Zuke v. Presentation Sisters, Inc.

• Decision Date: 20 October 1998
• Docket Number: No. 20455,20455
• Citation: 1999 SD 31,589 N.W.2d 925
• Parties: Sandra ZUKE, Plaintiff and Appellant, v. PRESENTATION SISTERS, INC., d/b//a McKennah Hospital, and GAB Robins North America, Inc., Defendants and Appellees. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 925

589 N.W.2d 925

1999 SD 31

Sandra ZUKE, Plaintiff and Appellant, v. PRESENTATION SISTERS, INC., d/b//a McKennah Hospital, and GAB Robins North America, Inc., Defendants and Appellees.

No. 20455.

Supreme Court of South Dakota.

Considered on Briefs Oct. 20, 1998.

Decided March 10, 1999.

Michael J. Simpson of Groves, Julius & Simpson, L.L.P., Rapid City, for plaintiff and appellant.

Comet Haraldson of Woods, Fuller, Shultz & Smith, P.C., Sioux Falls, for defendant and appellee GAB Robins North America, Inc.

Michael S. McKnight and Lisa Hansen Marso of Boyce, Murphy, McDowell & Greenfield, L.L.P., Sioux Falls, for defendant and appellee Presentation Sisters, Inc.

ANDERSON, Circuit Judge

¶1 Sandra Zuke (Zuke) appeals the trial court's grant of summary judgment to Presentation Sisters, Inc. (Presentation Sisters), and GAB Robins North America, Inc (GAB). We affirm.

Facts

¶2 Prior to the events giving rise to this cause of action, Zuke had been employed as a behavioral health technician at McKennan Hospital in Sioux Falls, South Dakota, since July 1983. Zuke's duties as a behavioral health technician included performing group and individual therapies for families and children. Presentation Sisters owns and operates McKennan Hospital. GAB is the administrator of the worker's compensation program at McKennan Hospital and works with Presentation Sisters in evaluating and adjusting worker's compensation claims.

¶3 On June 2, 1993, Zuke was injured while working at McKennan Hospital when a thirteen-year-old autistic patient struck her in the face with his fist as she was walking him to his room. Zuke's nose began bleeding and she went to McKennan's emergency room where she was observed by an emergency room physician. The physician took x-rays of Zuke's nose and informed her that it was broken. The emergency room visit was paid for by McKennan Hospital as a worker's compensation injury.

¶4 Upon arriving home on the day of the injury, Zuke contacted her family physician, Dr. Patricia Peters, to inform her that she was experiencing facial pain and could not breathe through her nose. Dr. Peters referred Zuke to Dr. David Witzke, a plastic surgeon in Sioux Falls. On June 4, 1993 Zuke visited Dr. Witzke. Dr. Witzke indicated in his notes that Zuke's nose was crooked and that he believed evidence of an old fracture was present. The June visits to Dr. Witzke and Dr. Peters were both covered by McKennan's worker's compensation plan.

¶5 In September 1993, Zuke went back to Dr. Witzke for an evaluation. Dr. Witzke noted that Zuke had a deviated septum ¹ which would require rebreaking the nose and surgery in the form of an open reduction of the nasal structure to correct. Dr. Witzke also discussed the possibility of performing cosmetic surgery for Zuke at the same time the open reduction surgery would be performed.

¶6 Dr. Witzke's notes regarding the surgeries were forwarded to Nancy Williams (Williams), claims examiner for GAB. Based on Dr. Witzke's original notes in which he stated that he believed Zuke had a prior nose fracture, Williams wrote to Zuke in November 1993, requesting her to sign a release for medical reports and requesting the name of the doctor who treated the alleged old nasal fracture. When Zuke had not yet signed and returned the release to Williams, Williams again made the same request to Zuke in January 1994. Sometime shortly after receiving the second letter, Zuke called William's office and denied having any prior nasal fractures.

¶7 On February 28, 1994, Williams wrote to Zuke advising her that a second opinion was required before pre-approval for the surgery would be granted. Williams arranged for Zuke to meet with Dr. Rif'at Hussain of Sioux Falls. After examining Zuke, Dr. Hussain wrote to Williams. Dr. Hussain's letter noted that Zuke's medical record included somewhat contradictory statements from Drs. Peters and Witzke. Dr. Hussain felt that the hump and a scar from a laceration on Zuke's nose were the result of the work-place injury, but doubted that the septal deviation was caused by the injury. Dr. Hussain also noted that certain other recommended surgery was cosmetic only.

