeal, Thornhill argues that the Commission's approval of the compromise settlement exhausted his administrative remedies and that his bad-faith lawsuit against the Employer/Carrier may go forward in the circuit court. For the reasons discussed below, we agree and reverse and remand the case for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL HISTORY

¶2. Thornhill worked at Walker-Hill as a supervisor driller. He alleges that he injured his back while attempting to move a heavy rig on July 5, 2017. He alleges that he reported his injury to his supervisor the following day, but Walker-Hill denies this allegation. On July 7, Walker-Hill asked Thornhill to take a drug test. Thornhill went to the testing facility and provided a sample, but the sample was reportedly "cold" (i.e., below the minimum acceptable temperature for testing). Thornhill says that he tried to produce a second sample but was unable to do so, and he left without providing a second sample. Walker-Hill says that Thornhill did not return to work for several days and was fired for refusing to submit to a drug screen. Thornhill began seeing a doctor for his back injury, and the doctor eventually recommended that Thornhill undergo back surgery.

¶3. In October 2017, Thornhill filed a petition to controvert with the Commission. In November 2017, the Employer/Carrier filed an answer in which they admitted both that ThornhilPs injury arose out his employment and that they had received proper notice of the injury. However, the Employer/Carrier denied that Thornhill was entitled to benefits, citing his refusal to complete the drug test. In April 2018, the Employer/Carrier filed an amended answer in which they denied that Thornhill had suffered any work-related injury and denied that they had received proper notice of the injury.^[1]

¶4. Following a hearing, an administrative judge ordered Thornhill to undergo an independent medical examination (IME) by Dr. Robert McGuire to "determine [Thornhill's] current condition and need for medical treatment." In his subsequent report, Dr. McGuire noted that Thornhill had been injured at work in 2015 but was able to return to work and function normally following conservative treatment. Dr. McGuire concluded that the surgery recommended by Thornhill's treating physician was "absolutely appropriate." Dr. McGuire concluded that Thornhill needed back surgery because of his injury in July 2017, which had "substantially aggravated [his] preexisting condition." Finally, Dr. McGuire concluded that Thornhill had not reached maximum medical improvement (MMI) and would not reach MMI until approximately six months post-surgery.

¶5. After receiving Dr. McGuire's IME report, the parties reached a settlement. In July 2019, Thornhill filed an application, which the Employer/Carried joined, for the Commission to approve their compromise settlement. The application stated that Thornhill contended that he was entitled to benefits, while the Employer/Carrier denied that Thornhill had sustained a compensable injury. However, the Employer/Carrier had agreed to pay Thornhill $ 145, 000 to settle the claim. The application stated that it was made pursuant to Mississippi Code Annotated section 71-3-29 (Rev. 2011) because the compensability of Thornhill's injury was "in issue and [it was] impossible to determine the exact extent of the disability suffered by [Thornhill], if any." The Commission found that the settlement was in Thornhill's best interest, approved the settlement, and dismissed the case with prejudice.

¶6. Pursuant to the settlement, Thornhill signed a general release that released the Employer/Carrier from all claims arising out of or connected with his alleged on-the-job injury. However, the general release included the following carve-out:

[Thornhill] reserves and does not release, however, the right to bring a claim for bad faith against any party and the parties agree administrative remedies in [Thornhill's] workers' compensation claim have been fully and finally exhausted.

The Employer/Carrier acknowledge that they drafted the release and included the above-quoted language at the request of Thornhill's attorney.

¶7. In January 2020, Thornhill sued the Employer/Carrier in circuit court, alleging bad-faith denial of his workers' compensation claim. The Employer/Carrier answered and later filed a motion to dismiss, arguing that Thornhill had not exhausted his administrative remedies. Specifically, the Employer/Carrier argued that the compromise settlement did not exhaust Thornhill's administrative remedies because the Commission never made a finding that Thornhill had a compensable claim or was entitled to benefits. They further argued that the circuit court lacked "jurisdiction" because the Commission had never made such a finding. The circuit court agreed and granted the motion to dismiss. The court reasoned that prior to filing suit for a bad-faith denial of workers' compensation benefits, a plaintiff must first obtain a ruling from the Commission that he is entitled to the benefits at issue.

¶8. On appeal, Thornhill raises two issues. First, he argues that the compromise settlement exhausted his administrative remedies as a matter of law and that he may proceed on his bad-faith claim in the circuit court. Second, Thornhill argues that the Employer/Carrier should be estopped from asserting an exhaustion-of-remedies argument because the Employer/Carrier drafted a release that not only reserved Thornhill's right to bring a bad-faith lawsuit but also specifically provided that Thornhill's "administrative remedies . . . [had] been fully and finally exhausted."

¶9. For the reasons explained below, we hold that the Commission's approval of the compromise settlement exhausted Thornhill's administrative remedies and that Thornhill's bad-faith lawsuit may go forward in the circuit court. Accordingly, we reverse and remand for further proceedings consistent with this opinion. Because we reverse on the first issue raised by Thornhill, it is unnecessary to address his estoppel argument.

ANALYSIS

¶10. We review de novo an order dismissing a complaint for failure to state a claim upon which relief can be granted. Hardaway v. Howard Indus. Inc., 211 So.3d 718, 721 (¶15) (Miss. Ct. App. 2016). "We accept as true all well-pled factual allegations in the complaint, and we will affirm only if it appears beyond doubt that the plaintiff would be unable to prove any set of facts that would support a right of recovery." Id. (ellipsis and quotation marks omitted).

¶11. "[T]he independent tort of bad faith refusal to pay compensation is an exception to" the general rule that workers' compensation benefits are an employee's "exclusive remedy" for an on-the-job injury. Miss. Power & Light Co. v. Cook, 832 So.2d 474, 479 (¶8) (Miss. 2002) (citing S. Farm Bureau Cas. Ins. Co. v. Holland, 469 So.2d 55, 59 (Miss. 1984); Luckett v. Miss. Wood Inc., 481 So.2d 288, 290 (Miss. 1985); McCain v. Nw. Nat'l Ins. Co., 484 So.2d 1001, 1002 (Miss. 1986); Leathers v. Aetna Cas. & Surety Co., 500 So.2d 451, 453 (Miss. 1986)). A cause of action for bad-faith refusal arises "when an insurance carrier or self-insured employer denies benefits without a legitimate or arguable basis, commits a willful or malicious wrong, or acts with gross and reckless disregard for the claimant's rights." Hardaway, 211 So.3d at 722 (¶16) (citing Cook, 832 So.2d at 479 (¶¶8-9); Chapman v. Coca-Cola Bottling Co., 180 So.3d 676, 681 (¶20) (Miss. Ct. App. 2015); Walls v. Franklin Corp., 177 So.3d 1156, 1163 (¶30) (Miss. Ct. App. 2015) ("Walls II); AmFed Cos. v. Jordan, 34 So.3d 1177, 1183 (¶21) (Miss. Ct. App. 2009)).

¶12. "[U]nder Mississippi law, claimants are required to exhaust their administrative remedies, i.e., obtain a final judgment from the Commission prior to instituting a bad-faith action for failure to pay benefits pursuant to the Workers' Compensation Act." Harper v. Cal-Maine Foods Inc., 43 So.3d 401, 403 (¶5) (Miss. 2010) (quotation marks omitted).

Regarding this requirement, our Supreme Court has stated that "our precedent requires only a determination that a plaintiff is 'entitled' to compensation before a bad-faith action may be brought." Bullock v. AIU Ins. Co., 995 So.2d 717, 723 (¶21) (Miss. 20...