RESPONSE TO MOTION FOR REHEARING FILED ON BEHALF OF HOWARD INDUSTRIES, INC.

Transcription

1 E-Filed Document Jul :25: CA COA Pages: 18 IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI VINCE HARDAWAY VS. HOWARD INDUSTRIES, INC. and CORVEL ENTERPRISE COMP. INC. f/k/a SAFETY RISK SERVICES APPELLANT NO.: 2014-CA APPELLEES consolidated with TOMMIE McCRAY VS. HOWARD INDUSTRIES, INC. APPELLANT NO CA APPELLEE RESPONSE TO MOTION FOR REHEARING FILED ON BEHALF OF HOWARD INDUSTRIES, INC. Attorney for Appellants Tommie McCray and Vince Hardaway Jonathan B. Fairbank MSB No.: 5119 P.O. Box Jackson, MS Telephone: Facsimile: jonfairbanklaw@gmail.com

2 TABLE OF CONTENTS Table of Contents... i Table of Authorities... iii INTRODUCTION...1 PLAINTIFFS DO NOT CONTEST THE COURT S RULING AS TO EXHAUSTION OF ADMINISTRATIVE REMEDIES....1 THE COURT COMMITTED NO ERROR OF LAW OR FACT IN CONCLUDING THAT MISSISSIPPI JURISPRUDENCE RECOGNIZES A CAUSE OF ACTION FOR AN INSURANCE CARRIER S OR SELF-INSURED EMPLOYER S BAD FAITH REFUSAL TO INVESTIGATE OR PAY WORKERS COMPENSATION BENEFITS...2 THE COURT COMMITTED NO ERROR OF LAW OR FACT IN CONCLUDING THAT DISMISSAL OF PLAINTIFFS CLAIMS MUST BE WITHOUT PREJUDICE....4 A.. The Court committed no error of law or fact in concluding the circuit court had erred in dismissing Plaintiffs claims for bad faith delay and denial of workers compensation benefits based upon dicta in In Re Howard Industries, Inc. Self Insured....4 i.. Potential questions as to the quantum of benefits owed does not excuse HI s failure to promptly investigate and pay temporary partial disability benefits ii. Periodic and prompt payment of temporary partial disability benefits is not optional under section (1) of the Mississippi Workers Compensation Act...8 i

3 iii. The penalty provisions provided in the Act were not intended as exclusive remedies for intentional wrongdoings. Where the wrong is intentional, malicious, or calculated to cause intimidation, the Claimant is entitled to another remedy CONCLUSION CERTIFICATE OF SERVICE...13 ii

4 TABLE OF AUTHORITIES FEDERAL CASES Patrick v. Wal-Mart, Inc., th 681 F.3d 614 (5 Cir. 2012)... 1 Rogers v. Hartford Accident & Indemnity Company, th 133 F. 3d 309 (5 Cir. 1998)... 2 STATE CASES Alumax Extrusions, Inc. v. Hankins, 902 So.2d 586 (Miss. App. 2004)...9 AmFed Companies, LLC v. Jordan, 34 So.3d 1177 (Miss. App. 2009)... 2,7 Banker s Life and Casualty Company v. Crenshaw, 483 So.2d 254 (Miss. 1985)...6 Bass v. California Life Insurance Co., 581 So.2d 1087 (Miss. 1991)...6 Chapman v. Coca-Cola Bottling Co., 180 So.3d 676(Miss. App. 2015)...6 Howard Industries, Inc. v. Robinson, 846 So.2d 245 (Miss. App. 2002)...7,8,9 Illinois Central Railroad Co. v. Byrd, 44 So. 3d 943 (Miss. 2010) In Town Lessee Associates, Inc. v. Howard, 67 So.3d 711 (Miss. 2011) Liberty Mutual Insurance Co. v. McKneely, 862 So. 2d 530)(Miss. 2003)...2 Luckett v. Mississippi Wood, Inc. 481 So.2d 288 (Miss. 1985)...2,3,4 iii

