Winterberg v. Transportation Ins. Co.

• Decision Date: 14 December 1995
• Docket Number: No. 95-1206,95-1206
• Parties: Patricia WINTERBERG; James Winterberg, Individually and as Husband and Wife, Plaintiffs/Appellants, v. TRANSPORTATION INSURANCE COMPANY t/a CNA Insurance Company, Defendant/Appellee.
• Court: U.S. Court of Appeals — Third Circuit

Page 318

72 F.3d 318

Patricia WINTERBERG; James Winterberg, Individually and as Husband and Wife, Plaintiffs/Appellants, v. TRANSPORTATION INSURANCE COMPANY t/a CNA Insurance Company,

Defendant/Appellee.

No. 95-1206.

United States Court of Appeals, Third Circuit.

Argued Oct. 10, 1995.

Decided Dec. 14, 1995.

James T. Vernile (argued), Philadelphia, PA, and Carole L. McHugh, North Hills, PA, for Appellants.

Leslie Martinelli Cyr (argued), Susan Silverman Riechelson, LaBrum & Doak, Philadelphia, PA, for Appellee.

Before: GREENBERG, LEWIS and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

The Pennsylvania state legislature, in 1915, enacted its first Workmen's Compensation Act ("the Act") in response to strong public sentiment. It was a humanitarian measure providing no-fault compensation to substantially all workers for injuries sustained during the course of employment. The primary purpose of the legislation was to substitute a method of accident insurance in place of common rights and liabilities "which would afford a workman a measure of protection against injuries and relief in case of accident, which was denied under existing law." Blake v. Wilson, 268 Pa. 469, 112 A. 126, 128 (1920). As quid pro quo, employees under the system waived their common law rights of action. The Act also abolished common law defenses, routinely and effectively raised by employers, of voluntary assumption of risk, contributory negligence and fellow employee negligence. American Association of Meat Processors v. Casualty Reciprocal Exch., 527 Pa. 59, 588 A.2d 491 (1991).

Thus, the Act provided compensation on a no-fault basis for work-related injury "as a fair exchange for relinquishing every other right of action against the employer." Rudy v. McCloskey and Co., 348 Pa. 401, 35 A.2d 250, 253 (1944). From time to time, however, injured employees and their counsel have attempted ingeniously to accept the rewards of this no-fault compensation system and still avail themselves of a possible common law damages action against the employer or its insurer.

This case requires us to predict whether the Supreme Court of Pennsylvania would permit an injured employee to disregard the state statutory workmen's compensation scheme and bring a common law action in court if an employer's insurance company behaves egregiously in handling the underlying workmen's compensation claim. Because we hold that it would not, but would honor the exclusivity provisions of the Act, we affirm the order of the district court dismissing plaintiffs' suit.

I.

Patricia Winterberg ¹ (Winterberg) worked for a T.J. Maxx department store in Pennsylvania. In 1991, during the course of her employment, a clothing rack weighing several hundred pounds fell on her foot, causing a "severe contusion of bones." Winterberg received medical treatment, paid for by the T.J. Maxx compensation carrier, Transportation Insurance Company (hereafter "TIC" or "carrier"), trading as CNA Insurance.

Winterberg's injury and pain became progressively worse, and the doctors diagnosed her as having Reflex Sympathy Dystrophy ("RSD"). She claims that she suffers extraordinary pain and the loss of use of her left foot; that it has intensified, causing her to fall down frequently. These falls, she asserts, caused her to sustain other injuries, such as damage to the tendons of her ankle, and a fracture of her elbow, which also needed medical attention. A doctor prescribed a wheelchair because the elbow fracture made it impossible for her to use crutches. In addition, Winterberg states she underwent psychological counseling for pain management and depression.

In 1992, TIC stopped paying Winterberg's medical bills. It took the position that the only compensable injury she had suffered was her original foot injury, and refused to authorize the other prescribed medications, therapies, and rehabilitative services. TIC also attempted to terminate her workmen's compensation benefits on the grounds that T.J. Maxx had offered her a position she could perform even with her symptoms. Winterberg disputes that the job offered conforms to the "bona fide" requirements of the Compensation Act.

According to plaintiff, ² defendant continued to deny her claims and refuse to pay her bills despite admonitions by the Workmen's Compensation Referee, approval of the expenses by two separate independent reviews, and numerous letters from plaintiff's counsel detailing the harmful impact of defendant's conduct on her. Apparently, plaintiff was terminated from some of her prescribed therapy because of her financial inability to pay for it, and this lack of therapy also aggravated her injury.

