Van Tine v. Idaho State Ins. Fund
| Decision Date | 09 December 1994 |
| Docket Number | No. 20623,20623 |
| Citation | 889 P.2d 717,126 Idaho 688 |
| Parties | Kerby M. VAN TINE and Linda Van Tine, husband and wife, Plaintiffs-Appellants, v. IDAHO STATE INSURANCE FUND, an Idaho Insurance Company, (which may be a political subdivision of the State of Idaho), Defendant-Respondent. Lewiston, October 1994 Term |
| Court | Idaho Supreme Court |
Aherin & Rice, Lewiston, for appellants. Darrel W. Aherin argued.
Clements, Brown & McNichols, Lewiston, for respondent. Michael E. McNichols argued.
This is an insurance bad faith case against the State Insurance Fund (SIF) arising out of a workers' compensation claim. We conclude that the trial court lacked subject matter jurisdiction to decide whether SIF is liable to the claimant for alleged breach of the duty of good faith and fair dealing and for alleged breach of fiduciary duty. We also conclude that the trial court lacked subject matter jurisdiction to consider whether SIF has waived its subrogation right provided for under the workers' compensation law.
THE BACKGROUND AND PRIOR PROCEEDINGS.
Kerby Van Tine (Van Tine) was seriously injured in an accident while working for the Idaho department of transportation (the department). Van Tine submitted a workers' compensation claim to SIF, the department's workers' compensation surety. After SIF refused to pay a portion of the benefits Van Tine requested, Van Tine filed a complaint with the Industrial Commission requesting additional benefits. Eventually, Van Tine and SIF entered into a lump sum agreement settling Van Tine's claims for additional benefits.
In this case, Van Tine and his spouse (the Van Tines) have sued SIF, alleging that SIF violated its duty of good faith and fair dealing and its fiduciary duty by initially refusing to satisfy Van Tine's workers' compensation claims.
The Van Tines also sought a judgment that SIF had waived its subrogation right to the Van Tines' recovery against the third party who caused the accident in which Van Tine was injured. The Van Tines received $125,000 from a settlement with this third party and the third party's employer (the third-party settlement). The Van Tines' attorney deposited the proceeds of the third-party settlement in a trust account.
Claiming it has a right to subrogation, SIF has sued the Van Tines' attorney to recover workers' compensation benefits paid to the Van Tines. SIF's suit against the Van Tines' attorney is pending in Second District Court in Nez Perce County.
In the case now before us, the trial court dismissed the Van Tines' breach of the duty of good faith and fair dealing and breach of fiduciary duty claims for lack of subject matter jurisdiction. The trial court dismissed the Van Tines' waiver of subrogation claim because of the pending action against the Van Tines' attorney.
The Van Tines appealed.
THE TRIAL COURT DID NOT HAVE SUBJECT MATTER JURISDICTION OVER THE CLAIMS FOR BREACH OF GOOD FAITH AND FAIR DEALING, FOR BREACH OF FIDUCIARY DUTY, AND FOR WAIVER OF SUBROGATION.
The Van Tines assert that the trial court improperly dismissed their claims for breach of the duty of good faith and fair dealing and for breach of fiduciary duty based on a lack of subject matter jurisdiction. We disagree. We also conclude that the trial court did not have subject matter jurisdiction over the Van Tines' claim that SIF waived its subrogation right to proceeds of the third-party settlement.
The Commission has exclusive jurisdiction of "[a]ll questions arising under" the workers' compensation law. I.C. § 72-707 (1989). If the Commission has jurisdiction over an employer, the Commission also has jurisdiction over the employer's surety. Smith v. O/P Transp., Inc., 120 Idaho 123, 127, 814 P.2d 23, 27 (1991).
Therefore, if the Van Tines' claims against SIF arise under the workers' compensation law, the trial court did not have subject matter jurisdiction over them. Our task is to examine the workers' compensation law to see whether there is any portion of that law under which these claims may be said to arise. Id.
I.C. § 72-804 provides that the Commission shall fix reasonable attorney fees that an employer shall pay to an employee, if the employer or the employer's surety: (1) contests a claim for compensation without reasonable ground; (2) within a reasonable time after receipt of a written claim for compensation neglects or refuses to pay the claimant; or (3) discontinues payment of compensation without reasonable grounds for doing so. I.C. § 72-804 (1989). In Royce v. Southwest Pipe of Idaho, 103 Idaho 290, 647 P.2d 746 (1982), superseded by statute as stated in Archer v. Bonners Ferry Datsun, 117 Idaho 166, 786 P.2d 557 (1990)), the Court upheld an award of attorney fees by the Commission against a surety pursuant to I.C. § 72-804 on the ground that the surety had contested a claim for compensation without reasonable ground. 103 Idaho at 295, 647 P.2d at 751.
To the extent that the Van Tines allege that SIF contested claims for compensation without reasonable ground, refused within a reasonable time to pay compensation, or without reasonable ground discontinued payment of compensation justly due and owing, their claims arise under I.C. § 72-804, and the trial court did not have jurisdiction over the claims. This includes all of the Van Tines' allegations in their claims for breach of the duty of good faith and fair dealing and for breach of fiduciary duty.
Most of the Van Tines allegations relate explicitly to the premises for an award of attorney fees pursuant to I.C. § 72-804:
1. SIF failed to make payment for medical treatment when SIF knew that Van Tine was entitled to payment.
2. SIF did not attempt in good faith to effectuate a prompt, fair, and equitable settlement of Van Tine's claim for medical expenses when SIF's liability had become reasonably clear.
3. SIF failed to provide a reasonable explanation of the basis it relied upon for the denial...
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