Opinion
Case No. 8:19-cv-1275-T-35AAS
03-31-2020
TIBBETTS LUMBER CO., LLC, Plaintiff, v. AMERISURE INSURANCE COMPANY, Defendant.
David Lisko, Jason H. Baruch, Holland & Knight, LLP, Tampa, FL, for Plaintiff. Bruce A. Aebel, Ryan Steven Stratton, Banker Lopez Gassler, Tampa, FL, for Defendant.
David Lisko, Jason H. Baruch, Holland & Knight, LLP, Tampa, FL, for Plaintiff.
Bruce A. Aebel, Ryan Steven Stratton, Banker Lopez Gassler, Tampa, FL, for Defendant.
ORDER
MARY S. SCRIVEN, UNITED STATES DISTRICT JUDGE
THIS CAUSE comes before the Court for consideration of Defendant's Motion to Dismiss, (Dkt. 15), Plaintiff's response in opposition thereto, (Dkt. 17), Defendant's reply in support, (Dkt. 24), and Plaintiff's sur-reply in opposition. (Dkt. 30) Upon consideration of the relevant filings, case law, and being otherwise fully advised, the Court finds that Defendant's Motion is due to be DENIED .
I. BACKGROUND
Plaintiff brings this case against its workers' compensation insurer for breach of contract, breach of fiduciary duty, breach of implied covenant of good faith and fair dealing, and negligent misrepresentation arising from Defendant's alleged failure to conduct good faith investigations into workers' compensation claims and acceptance of fraudulent claims out of expediency. (Dkt. 10) The relevant allegations in Plaintiff's Amended Complaint are as follows.
Defendant is a workers' compensation insurer in the State of Florida. (Id. at ¶ 1) In its advertisements, Defendant claims to help its insureds contain losses and fight workers' compensation fraud through a comprehensive program and highly trained and experienced team of investigators. (Id. at ¶¶ 1, 19) Plaintiff relied on Defendant's advertising in choosing a workers' compensation insurer. (Id. at ¶ 20) Plaintiff obtained a workers' compensation policy from Defendant that was renewed several times (the "Contract") and paid nearly $2,000,000 to Defendant pursuant to the terms of the Contract. (Id. at ¶ 2)
Plaintiff alleges that, pursuant to the terms of the Contract and in conjunction with the Workers' Compensation Statute, Chapter 440, Florida Statutes, Defendant was required to conduct good faith investigations into Plaintiff's employees' workers' compensation claims to determine if, to a reasonable degree of medical certainty based on objective medical findings, the injury arose out of work performed in the course and scope of the claimant's employment with Plaintiff and was a major contributing cause of the injury. (Id. at ¶ 5) Plaintiff contends that Defendant was required to conduct these investigations prior to accepting them and that Plaintiff relied on Defendant to do so. (Id. at ¶ 22) Plaintiff further alleges that Defendant did not have the authority to accept fraudulent claims out of expediency, as the Contract did not include a "deems-expedient" clause. (Id. at ¶ 5)
Despite this alleged contractual obligation, Plaintiff claims that Defendant failed to conduct any investigations into Plaintiff's employees' workers' compensation claims. (Id. at ¶ 6) As a result, Plaintiff alleges that it has suffered damages, including substantially increased workers' compensation insurance premiums, lost employee resources, and ancillary expenses, such as investigation costs. (Id. )
In the Amended Complaint, Plaintiff details specific examples of workers' compensation claims that Defendant accepted without investigation. For example, on September 25, 2015, an employee of Plaintiff ("Claimant") allegedly injured himself unloading a lightweight metal rod. (Id. at ¶ 26) Plaintiff reported Claimant's injury to Defendant and provided Defendant with the information Defendant requested related to Claimant's workers' compensation claim ("the Claim"), including an Injured Employee Report and a First Report of Injury or Illness Form, as well as access to any of its employees. (Id. at ¶¶ 26–27) Plaintiff alleges that the Claim was suspicious because Claimant was obese, had a history of hernias, and allegedly injured himself with no witnesses present by picking up a rod that weighed approximately two (2) lbs. (Id. at ¶ 28)