5 Parker v. Ashley Furniture Industries, 164 So.3d 1081 (Miss. App. 2015)...9 Pilate v. Am Federated Insurance Co., 865 So.2d 387 (Miss. Ct. App. 2004)....7 Southern Farm Bureau Insurance Co. v. Holland, 469 So.2d 55 (Miss. 1984)... 10,11 Smith v. Jackson Construction Co., 607 So.2d 1119 (Miss. 1992)...6 Travelers Indemnity Co. v. Weatherbee, 368 So.2d 829 (Miss. 1979)...7 MWCC DECISIONS In Re Howard Industries, Inc. Self Insured... 4,5 RULES OF COURT Rule 12(b)(6) of the Mississippi Rules of Civil Procedure Rule 40 of the Mississippi Rules of Appellate Procedure...1 STATUTES Mississippi Code Mississippi Code ,6,8,10 OTHER AUTHORITIES Dunn, Mississippi Workmen s Compensation (1990 WC Publications) iv

6 INTRODUCTION Howard Industries, Inc s. (hereinafter simply HI) Motion for Rehearing fails to meet the requirements of Rule 40 of the Mississippi Rules of Appellate Procedure and should be DENIED. Rather than state with particularity the points of law or fact which the Court has allegedly overlooked, or call attention to specific errors of law or fact HI s Motion for Rehearing simply regurgitates arguments which have been previously considered and rejected by the Court in its May 24, 2016, OPINION. The Motion for Rehearing is not intended to afford an opportunity for a mere repetition of arguments already considered by the Court. HI violates this injunction by copying the 1 Brief of the Appellee, and captioning it as a Motion for Rehearing. That HI failed to adhere to Rule 40 is reason enough to DENY the Motion for Rehearing. Regardless, the Motion for Rehearing must be DENIED because a re-examination of HI s arguments reveals the Court committed no errors of law or fact in the May 24, 2016, OPINION. PLAINTIFFS DO NOT CONTEST THE COURT S RULING AS TO EXHAUSTION OF ADMINISTRATIVE REMEDIES. 2 Plaintiffs believe that Patrick v. Wal-Mart called into question when an award of workers compensation benefits became sufficiently final to begin the statute of limitations on a bad faith claim. Thus Plaintiffs filed their respective lawsuits after receiving an award of temporary partial disability benefits but before final disposition of the respective appeals in the underlying workers compensation cases. Plaintiff s interpret the May 24, 2016, OPINON as holding that their bad faith 1 Compare pages 1,2,6,9,10,11,12,13, 14, 15,16,17, 18, 19, 20,21, 22, and 23 of HI s Brief of the Appellee with pages 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, and 19 of HI s Motion for Rehearing. 2 th 681 F.3d 614 (5 Cir. 2012) -1-

7 claims did not ripen until appeals in the underlying workers compensation cases were exhausted. With the understanding that the statute of limitations on their bad faith claims did not began to run until disposition of the appeals in the underlying workers compensation cases, Plaintiffs will simply re-file their lawsuits once this appeal is concluded. Hence, Plaintiffs do not question the Court s ruling as to Plaintiffs failure to exhaust administrative remedies. THE COURT COMMITTED NO ERROR OF LAW OR FACT IN CONCLUDING THAT MISSISSIPPI JURISPRUDENCE RECOGNIZES A CAUSE OF ACTION FOR AN INSURANCE CARRIER S OR SELF-INSURED EMPLOYER S BAD FAITH REFUSAL TO INVESTIGATE OR PAY WORKERS COMPENSATION BENEFITS Mississippi jurisprudence has long recognized the right of an injured worker to pursue an action against his employer for the commission of an intentional tort independent of the accident compensable under the workers compensation act. 3 To establish a claim for bad faith delay or refusal to pay workers compensation benefits, a plaintiff must prove the following: 1) a contract of workers compensation insurance between the defendant and the plaintiff s employer; 2) the employer denied or delayed plaintiff s compensable workers compensation claim without legitimate or arguable reason; and 3) the denial of delay in payment of benefits constitutes a willful and intentional or malicious wrong. 4 3 See, e.g.,luckett v. Mississippi Wood, Inc. 481 So.2d 288, 290 (Miss. 1985) ( Today we extend Holland to include a bad faith refusal action against the employer, as well as the carrier, and hold that Luckett may recover if he can prove his claim.) 4 th Rogers v. Hartford Accident & Indemnity Company, 133 F. 3d 309,312 (5 Cir. 1998); Liberty Mutual Insurance Co. v. McKneely, 862 So. 2d 530, ( 9)(Miss. 2003); AmFed Companies, LLC v. Jordan, 34 So.3d 1177, ( 22)(Miss. App. 2009) -2-

