Zurich Ins. Co. v. Mitchell, Nos. 85-SC-643-D

CourtUnited States State Supreme Court (Kentucky)
Writing for the CourtWINTERSHEIMER; STEPHENS; VANCE; LEIBSON; GANT; LEIBSON
Citation712 S.W.2d 340
Decision Date12 June 1986
Docket NumberNos. 85-SC-643-D,85-SC-643-D,85-SC-650-DG
PartiesZURICH INSURANCE COMPANY, Underwriters Safety & Claims, Inc., and Courier-Journal & Louisville Times Company, Appellants, v. Ada M. MITCHELL, Personal Representative of the Estate of William W. Mitchell, Deceased, Appellee.

Page 340

712 S.W.2d 340
ZURICH INSURANCE COMPANY, Underwriters Safety & Claims,
Inc., and Courier-Journal & Louisville Times
Company, Appellants,
v.
Ada M. MITCHELL, Personal Representative of the Estate of
William W. Mitchell, Deceased, Appellee.
Nos. 85-SC-643-DG, 85-SC-643-DG, 85-SC-650-DG
Supreme Court of Kentucky.
June 12, 1986.

Roy Kimberly Snell, Frank P. Hilliard, Louisville, for appellants Zurich Insurance Co.

Armer H. Mahan, Jr., Louisville, for appellant Underwriters Safety & Claims, Inc.

J. Baxter Schilling, Louisville, for appellant Courier Journal & Louisville Times Co.

Alan W. Roles, Louisville, for appellee.

E. Andre Busald, Florence, for amicus curiae, Kentucky Academy of Trial Attorneys.

WINTERSHEIMER, Justice.

This appeal is from a decision of the Court of Appeals which reversed a circuit court summary dismissal of Mitchell's complaint which sought damages in tort for the alleged outrageous conduct of the appellees in delaying the payment of certain medical expenses arising out of a worker's compensation claim.

The question presented is whether the Workers' Compensation Act provides an exclusive remedy and therefore bars an employee's tort action for separate damages because of untimely payment of certain benefits or whether such action can be the basis of a suit for outrageous conduct causing emotional distress.

Mitchell received a 100 percent permanent total disability award following an angina attack arising out of his employment with the Courier Journal & Louisville Times Company. The company and its insurance carrier began paying the benefits and expenses pursuant to the award in June 1981, but stopped payment of the medical expenses later that year. Litigation

Page 341

ensued and ultimately the claim was fully paid. Mitchell then sued in tort against the Courier Journal and its compensation carriers charging them with outrage and bad faith in refusing to fully pay his medical expenses under the compensation award. The circuit court granted the Courier Journal's motion for summary judgment as well as the insurance company's motions for judgment on the pleadings holding that the compensation law provided the exclusive remedy for claims arising out of a delay by an employer or insurance carrier. The Court of Appeals reversed that decision and remanded the case for further proceedings. This Court granted discretionary review.

This Court reverses the decision of the Court of Appeals because the Workers' Compensation Act provides an exclusive remedy and consequently bars an employee's tort action for separate damages due to the untimely payment of benefits. Neither the tort of outrage, nor bad faith, applies in this situation.

KRS 342.690 provides the exclusive remedy for the collection of compensation payments. An independent tort action filed by a former employee when the facts alleged demonstrate that the only conduct complained of is a delay in the payment of certain medical bills does not give rise to a claim of bad faith or outrage. Injection of a claim or cause of action based on Feathers v. State Farm Fire & Casualty Co., Ky.App., 667 S.W.2d 693 (1983), is inappropriate because the Kentucky statute already provides for sanctions against "bad faith" conduct. The delay in the payment of medical bills demonstrated in this case cannot be the basis for an action for outrageous conduct pursuant to Craft v. Rice, Ky., 671 S.W.2d 247 (1984).

The exclusivity of the remedies created by the Workers' Compensation Act has been and remains a fundamental legislative objective. This Court recognized that the diversion of cases involving work-related accidents from the courts to an administrative forum involved a mutual tradeoff which conferred benefits and imposed restraints on both employer and employee. Morrison v. Carbide & Chemicals Corp., 278 Ky. 746, 129 S.W.2d 547 (1939). Chapter 342 applies to the adjudication of claims as well as the administration of awards. The drafters of the legislation wisely anticipated that disputes would arise in the administration of an award. Consequently, medical expenses claimed pursuant to an award are subject to the approval of the Board. KRS 342.325 confers broad authority on the Board to resolve all questions arising under this chapter if not settled by agreement of the parties. KRS 342.040 imposes a 12 percent interest penalty on delayed payments and KRS 342.990(2) authorizes the imposition of fines and imprisonment on those who violate the time requirements of the statute which is KRS 342.040. KRS 342.210 allows the Board to assess the whole cost of the proceeding against the party who brings, prosecutes or defends a proceeding without reasonable grounds. Kentucky Workers' Compensation Law provides several safeguards to insure that alleged misconduct or delay in payment by an employer or its insurance carrier can be presented quickly and appropriate relief granted, if required, by the Board or courts.

Brown Badgett, Inc. v. Calloway, Ky., 675 S.W.2d 389 (1984) holds that Chapter 342 gives the Board exclusive jurisdiction to determine the reasonableness of medical expenses claimed under its award as in the present case. Brown Badgett, supra, involved the refusal of an employer to pay a medical bill submitted by the employee on the grounds that the bill was for an expert witness fee rather than a necessary medical expense. This Court determined that the Board and not the circuit court had jurisdiction to determine the reasonableness of a claimed medical expense and the statutes require that the complaining party petition the Board to resolve the dispute.