Although Plaintiff shared these concerns with Defendant, Defendant allegedly failed to conduct a good faith investigation into the Claim. (Id. at ¶¶ 28, 31) Defendant did not question Claimant regarding his prior medical history and never obtained any of Claimant's pre-injury medical records. (Id. ) Plaintiff alleges that Defendant accepted the Claim without determining whether (a) to a reasonable degree of medical certainty based on objective medical findings, Claimant's alleged injury arose out of work performed for Plaintiff, or (b) the alleged incident was a major contributing cause of the injury. (Id. at ¶ 32) Plaintiff further alleges that Defendant accepted the Claim without investigating whether Claimant's injury predated the incident. (Id. at ¶ 33)
After accepting the Claim, Defendant referred Claimant to Dr. Kevin J. Hirsch to perform hernia repair surgery. (Id. at ¶ 34) Dr. Hirsch determined that Claimant had three hernias, at least one of which predated the alleged injury. (Id. at ¶ 35) Plaintiff alleges that Dr. Hirsch never questioned Claimant regarding his pre-injury medical conditions, reviewed any of Claimant's pre-injury medical records, or questioned any of Claimant's medical providers. (Id. ) Nevertheless, Defendant entered into a contract with Dr. Hirsch to treat all three of Claimant's hernias. (Id. at ¶ 36) Dr. Hirsch performed outpatient hernia repair surgery on Claimant on June 23, 2016, which resulted in severe complications. (Id. at ¶¶ 36–37) The resulting treatments cost several hundreds of thousands of dollars. (Id. at ¶ 37)
Plaintiff remained suspicious of the Claim and again shared its concerns with Defendant, which continued to ignore Plaintiff. (Id. at ¶ 38) Plaintiff also allegedly became frustrated with Defendant regarding another workers' compensation claim that cost "tens of thousands of dollars" but "turned out to be a wood splinter the workers' compensation claimant sustained at home." (Id. )
In September of 2017, Defendant asked Plaintiff to pay for Claimant to have a weight loss surgery so that he could become medically fit to have another hernia surgery. (Id. at ¶ 39) Additionally, on September 19, 2017, Claimant filed a new workers' compensation claim, which was also accepted, for an alleged twisted ankle. (Id. ) Plaintiff was suspicious of this claim as well because a GPS device on Claimant's work truck established that he had been home for several hours at the time of the alleged injury. (Id. )
Plaintiff demanded that Defendant reopen its investigation into the validity of the Claim. (Id. at ¶ 41) However, Defendant did not reopen the investigation or request an independent medical examination of Claimant. (Id. at ¶ 42) Instead, Defendant sent a short letter to Dr. Hirsch but did not get a response or obtain any medical records. (Id. ) One of Defendant's representatives admitted during this process that Defendant never investigated the Claim and suggested that Plaintiff's outside legal counsel investigate because Defendant would not. (Id. )
Plaintiff engaged counsel and began its own investigation into the Claim in May of 2018, a process that cost Plaintiff tens of thousands of dollars. (Id. at ¶ 43) Plaintiff requested and was given Defendant's file regarding the Claim and subpoenaed medical records that showed the hernias were pre-existing on the date of the alleged injury. (Id. at ¶ 44) In June of 2018, Plaintiff also requested that Defendant investigate and obtain pre-injury medical records regarding another workers' compensation claimant who sustained an alleged back injury. (Id. at ¶ 45) Defendant claimed that it could not obtain these records. (Id. )
In July of 2018, Plaintiff shared the results of its investigation and the medical records it obtained, and Defendant admitted that it did not have any of Claimant's medical records of Claimant's pre-existing conditions. (Id. ) As a result, Defendant engaged counsel to investigate the Claim. (Id. at ¶ 47) Using the medical records Plaintiff provided to Defendant, Defendant's counsel determined the Claim was fraudulent and should have been denied. (Id. at ¶ 48)