At the carrier's request, Winterberg underwent a medical examination by a neurologist of TIC's choosing. Plaintiff claims that during the examination, the neurologist, Dr. Bennett, emotionally and physically abused her. He asked her, "Did you settle your lawsuit?", roughly grabbed her foot immediately after being told that she suffered pain even from air blowing across it, and demanded that she walk. Plaintiff asserts that she became unsteady, and fell to the floor, injuring her head, shoulder and neck, but the doctor refused to assist her, saying "You are not an invalid and you have to get up yourself." Shortly after this medical examination, and because of her despondency over it, the denial of her benefits, and her pain and depression, Winterberg made an unsuccessful suicide attempt.

Winterberg and her husband filed this lawsuit in the Philadelphia Court of Common Pleas. They alleged that TIC had violated Pennsylvania's "bad faith" insurance statute, 42 Pa.C.S.A. Sec. 8371 and the Unfair Trade Practices and Consumer Protection Law, 73 Pa.S. Sec. 201-1, et seq., as well as having intentionally inflicted emotional distress, breached a contract likely to result in emotional distress, and engaged in common law fraud and deceit. Claiming diversity jurisdiction, the defendant removed the suit to the United States District Court for the Eastern District of Pennsylvania.

Defendants then filed a motion to dismiss based on the exclusivity jurisdiction of Pennsylvania Workmen's Compensation Act, 77 Pa.S. Sec. 481(a). Under that Act, an employee may not sue an employer (or its insurer) at common law for an injury arising in the course of employment. TIC argues that all of plaintiff's claims have their fundament in the treatment of her workmen's compensation claim, and, therefore, the district court has no jurisdiction of this proceeding. On the other hand, plaintiff contends that the "bad faith" insurance statute superseded Pennsylvania's Workmen's Compensation Act and provides a concurrent action at common law in cases of a carrier's flagrant misconduct. Noting that the state Supreme Court had not spoken directly on the issue, the district court determined that plaintiff's claims were all within the scope of the Act, and dismissed all claims against the insurance company. ³ The court held that the exclusivity provision of the Compensation Act barred the tort claims and that the "bad faith" statute, though enacted later, did not repeal the Act's exclusivity provision. Further, the court dismissed plaintiff's claim under the "bad faith" statute for lack of jurisdiction. Although the statute created a separate cause of action, the court determined that it could not be brought in a court which did not have jurisdiction of the underlying insurance claim.

The court did, however, allow plaintiff's claims arising from the tortious conduct that allegedly occurred during the medical examination conducted by Dr. Bennett. The court concluded that Dr. Bennett's alleged actions during that examination, if proven, would constitute a common-law tort such as battery. Such conduct constituted activity wholly separate from the handling of the compensation claim, and was not subsumed under the Compensation Act.

Plaintiff petitioned the court to certify the partial dismissal under 28 U.S.C. Sec. 1292(b) to enable her to appeal from the interlocutory order. The court denied the request. At that point, plaintiff amended her complaint to drop the breach of contract claim only. Defendant moved to strike all references to the insurance company's conduct in the remaining portion of the complaint, and the court granted this motion. It ordered plaintiff to amend the complaint accordingly. Plaintiff, however, notified the court that she intended to stand on her complaint and not amend. The court therefore dismissed the complaint with prejudice. Plaintiff concedes that these actions have waived her right to proceed with any claim against Dr. Bennett. The order now being final, plaintiff appealed.

II.

In the absence of any precedent of the Pennsylvania Supreme Court, we must predict how that court would decide this issue. In so doing, we must also give due deference to decisions of the lower Pennsylvania courts. See, City of Philadelphia v. Lead Industries Ass'n, 994 F.2d 112 (3d Cir.1993).

Pennsylvania's Workmen's Compensation scheme provides that it is the exclusive remedy available to employees against employers for work-related injuries:

The liability of an employer under this act shall be exclusive and in the place of any and all other liability to such employes [sic] ... or anyone otherwise entitled to damages in any action at law or otherwise on account of any injury or death as defined in section 301(c)(1) and (2) or occupational disease as defined in section 108.

77 Pa.S. Sec. 481(a). The same exclusivity of remedy is applied in cases against an employer's insurer. See, 77 Pa.S. Sec. 501 ("Such insurer shall assume the employer's liability hereunder and shall be entitled to all of the employer's immunities and protection hereunder ...").

This exclusivity of remedy has been described as a "historical quid pro quo employers received for being subjected to a no-fault system of compensation for worker injuries. That is, while...