Wilson v. IBP, Inc., 95-477

• Decision Date: 18 December 1996
• Docket Number: No. 95-477,95-477
• Citation: 558 N.W.2d 132
• Parties: Kevin WILSON, Appellant, v. IBP, INC., and Diane Arndt, Appellees.
• Court: Iowa Supreme Court

Page 132

558 N.W.2d 132

Kevin WILSON, Appellant, v. IBP, INC., and Diane Arndt, Appellees.

No. 95-477.

Supreme Court of Iowa.

Dec. 18, 1996.

Rehearing Denied Feb. 14, 1997.

David L. Brown of Hansen, McClintock & Riley, Des Moines, and Randall J. Shanks and Laura L. Pattermann, Council Bluffs, for appellant.

Mark McCormick and Margaret C. Callahan of Belin Harris Lamson McCormick, A P.C., Des Moines, for appellees.

Considered en banc.

SNELL, Justice.

This appeal arises from an order of the district court requiring remittitur of all but $100,000 of a $15 million punitive damage award, or in the alternative, granting a new trial on the issue of punitive damages. Plaintiff-appellant, Kevin Wilson, rejected the remittitur conditions and appealed. Defendants-appellees, IBP, Inc. and Diane Arndt, cross-appealed. We affirm as modified on appeal and remand for entry of judgment or for a new trial; we affirm on the cross-appeal.

I. Background Facts and Procedure

Plaintiff Kevin Wilson injured his back while working for defendant IBP, which is self-insured for purposes of workers' compensation. Defendant Diane Arndt is a registered nurse who was employed by IBP as manager of occupational health services for its Council Bluffs plant. In this capacity, it was Arndt's job to coordinate workers' medical care, treatment, and recovery, including overseeing work restrictions, monitoring their condition, setting up doctor's appointments, and overseeing the OSHA logs. It was Arndt who set up Wilson's appointments for treatment after his injury.

As part of its policy of seeking "conservative" treatment for injured employees, IBP sent Wilson to Dr. A.K. Argawal, who initially told Wilson to treat the injury only with rest. Eventually, Dr. Argawal assigned Wilson to light duty at the plant. Wilson, however, chose not to accept the light duty assignment and asked for a second medical opinion on his condition because he felt the treatment provided by Dr. Argawal was too conservative and ineffective. Arndt authorized a second opinion with Dr. William Hamsa, who diagnosed Wilson with an unstable disc and prescribed bed rest for him. Around the same time, IBP's corporate security department instituted a surveillance operation directed at Wilson. According to IBP, these procedures are common to ensure that workers are legitimately injured and are following their recovery instructions. The investigation involved observing Wilson's activity at home and following him in an unmarked van. Security reported to Arndt that Wilson continued to drive his children and run errands from time to time when he was instructed to be in bed.

Based on this report from corporate security, Arndt sought to have Dr. Hamsa return Wilson to light duty because of what she believed was Wilson's failure to follow the prescribed lifestyle restrictions. Arndt also informed Dr. Hamsa that IBP had a videotape showing that Wilson was not following his prescribed treatment regimen. This statement, however, was false as Arndt knew no such videotape actually existed. After this conversation with Arndt, Dr. Hamsa met with Wilson and sought to return him to light duty. Dr. Hamsa then told Wilson that he was aware Wilson had been "messing around" and was not following his prescribed treatment. Wilson testified that Dr. Hamsa accused him of lying and Dr. Hamsa subsequently discontinued his treatment. Wilson then requested that IBP refer him to a neurological surgeon who, after examination, took Wilson off light duty and performed surgery to correct his condition. Wilson never returned to work at IBP and eventually settled his workers' compensation claim against the company.

After the workers' compensation claim was settled, Wilson brought an action in district court alleging Arndt, in her statements to Dr. Hamsa regarding the non-existent videotape, slandered him and that she had violated the fiduciary duty imposed on her as an occupational health nurse at IBP. Wilson also named IBP as a defendant in the action, asserting that IBP was liable for the actions of Arndt.

The jury returned a general verdict in Wilson's favor and awarded him $4000 in compensatory and $15 million in punitive damages. After the verdict was returned, the defendants filed a motion for judgment notwithstanding the verdict (JNOV), an alternative motion for remittitur, and an alternative motion for a new trial. The court ordered a remittitur of the amount of the punitive damage award in excess of $100,000 and a new trial conditioned upon rejection of the remittitur conditions. After Wilson failed to accept the conditions of the remittitur, plaintiff and defendants moved for clarification of the new trial order. The district court entered a ruling dated March 23, 1995 specifying the grounds for the new trial:

(a) The punitive damages issue would be retried against both defendants.