On December 5, 2018, Defendant filed before a judge of compensation claims a Motion for Summary Final Order That Claims For Benefits Are Barred for Misrepresentation Pursuant to Sections 440.105 and 440.09, Florida Statutes. In that motion, Defendant asserted that "it is undisputed that the Claimant's hernias pre-existed the alleged date of accident" and requested entry of a summary final order concluding that all contested and outstanding requests for benefits are barred. (Id. at ¶ 49) On December 7, 2018, the Motion was summarily dismissed based on lack of jurisdiction because there was no petition for benefits pending. (Id. at ¶ 50) Defendant then denied the Claim, and Claimant has not contested the denial. (Id. at ¶ 51)
Plaintiff contends that as a result of Defendant's failure to investigate the Claim until July of 2018, Plaintiff's workers' compensation insurance premiums increased drastically because of the impact the Claim had on Plaintiff's workers' compensation experience modifier. (Id. at ¶ 52) Additionally, Plaintiff incurred costs for performing its own investigation and paid Claimant for approximately five hours of work missed per week after the date of alleged injury until the date of his termination. (Id. ) Plaintiff alleges upon information and belief that it is Defendant's policy not to request medical records predating the alleged dates of injury for claimants. (Id. at ¶ 53)
Plaintiff and Defendant ended their contractual relationship in late 2018. (Id. at ¶ 54) However, Plaintiff alleges that Defendant continued to be responsible for multiple workers compensation claims, including a claim related to an employee's knee injury. (Id. ) In March of 2019, the Parties discovered that the knee injury claimant was dishonest regarding some aspects of the claim. (Id. at ¶ 55) Plaintiff requested to see Defendant's file on the claimant, but Defendant refused to allow Plaintiff to investigate or produce any medical records. (Id. )
On May 13, 2019, Plaintiff sued Defendant in state court for breach of contract, breach of fiduciary duty, and violation of Florida's deceptive and unfair trade practices act, Fla. Stat. § 501.204. (Dkt. 1-1) Defendant timely removed the case on May 24, 2019, asserting subject matter jurisdiction based on 28 U.S.C. § 1332(a). (Dkt. 1) On June 17, 2019, Plaintiff filed an Amended Complaint a matter of course, asserting claims for breach of contract ("Count One"), breach of fiduciary duty ("Count Two"), breach of implied covenant of good faith and fair dealing ("Count Three"), and negligent misrepresentation ("Count Four"). (Dkt. 10) The Amended Complaint is the operative complaint in this action. Defendant has moved to dismiss all counts of the Amended Complaint with prejudice for failure to state a claim, failure to comply with conditions precedent, and because Defendant contends that Plaintiff's claims are barred by the exclusivity provision of Florida's Workers' Compensation Statute. (Dkt. 15) The Motion is ripe for review.
II. LEGAL STANDARD
The threshold for surviving a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is a low one. Quality Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev. Corp., S.A., et al., 711 F.2d 989, 995 (11th Cir. 1983). A plaintiff must plead only enough facts to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1968–69, 167 L.Ed.2d 929 (2007) (abrogating the "no set of facts" standard for evaluating a motion to dismiss established in Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). Although a complaint challenged by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff is still obligated to provide the "grounds" for his entitlement to relief, and "a formulaic recitation of the elements of a cause of action will not do." Berry v. Budget Rent A Car Sys., Inc., 497 F. Supp. 2d 1361, 1364 (S.D. Fla. 2007) (quoting Twombly, 127 S.Ct. at 1964–65 ). In evaluating the sufficiency of a complaint in light of a motion to dismiss, the well pleaded facts must be accepted as true and construed in the light most favorable to the plaintiff. Quality Foods, 711 F.2d at 994–95. However, the court should not assume that the plaintiff can prove facts that were not alleged. Id. Thus, dismissal is warranted if, assuming the truth of the factual allegations of the plaintiff's complaint, there is a dispositive legal issue which precludes relief. Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989).