8 Plaintiffs Complaints allege facts which, if proven, would establish a claim for the Defendants bad faith denial and delay of their claims for temporary partial disability benefits in the underlying workers compensation cases. 5 In Luckett v. Mississippi Wood, Inc. the plaintiff alleged that he was injured during the course and scope of his employment on October 1, Although the plaintiff s employer had actual notice of the injury, the employer did not file a Notice of Injury with the Mississippi Workers Compensation Commission until June or July of Moreover, the plaintiff s employer did not advise that it would provide medical treatment, and had not furnished plaintiff with any compensation benefits. 6 The trial court granted the employer s motion to dismiss plaintiff s bad faith complaint for failure to state a claim upon which relief could be granted. On appeal, the Mississippi Supreme Court reversed, finding that the pleadings alleged a willful failure to tender benefits to the plaintiff knowing his claim to be valid, and a willful and bad faith use of unequal bargaining position of the parties to effect economic gain. The Court considered the plaintiff s allegations in light of the fact that the employer and its carrier became obligated under Mississippi Code (1) and (2) to began the payment of compensation two weeks after it learned of the injury. The Court concluded that the plaintiff s pleadings were sufficient to survive a motion for failure to state a claim upon which relief may be granted So.2d 288 (Miss. 1985) 6 7 Id. Id at p

9 Plaintiffs Complaints likewise allege a wilfull failure to tender benefits while HI initially accepted their claims and knew them to be valid. Plaintiffs allege that they were injured during the course and scope of their employment. When Plaintiffs returned to work at HI under medical restrictions they earned less than their average weekly wages. Under Mississippi Code , 8 Plaintiffs were entitled to temporary partial disability benefits. Despite actual knowledge of Plaintiffs injuries, and despite the ability to quantify Plaintiffs wages, both before their injuries and during the time they returned to work under medical restrictions, the Defendants neither investigated nor paid Plaintiffs temporary total disability benefits until Plaintiffs filed Petitions to Controvert with the Mississippi Workers Compensation Commission. Just as in Luckett, the allegations of Plaintiffs Complaints, if proven, would establish a right of recovery for the Defendants bad faith refusal to investigate and timely pay Plaintiffs claims for temporary partial disability benefits. This Court committed no error of law or fact in holding dismissal of Plaintiffs Complaints should have been without prejudice. THE COURT COMMITTED NO ERROR OF LAW OR FACT IN CONCLUDING THAT DISMISSAL OF PLAINTIFFS CLAMS MUST BE WITHOUT PREJUDICE. A.. The Court committed no error of law or fact in concluding the circuit court had erred in dismissing Plaintiffs claims for bad faith delay and denial of workers compensation benefits based upon dicta in In Re Howard Industries, Inc. Self Insured. Relying upon In Re Howard Industries, Inc., the circuit court held that since no temporary partial disability benefits were due until after a hearing and determination by an administrative law 8 Mississippi Code provides as follows: In the case of temporary partial disability resulting in decrease of earning capacity, there shall be paid to the injured employee sixty-six and two thirds percent (66 2/3 %) of the difference between the injured employees average weekly wages before the injury, and his wage earning capacity after the injury in the same or other employment