¶8 On May 4, 1994, Williams wrote to Zuke informing her that approval for the surgery was being denied as there was "no medical documentation stating that this [surgery] is absolutely necessary nor ... is a result of the injury of June 2, 1993." In the letter Williams advised Zuke that she had the right pursuant to SDCL 62-7-12 ² to appeal the decision of denial to the department of labor within two years. Zuke did not appeal the decision of denial.

¶9 Over the next year Zuke experienced breathing difficulties. On June 4, 1995, she went to the emergency room at McKennan Hospital, where she was diagnosed with a history of intermittent dyspnea. ³

¶10 Williams wrote to Chris Specht (Specht), Director of Risk Management for Presentation Sisters, on August 15, 1995, and enclosed the medical notes of the June 4-5 emergency room visit. Williams stated in her letter that there were no notes stating that the problems were related to the nose injury. Williams opined coverage could be denied based on the emergency room visit not being causally and directly related to the original injury. Specht responded via an August 18, 1995 letter, stating coverage for the emergency room visit should be denied for not being causally related to the broken nose. Williams thereafter sent Zuke a denial letter on August 28, 1995, stating that in her opinion the medical bills were not causally related to the June 2, 1993 nose injury. This letter again informed Zuke she had a right to appeal the decision to the department of labor.

¶11 Dr. Peters sent letters to Williams on September 20, 1995, and April 10, 1996, informing her that Zuke was still having problems breathing. Dr. Peters stated it was her opinion that the symptoms would probably be improved by straightening the nasal septum, and the breathing problems had probably arisen since her injury to the nose.

¶12 On May 6, 1996, Zuke wrote to Williams requesting coverage for a scheduled surgery to repair the nose. On May 13, 1996, Williams wrote to Dr. Peters stating that the claim would be denied because the statute of limitations had expired as more than two years had passed since the May 4, 1994 denial of surgical intervention.

¶13 Zuke proceeded to have the surgery performed and on March 27, 1997, filed a complaint alleging bad faith and deceit on the part of GAB and Presentation Sisters in connection with the denial of medical benefits. The circuit court granted GAB's and Presentation Sisters' motion for summary judgment on the basis that there was no genuine issue of material fact and that the case lacked the factual foundation which would support a conclusion that GAB and Presentation Sisters acted with intentional bad faith. The court held that the case did not meet the criteria for a claim based on deceit as there were no facts presented by Zuke indicating that GAB and Presentation Sisters misled her in any way. Zuke appeals the award of summary judgment raising the following issues:

1. Whether Zuke must exhaust her administrative remedies with the department of labor prior to bringing her bad faith and deceit action?

2. Do genuine issues of material fact exist regarding whether GAB and Presentation Sisters had a reasonable basis for denying medical expenses?

3. Do genuine issues of material fact exist as to whether GAB and Presentation Sisters committed statutory deceit?

Standard of Review

¶14 The standard under which we review summary judgment is well established:

"Summary judgment shall be granted 'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.' We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. All reasonable inferences drawn from the facts must be viewed in favor of the nonmoving party. The burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. On the other hand, '[t]he party opposing a motion for summary judgment must be diligent in resisting the motion, and mere general allegations and denials which do not set forth specific facts will not prevent issuance of a judgment.' "

Greene v. Morgan, Theeler, Cogley & Petersen, 1998 SD 16, p 6, 575 N.W.2d 457, 459 (citations omitted). If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper. Mack v. Kranz Farms, Inc., 1996 SD 63, p 8, 548 N.W.2d 812, 814.

Analysis and Decision

Exhaustion of Administrative Remedies

¶15 In awarding summary judgment to GAB and Presentation Sisters, the trial court stated Zuke's case was governed by South Dakota's worker's compensation statutes. SDCL 62-3-2 provides The rights and remedies herein granted to an employee subject to this title, on account of personal injury or death arising out of and in the course of employment, shall exclude all other rights and remedies of such employee, his personal representatives, dependents, or next of kin, on account of such injury or death against his employer or any employee, partner, officer, or director of such employer, except rights and remedies arising from intentional tort.

¶16 Under SDCL 62-7-12, if the employer and injured employee fail to reach an agreement with regard to worker's compensation, either party may notify the department of labor and request a hearing. If a worker's compensation claim is denied, the aggrieved party has two years to file a written request pursuant to SDCL 62-7-35. ⁴ Williams notified Zuke of her right to appeal the denial of coverage when she sent Zuke the letters denying compensation...