III. DISCUSSION
A. Whether Plaintiff's Claims are Disguised Impermissible Bad Faith Claims
Defendant contends that Plaintiff's claims must be dismissed because they are not recognized by Florida law. Specifically, Defendant asserts that Counts One, Two, and Three are "nothing more than improper attempts to secure extra-contractual (bad faith) damages." (Dkt. 15 at 2) Defendant also asserts that Count Four fails to state a claim because "Florida does not recognize a cause of action against an insurer for extra-contractual advertisements." (Id. at 2–3) However, contrary to applicable standard of review, Defendant's arguments require the Court to recast Plaintiff's Amended Complaint rather than accepting its well-pled allegations in assessing the viability of the action. Quality Foods, 711 F.2d at 994–95. Accepting the well-pled allegations as set forth in summary above, the Court finds that the Amended Complaint states a cause of action.
Likewise, the Court rejects the Defendant's mistaken premise that Plaintiff's causes of action as pled are disguised bad faith claims and concludes that the action may move forward at this stage. Defendant argues the allegations in the Amended Complaint are impermissible first-party bad faith claims, despite being styled otherwise. As such, Defendant claims they must be dismissed with prejudice for various reasons, including that first-party bad faith claims are subject to the conditions precedent in Florida's Civil Remedy Statute, Fla. Stat. § 624.155, which Plaintiff can never satisfy and because Florida's Workers' Compensation Statute prohibits bad faith claims against workers' compensation insurers. (Dkts. 15, 24) These very arguments highlight the fact that the instant suit is not brought as a bad faith claim. In fact, Defendant recognizes in its Motion that bad faith claims in Florida generally "are limited to instances when an insurer fails to pay a claim and exposes an insured to a judgment in excess of policy limits." (Dkt. 15 at 10) (emphasis in original) Plaintiff's causes of action plainly do not fit within the construct of Florida's bad faith insurance law in this respect.
Under Florida common law, a third-party bad faith action generally involves a claim "in which an insured sues his liability insurance company for bad faith in failing to settle a claim which ultimately results in a third-party judgment against him in excess of the policy limits." QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass'n, Inc., 94 So. 3d 541, 545 (Fla. 2012). On the other hand, "[a] first-party bad-faith action involves a case in which an insured sues his or her own insurance company for improper denial of benefits." Id. at 546 n.1. (emphasis added) A first-party bad faith claim is not recognized under the common law and may be brought only pursuant to Florida's "Bad Faith Statute," Section 624.155, Florida Statutes, which imposes the filing of a Civil Remedy Notice as a condition precedent to suit. Id. at 546–47.
The allegations in the Amended Complaint implicate neither a third-party nor a first-party bad faith claim. Plaintiff does not plead that Defendant improperly denied benefits due or failed to settle a workers' compensation claim, nor does Plaintiff bring suit premised on an excess third-party judgment entered against it based on Defendant's failure to settle within policy limits.
Instead, Plaintiff alleges, sufficient to withstand dismissal, that Defendant breached the Parties' Contract by failing to properly evaluate claims when it routinely accepted them without conducting any investigation as to whether payment was due pursuant to workers' compensation law, as Plaintiff claims it was obligated to do. This practice allegedly resulted in the acceptance and payment of numerous fraudulent workers' compensation claims that were, in fact, not due, which damaged Plaintiff in the form of increased premiums and other costs. Based on these allegations, Plaintiff's claims are governed by contract law, not the body of law governing bad faith actions. Thus, because the Court finds that the causes of action are not disguised bad faith claims, Defendant's arguments for dismissal miss the mark. Any argument by Defendant that the Contract provisions, which require Defendant to pay claims that are due, do not implicitly provide for the concomitant obligation to investigate whether the claims are, in fact, due before accepting and paying them can more properly be raised on a motion for summary judgment.