10 judge, Plaintiffs had no bad faith cause of action arising out of the Defendants failure to investigate or timely pay temporary partial disability benefits. In Re Howard Industries, Inc. did not address an employer s duty to investigate and promptly pay workers compensation benefits. The Full Mississippi Commission was considering a Motion to Revoke the Self Insured Status of HI based upon the failure of HI to pay temporary partial disability benefits to several movants under the Mississippi Workers Compensation law. In denying the Motion to Revoke the Self Insured Status of HI, the Full Mississippi Workers Compensation refused to comment upon, or adjudicate any individual claim for temporary partial disability benefits. The Full Mississippi Workers Compensation Commission stated that where an employer and claimant can not agree on the extent of loss of wage earning capacity for temporary partial disability in a matter, the appropriate procedure under our rules to resolve the issue would be to seek a hearing before an Administrative Judge, not to seek revocation of an employer s status as a self insurer. The Full Mississippi Workers Compensation Commission stated only that where the employer has a defense, no temporary partial disability benefits are due until a determination of that defense by an administrative law judge. The Court committed no error of law or fact in concluding the circuit court erred in interpreting In Re Howard Industries, Inc. as holding temporary partial disability benefits are never due until after a hearing and determination by an administrative law judge and in dismissing Plaintiffs Complaints for the Defendants bad faith failure to investigate and pay workers compensation benefits. -5-

11 i.. Potential questions as to the quantum of benefits owed does not excuse HI s failure to promptly investigate and pay temporary partial disability benefits. HI convinced the circuit court that since temporary partial disability benefits are paid based upon the difference between the claimant s average weekly wage and the claimant s post injury wage earning capacity, temporary partial disability benefits are never due until an administrative law judge determines the Claimant s post injury wage earning capacity and renders an order compelling the payment of temporary partial disability benefits. Both HI and Corvel suffered under a duty to 9 promptly investigate claims for benefits. The circuit court s reasoning underlying its decision to dismiss the Complaints of Hardaway and McCray ignores the duty to investigate. McCray and Hardaway have alleged and will prove that neither HI nor Corvel investigated their claims for temporary partial disability benefits despite actual knowledge of their injuries, and despite actual knowledge that Hardaway and McCray were earning less while working under medically imposed limitations and restrictions. Had HI investigated and determined that McCray and Hardaway were earning less because of factors other than their injuries-- such as diminished availability of overtime or depressed economic conditions HI could have timely controverted McCray s and Hardaway s entitlement to temporary partial disability benefits. That is the procedure contemplated by Mississippi Code When HI finally did examine the claims of Hardaway and McCray, HI tendered sums certain as payment for temporary partial disability benefits. 9 Smith v. Jackson Construction Co, 607 So.2d 1119,1129(Miss. 1992) (Although Smith did not ask for compensation, that is not his burden. By statute the employer is required to pay compensation fourteen days after he has notice of the injury.) See also, Banker s Life and Casualty Company v. Crenshaw, 483 So.2d 254, 273 (Miss. 1985)(Insurer has a duty to investigate claims); Bass v. California Life Insurance Co., 581 So.2d 1087, 1090 (Miss. 1991)(An adjuster has a duty to investigate all relevant information and make a realistic evaluation of the claim.); Chapman v. Coca-Cola Bottling Co.,180 So.3d 676, ( 34)(Miss. App. 2015) -6-

12 It was only after McCray and Hardaway filed Petitions to Controvert and asserted their claims that HI investigated and then paid temporary partial disability benefits. However, this investigation and payment came years after McCray and Hardaway were injured. Undue delay in the investigation and payment of claims are plainly actionable under Mississippi law, and thus the circuit court erred in dismissing the Complaints of Hardaway and McCray for failure to state a claim upon which relief can be granted. Hardaway and McCray do not dispute that factors other than actual post injury wages may impact the quantum of temporary partial disability benefits owed, and may even support an absolute defense excusing the payment of benefits. That HI possessed possible defenses to claims for temporary partial disability benefits did not excuse them from investigating the claims of McCray and Hardaway. 11 HI cites Howard Industries, Inc. v. Robinson, as support for the proposition that temporary partial disability benefits are never due until a hearing and determination by an administrative law judge. HI s reliance on Robinson is misplaced. The Claimant in Robinson had worked intermittent periods during the four years between his injury and the date he attained maximum medical improvement. Rather than awarding the Claimant temporary partial disability benefits for those See, e.g., Travelers Indemnity Co. v. Weatherbee, 368 So.2d 829, (Miss. 1979) (affirming jury award for punitive damages where insurer withheld payment for eight months); Am Fed Cos., LLC v. Jordan, 34 So.3d 1177, ( 23) (Miss. Ct. App. 2009)(affirming trial judge s decision to submit punitive damages issue to jury based upon six week delay in paying benefits.) ; Pilate v. Am Federated Insurance Co., 865 So.2d 387,( 67) (Miss. Ct. App. 2004)(The duty to timely investigate and pay workers compensation claims is a mutual obligation of both the claimant and the employer and carrier. The employer and carrier may not ignore the duty and wait for the claimant to provide the necessary information. ) So.2d 245 (Miss. Ct. App. 2002) -7-

