Vigue v. Evans Products Co.

• Decision Date: 19 March 1980
• Docket Number: No. 14764,14764
• Parties: William VIGUE et al., Plaintiffs and Appellants, v. EVANS PRODUCTS COMPANY et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 488

608 P.2d 488

187 Mont. 1

William VIGUE et al., Plaintiffs and Appellants, v. EVANS PRODUCTS COMPANY et al., Defendants and Respondents.

No. 14764.

Supreme Court of Montana.

Submitted Jan. 15, 1980.

Decided March 19, 1980.

Hoyt, Trieweiler, Lewis & Regnier, John Hoyt (argued), Great Falls, for plaintiffs and appellants.

Galrington, Lohn & Robinson, Larry Riley (argued), Missoula, Andrew J. Utick (argued), Helena, for defendants and respondents.

HARRISON, Justice.

This is an appeal from an order dismissing a complaint which alleged the commission of certain tortious acts in the adjusting and processing of a Workers' Compensation claim. The order was entered in the District Court of Missoula County, the Honorable Jack L. Green presiding.

The claimant and appellant, William Vigue, suffered an industrial accident injury on March 29, 1976 while employed by one of the respondents, Evans Products Company. After the injury, appellant underwent extensive back surgery and was certified by his physician on February 20, 1978 as totally and permanently disabled. Evans is a Plan I insurer under the Montana Workers' Compensation Act and employs George Wood, the other respondent in this matter. Wood is a professional adjuster in Workers' Compensation claims. On July 13, 1978, appellant filed a complaint against respondents alleging the commission of certain tortious acts in the adjusting and handling of his Workers' Compensation claim. Among the torts alleged were fraud, conversion, economic duress and bad faith.

Respondents moved to dismiss the complaint upon the ground that it failed to state a claim for which relief could be granted. Respondents contended that the controversy among the parties was within the exclusive jurisdiction of the Workers' Compensation Court. After submission of briefs and oral argument, the District Court granted the motion to dismiss. Appellant then appealed.

The issue raised for our consideration upon this appeal is whether a claimant, who sustains an injury covered by the Workers' Compensation Act, may assert a separate action for damages in District Court against an insurer and its adjuster for the commission of intentional torts in the processing and handling of a Workers' Compensation claim.

In resolving this issue, the focus of our inquiry is on the scope and coverage of the Workers' Compensation Act and the extent to which its provisions and remedies are made exclusive. The exclusivity provision of the Act states:

"For all employments covered under the Workers' Compensation Act or for which an election has been made for coverage under this chapter, the provisions of this chapter are exclusive. Except as provided in part 5 of this chapter for uninsured employers and except as otherwise provided in the Workers' Compensation Act, an employer is not subject to any liability whatever for the death of or personal injury to an employee covered by the Workers' Compensation Act, or for any claims for contribution or indemnity asserted by a third person from whom damages are sought on account of such injuries or death. The Workers' Compensation Act binds the employee himself, and in case of death binds his personal representative and all persons having any right or claim to compensation for his injury or death, as well as the employer and the servants and employees of such employer and those conducting his business during liquidation, bankruptcy, or insolvency." Section 39-71-411, MCA. (Emphasis added.)

Under the Act, the Workers' Compensation Court is given exclusive jurisdiction over all disputes arising from claims. Section 39-71-2905, MCA states:

"A claimant or an insurer who has a dispute concerning any benefits under chapter 71 of this title may petition the workers' compensation judge for a determination of the dispute. The judge, after a hearing, shall make a determination of the dispute in accordance with the law as set forth in chapter 71 of this title. If the dispute relates to benefits due a claimant under chapter 71, the judge shall fix and determine any benefits to be paid and specify the manner of payment. The workers' compensation judge has exclusive jurisdiction to make determinations concerning disputes under chapter 71. The penalties and assessments allowed against an insurer under chapter 71 are the exclusive penalties and assessments that can be assessed against an insurer for disputes arising under chapter 71."

Appellant contends that, while the exclusivity provisions of the Act bar an action in District Court against employers or their insurers for personal injury or death to the claimant, they do not bar an action in District Court against the insurers or adjusters for the commission of intentional torts in the settling of a claim. Appellant relies on several cases outside of this jurisdiction which have upheld a claimant's right to bring a separate action at law for the commission of independent intentional torts in the settlement of a Workers' Compensation claim. See Coleman v. American Universal Ins. Co. (1979), 86 Wis.2d 615, 273 N.W.2d 220; Gibson v. Nat. Ben Franklin Ins. Co. (Me.1978), 387 A.2d 220; Stafford v. Westchester Fire Ins. Co. of N. Y., Inc. (Alaska 1974), 526 P.2d 37; Martin v. Travelers Insurance Company (1st Cir. 1974), 497 F.2d 329; Reed v. Hartford Accident & Indemnity Co. (E.D.Pa.1973), 367 F.Supp. 134; Unruh v. Truck Insurance Exchange (1972), 7 Cal.3d 616, 102 Cal.Rptr. 815, 498 P.2d 1063. In these cases, primarily two bases have been offered for the upholding of the right. The first basis is that the acts complained of do not arise out of the employment relationship. Rather, at the time of the commission of the torts, the employment relationship has terminated. The insurance carrier is no longer the "alter ego" of the employee and, therefore, is not afforded the protection of the Act.

"The injury for which remedy is sought in the instant case is the emotional distress and other harm caused by the defendants' intentional acts during the investigation and during the course of payment of the claim. This claimed injury was distinct in time and place from the original on-the-job physical injury which was subject to the Compensation Act. The injury for which recovery is sought in the present actions did not occur while the plaintiff was employed or while he was performing services growing out of and incidental to his employment. As the plaintiff repeatedly and correctly stresses in his brief, this action is based not on the original work-related injury but on a second and separate injury resulting from the intentional acts of the insurer and its agents while investigating and paying the claim. The Act does not cover the alleged injury, and the exclusivity provision does not bar the claim." Coleman, supra, 273 N.W.2d at 223.

The second basis upon which the right has been upheld is that the penalty provisions of the various state Workers' Compensation Act are inappropriate for intentional...