(b) A new determination would be made by the jury as to whether Arndt's conduct met the standard of willful and wanton disregard for the rights and safety of another as provided in Iowa Code section 668A.1(1)(a).

(c) The jury would be asked to determine anew if IBP is liable for punitive damages on the ground of complicity under the standard set forth in Briner v. Hyslop, 337 N.W.2d 858, 861-67 (Iowa 1983).

(d) The jury would be asked to determine anew whether the conduct of Arndt was directed specifically at plaintiff under the standard in Iowa Code section 668A.1(1)(b).

(e) The jury would not be instructed that the maximum punitive damage award against IBP, if any, could not exceed $100,000 (the amount set by the trial court in remittitur).

It is from these court orders that plaintiff appeals and defendants cross-appeal.

II. Issues on Appeal

Plaintiff claims the trial court abused its discretion in ordering a new trial based on excessive punitive damages. The trial court reasoned that the $15 million punitive damages verdict was so large and disproportionate to the plaintiff's actual damages that it was grossly excessive and likely the result of passion or prejudice on the part of the jury. Plaintiff claims further error in the court's ordering a remittitur of all punitive damages assessed that exceed $100,000.

Defendants, as cross-appellants, claim error in not finding exclusive jurisdiction in the Iowa Industrial Commissioner on the issue of fiduciary duty and in submitting it to the jury. Error is also claimed in submitting the issues of defamation, compensatory damages, and punitive damages, in finding the jury verdict unambiguous, and in not granting a new trial on all issues.

III. Breach of Fiduciary Duty

A. Subject Matter Jurisdiction

Defendants challenge the validity of Wilson's claim for breach of fiduciary duty and the resulting jury verdict in Wilson's favor. They contend this claim falls within the exclusive jurisdiction of the industrial commissioner and thus was not properly brought before the district court. We disagree.

Our review of proceedings concerning subject matter jurisdiction is at law. S.S. v. Iowa Dist. Ct., 528 N.W.2d 130, 132 (Iowa 1995); Tigges v. City of Ames, 356 N.W.2d 503, 512 (Iowa 1984). Our scope of review is for correction of errors at law. Iowa R.App.P. 4.

An action involving compensation for Wilson's physical injury suffered while employed at IBP was commenced as a workers' compensation proceeding under chapter 85 of the Iowa Code and was settled prior to trial. The issues involved at trial and here on appeal are independent of Wilson's initial physical injury. IBP's status as a self-insured employer for workers' compensation subjects it to liability as an insurer. Reedy v. White Consol. Indus., Inc., 503 N.W.2d 601, 602-03 (Iowa 1993).

The provisions of the workers' compensation act are intended to be "the exclusive and only rights and remedies of [an] employee ... at common law or otherwise ... against ... [his or her] employer...." Iowa Code § 85.20 (1995). We have previously recognized that where no adequate remedy is provided by the Iowa workers' compensation act, then an injured worker's claim falls outside of the exclusivity provision. See Boylan v. American Motorists Ins. Co., 489 N.W.2d 742, 744 (Iowa 1992) (establishing independent bad faith tort liability for insurers because workers' compensation act does not provide an adequate remedy); Dolan v. Aid Ins. Co., 431 N.W.2d 790, 794 (Iowa 1988) (recognizing first-party bad faith tort claims "to provide the insured an adequate remedy for an insurer's wrongful conduct."); see also 1A Larson, Workmen's Compensation Law § 48.34(a) (1994). Wilson's claims for breach of fiduciary duty and defamation, as intentional torts, fall outside the scope of the remedies available under the workers' compensation act.

Defendants attempt to frame the intentional tort claims as a general dispute involving Wilson's overall dissatisfaction with the care he received. The record, however, does not support this construction of Wilson's claim. Although there was some dispute over IBP's habit of practicing "conservative care," the gravamen of Wilson's complaint involves alleged intentional torts committed by Arndt in the period preceding and during his treatment. Thus, this case is not a simple issue of dissatisfaction with care as defendants suggest.

IBP notes it has a right to choose the care it provides (including its aggressiveness) and that injured workers who are dissatisfied with their care have an exclusive remedy with the industrial commissioner pursuant to Iowa Code section 85.27. See Harned v. Farmland Foods, Inc., 331 N.W.2d 98, 99 (Iowa 1983). The district court, however, was correct in distinguishing the facts in Harned from the case at bar. We find it significant that the facts in Harned "suggest plaintiffs' claim was simply one of failure to provide requested care. There is nothing to indicate an intentional tort." Id. at 101. Here, the district court found that Wilson's claims for breach of fiduciary duty and...