Brown Badgett has been extended in Westvaco Corporation and Fred S. James & Company v. Fondaw, Ky., 698 S.W.2d 837 (1985) to require the complaining party to petition the Board to resolve the dispute.

Page 342

While the language of the exclusive remedy provision of the statute appears clear, appellate courts from other states are divided on whether the exclusive remedy sections of a Workers' Compensation Act bar a separate tort action recovery. There are as many as three separate legal theories which have been adopted on this question. The majority view is that the exclusive remedy provisions of the law bar a separate tort action. The minority position has two sections. One minority position is that the exclusive remedy provided in the act will bar a tort claim only if the allegation in the tort claim is that there has been a delay in the payment of benefits. The other minority view is that the exclusive remedy provided in the law does not bar a separate tort action brought by an employee against his employer or its insurance carrier.

The majority view can be traced to Penn v. Standard Accident Ins. Co., 4 A.D.2d 796, 164 N.Y.S.2d 618 (1957). Robertson v. Travelers Insurance Co., 95 Ill.2d 441, 69 Ill.Dec. 954, 448 N.E.2d 866 (1983), which analyses both the majority and minority positions regarding this issue. The Colorado Supreme Court has also recently reviewed this problem in the case of Travelers Insurance Co. v. Savio, Colo., 706 P.2d 1258 (1985). In its analysis of many of these same cases the court therein adopts the minority view. Other recent cases of interest in this field are Harned v. Farmland Foods, Inc., Ia., 331 N.W.2d 98 (1983); Sullivan v....

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53 practice notes
  • DeOliveira v. Liberty Mut. Ins. Co., No. 17132
    • United States
    • Supreme Court of Connecticut
    • May 3, 2005
    ...and 31-300; is broad enough to encompass the bad faith processing of a workers' compensation claim. See Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340, 342 (Ky.1986) ("allegation that the benefits have been unpaid, whether negligently, recklessly or intentionally constitutes a denial without r......
  • Kuykendall v. Gulfstream Aerospace Tech., No. 97,036.
    • United States
    • Supreme Court of Oklahoma
    • December 17, 2002
    ...P.2d 203, 209 (1989); Ancrum v. United States Fidelity & Guar. Co., 301 S.C. 32, 389 S.E.2d 645-46 (1989); Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340 (Ky.1986); Aetna Cas. & Surety Co. v. Davis, 253 Ga. 376, 320 S.E.2d 368, 370 (1984); Hormann v. New Hampshire Ins. Co., 236 Kan. 190, 689 P......
  • Tex. Mut. Ins. Co. v. Ruttiger, No. 08–0751.
    • United States
    • Supreme Court of Texas
    • September 21, 2012
    ...Co., 782 N.E.2d 345, 349–50 (Ind.2003); Hormann v. N.H. Ins. Co., 236 Kan. 190, 689 P.2d 837, 840 (1984); Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340, 341 (Ky.1986); Kelly v. CNA Ins. Co., 729 So.2d 1033, 1034 (La.1999); Fleming v. Nat'l Union Fire Ins. Co., 445 Mass. 381, 837 N.E.2d 1113, ......
  • DeOliveira v. Liberty Mutual Insurance Company
    • United States
    • Supreme Court of Connecticut
    • May 3, 2005
    ...(b) and 31-300; is broad enough to encompass the bad faith processing of a workers' compensation claim. See Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340, 342 (Ky. 1986) ("allegation that the benefits have been unpaid, whether negligently, recklessly or intentionally constitutes a denial with......
  • Request a trial to view additional results
53 cases
  • DeOliveira v. Liberty Mut. Ins. Co., No. 17132
    • United States
    • Supreme Court of Connecticut
    • May 3, 2005
    ...and 31-300; is broad enough to encompass the bad faith processing of a workers' compensation claim. See Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340, 342 (Ky.1986) ("allegation that the benefits have been unpaid, whether negligently, recklessly or intentionally constitutes a denial without r......
  • Kuykendall v. Gulfstream Aerospace Tech., No. 97,036.
    • United States
    • Supreme Court of Oklahoma
    • December 17, 2002
    ...P.2d 203, 209 (1989); Ancrum v. United States Fidelity & Guar. Co., 301 S.C. 32, 389 S.E.2d 645-46 (1989); Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340 (Ky.1986); Aetna Cas. & Surety Co. v. Davis, 253 Ga. 376, 320 S.E.2d 368, 370 (1984); Hormann v. New Hampshire Ins. Co., 236 Kan. 190, 689 P......
  • Tex. Mut. Ins. Co. v. Ruttiger, No. 08–0751.
    • United States
    • Supreme Court of Texas
    • September 21, 2012
    ...Co., 782 N.E.2d 345, 349–50 (Ind.2003); Hormann v. N.H. Ins. Co., 236 Kan. 190, 689 P.2d 837, 840 (1984); Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340, 341 (Ky.1986); Kelly v. CNA Ins. Co., 729 So.2d 1033, 1034 (La.1999); Fleming v. Nat'l Union Fire Ins. Co., 445 Mass. 381, 837 N.E.2d 1113, ......
  • DeOliveira v. Liberty Mutual Insurance Company
    • United States
    • Supreme Court of Connecticut
    • May 3, 2005
    ...(b) and 31-300; is broad enough to encompass the bad faith processing of a workers' compensation claim. See Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340, 342 (Ky. 1986) ("allegation that the benefits have been unpaid, whether negligently, recklessly or intentionally constitutes a denial with......
  • Request a trial to view additional results

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