13 periods the Claimant worked for diminished wages while under medically imposed limitations and restrictions, the Commission simply awarded the Claimant temporary total disability benefits for 12 four years and gave the employer credit for those periods the claimant worked. On appeal, the Court of Appeals determined the computation employed by the Commission was incorrect because temporary total and temporary partial disability benefits are computed differently, and because the Claimant may have been entitled to temporary partial disability benefits during those periods he worked prior to attaining maximum medical improvement. 13 The Court of Appeals remanded Robinson s case to the Commission, not because of a rule that a hearing is required prior to payment of temporary partial disability benefits, but because the Commission had employed the wrong method of computing temporary benefits and further evidence was needed to calculate temporary benefits accurately. HI seeks solace in the fact that the Robinson Court failed to find that Howard did anything wrong. However, whether HI was wrong in the manner it paid or did not pay Robinson temporary benefits was not an issue discussed by the Court. ii. Periodic and prompt payment of temporary partial disability benefits is not optional under section (1) of the Mississippi Workers Compensation Act. Mississippi Code (1) plainly provides that Compensation under this chapter shall be paid periodically, promptly, in the usual manner, and directly to the person entitled thereto, without an award except where liability to pay compensation is controverted by the employer. (emphasis mine.) In direct contradiction of the statutory injunction that benefits shall be paid periodically and promptly, HI urges that it can not be culpable of bad faith as a matter of law 12 Id. at s20, Id. at s 26,

14 because it had the option of paying benefits promptly and periodically, or waiting till ordered to do so by an administrative law judge. HI reasons that, since the Claimant bears the burden of proving entitlement to benefits, it is optional whether the employer pays voluntarily or pursuant to Commission Order. Again, HI s argument ignores an Employer s duty to promptly investigate and pay meritorious claims for benefits. Where a claim for temporary partial disability benefits is controverted, the Claimant bears the burden of proving his claim. However, the Employer suffers under the duty to investigate claims, and pay, promptly and periodically, legitimate claims for benefits. Indeed, employers routinely pay temporary partial disability benefits promptly and periodically without hearing or Commission involvement. 14 Making periodic and prompt payment of temporary partial disability benefits optional until a hearing and order, would be directly contrary to the beneficent purposes of the act. Temporary disability benefits represent a substitute for wages lost while the employee recovers from injury. 15 Forcing an employee to wait months, and possibly years to receive temporary partial disability benefits pursuant to an Order compelling payment would deprive the employee of benefits when he needed them most: while he was recovering from his injury. Moreover, a ruling that payment of temporary partial disability benefits was optional until a hearing and order compelling payment would increase the work of the Commission and this Court exponentially. If given the option most employers and insurers would defer payment of temporary 14 See e.g., Parker v. Ashley Furniture Industries, 164 So.3d 1081, ( 6) (Miss. App. 2015); Alumax Extrusions, Inc. v. Hankins, 902 So.2d 586, ( 12) (Miss. App. 2004). 15 Robinson, 846 So.2d at ( 23). -9-

15 partial disability benefits until ordered to pay by the Commission. The Commission and this Court would see a dramatic increase in the number of hearings were Claimants required to request hearings in every case wherein an entitlement to temporary partial disability benefits was alleged. Finally, Employers are subject to a ten percent penalty if any installment of compensation payable without an award is not paid within fourteen (14) day, after it becomes due. The purpose 17 of this penalty is to enforce periodic and prompt payment of benefits. That the employer must pay a ten percent penalty for failing to pay benefits promptly and periodically as provided in the Act means that prompt and periodic payment of benefits is not optional. The employer must either controvert, pay, or suffer the ten percent penalty. iii. The penalty provisions provided in the Act were not intended as exclusive remedies for intentional wrongdoings. Where the wrong is intentional, malicious, or calculated to cause intimidation, the Claimant is entitled to another remedy. HI urges that the sole remedy to compensate an injured employee for the untimely payment of benefits deemed due after a hearing, is an award of statutory interest on those back due payments, pursuant to Mississippi Code (5), and not an impermissible bad faith lawsuit. HI did not raise this argument before the trial court, and is therefore procedurally barred from 18 raising this issue for the first time on appeal. Moreover, the Mississippi Supreme Court expressly rejected this argument in Southern Farm Mississippi Code (5). 17 Dunn, Mississippi Workmen s Compensation 296 (1990 WC Publications) 18 See, In Town Lessee Associates, Inc. v. Howard, 67 So.3d 711, ( 25) (Miss. 2011); Illinois Central Railroad Co. v. Byrd, 44 So. 3d 943, ( 14) (Miss. 2010)(unless substantial rights are affected, issues not presented to the trial judge are procedurally barred from being raised for the first time on appeal.) -10-

16 Bureau Casualty Insurance Company v. Holland. 19 The Employer in Holland, just as HI in this case, argued that the penalty provisions of Mississippi Code (5) and (6) constituted the Claimant s exclusive remedy for the late or non-payment of benefits. In rejecting this argument, the Mississippi Supreme Court stated [t]his provision of the Act did not contemplate the commission of an independent tort, and its penalty is hardly adequate to deter wilful actions of an overreaching insurance company against a weekly wage earner...the penalty provisions, designed to provide some measure of compensation where claims are not promptly paid due to the negligence of the carrier, are inadequate to deter intentional wrongdoing by the carrier. 20 Under Holland, the penalty provisions of the Act are not the exclusive remedy for late or nonpayment of benefits. If McCray and Hardaway can prove their allegations that HI s failure to investigate and pay benefits timely was wilful and malicious, they would be entitled to recover consequential and punitive damages for HI s intentional tort. Because Hardaway and McCray would be entitled to relief if the allegations of their Complaints are proven, the circuit court erred in dismissing their Complaints with prejudice under Rule 12 (b) (6) of the Mississippi Rules of Civil Procedure So.2d 55 (Miss. 1984) 20 Id. at p

17 CONCLUSION The Motion for Rehearing should be DENIED because this Court committed no error of law or fact in finding the circuit court erred in dismissing the Complaints of McCray and Hardaway with prejudice. The May 24, 2016, OPINION finding that dismissal of Plaintiffs Complaints should have been without prejudice should not be disturbed. The Plaintiffs respectfully request that the Court issue its mandate, and allow the Plaintiffs to proceed accordingly. Respectfully Submitted, /s/ Jonathan B. Fairbank Counsel for Appellant s, Tommie McCray and Vince Hardaway Mississippi State Bar No.: 5119 P.O. Box Jackson, MS Telephone: Facsimile:

18 CERTIFICATE OF SERVICE I Jonathan B. Fairbank certify that I have this day electronically filed the above and foregoing RESPONSE TO MOTION FOR REHEARING FILED ON BEHALF OF HOWARD INDUSTRIES, INC. with the Clerk of the Court using the MEC system which sent notification to all counsel of record. Richard L. Yoder, Jr., Esq. P.O. Box 106 Laurel, MS As Counsel for Howard Industries, Inc. Richard T. Lawrence, Esq. P.O. Box 650 Jackson, MS I further certify that I have served the following persons by mailing, postage prepaid or by sending facsimile a true and correct copy of the foregoing RESPONSE TO MOTION FOR REHEARING FILED ON BEHALF OF HOWARD INDUSTRIES, INC. to their last known business address: Circuit Court of Jones County, Mississippi c/o Honorable Dal Williamson Circuit Court Judge P.O. Box 65 Laurel, Mississippi Billy J. Landrum, Esq. Former Circuit Court Judge By Facsimile: This the 8 day of July 2016 TH /s/ Jonathan B. Fairbank Mississippi State Bar No.: 5119 P.O. Box Jackson, MS Telephone: Facsimile: jonfairbanklaw@gmail.com -13-