The Florida Supreme Court has acknowledged that a common law, third-party bad faith claim may be premised on an insurer's improvident settlement of claims, rather than the more typical case premised on an insurer's failure to settle. See Shuster v. South Broward Hospital District Physicians' Professional Liability Insurance Trust, 591 So. 2d 174 (Fla. 1992). In Shuster, an insurance company settled three medical malpractice suits against an insured physician within the policy limits, but the physician claimed the settlements resulted in his being unable to obtain medical malpractice insurance, which limited his practice. Id. at 176. The physician brought an action under the common law for third-party bad faith. Id. The Florida Supreme Court addressed whether the insured could pursue its insurer for bad faith where the insurer settled a cause of action against the insured within the policy limits of an insurance contract, which provided that the insurer may settle the claim as it deems expedient and where the insured was not exposed to an excess judgment but incurred other damages as a result. 591 So. 2d at 175.
In answering the certified question, the Florida Supreme Court recognized its previous holding that insurers generally owe a duty to exercise good faith in handling claims against their insureds. Id. at 176 (citing Boston Old Colony Insurance Co. v. Gutierrez, 386 So.2d 783, 785 (Fla. 1980). In Boston Old Colony Insurance Co., the Florida Supreme Court had explained:
An insurer, in handling the defense of claims against its insured, has a duty to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business. For when the insured has surrendered to the insurer all control over the handling of the claim, including all decisions with regard to litigation and settlement, then the insurer must assume a duty to exercise such control and make such decisions in good faith and with due regard for the interests of the insured. This good faith duty obligates the insurer to advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of an excess judgment, and to advise the insured of any steps he might take to avoid same. The insurer must investigate the facts, give fair consideration to a settlement offer that is not unreasonable under the facts, and settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so. Because the duty of good faith involves diligence and care in the investigation and evaluation of the claim against the insured, negligence is relevant to the question of good faith.
386 So.2d at 785 (citations omitted). The Boston Old Colony court further explained that "[a]n insurer cannot escape liability for breach of the duty of good faith by acting upon what it considers to be its interest alone." Id. at 786. The Shuster court determined that where the policy contains a "deems expedient" clause with respect to settlement, an insurer may settle a claim within the policy limits even where the claim is frivolous and without consideration of the insured's best interest. Id. Thus, although Florida courts recognize that there is a duty on behalf of an insurer to exercise good faith in the settlement of claims under Florida law, this duty may be limited contractually. See Rogers v. Chicago Ins. Co., 964 So. 2d 280, 283 (Fla. 4th DCA 2007).
Shuster is factually inapposite as the plaintiff in that action expressly pled a common law third-party bad faith claim, whereas Plaintiff here has not asserted a bad faith claim at all, and Defendant contends the instant claims are disguised first-party bad faith claims, not third-party claims. Additionally, the Contract at issue in this case does not contain a "deems expedient" clause regarding the insurer's right to settle. Thus, even if the Court were to interpret the allegations at issue in the Amended Complaint as disguised first-party bad faith claims, which it does not, the holding in Shuster would not bar the suit, as pled.
Thus, construing the allegations of the Complaint in the light most favorable to the Plaintiff at the motion to dismiss stage, the Court finds that Plaintiff's claims are not disguised bad faith causes of action and survive dismissal.
B. Exclusivity of Florida's Workers' Compensation Statute
Defendant also contends that Plaintiff's Amended Complaint must be dismissed because the Florida Workers' Compensation Statute is the exclusive remedy for workers' compensation claims and provides immunity to workers' compensation insurance carriers such as Defendant. (Dkt. 15 at 5 n.3; Dkt. 24 at 3–4)
Florida's Workers' Compensation Act governs the right of an injured employee to recover from his employer for an injury sustained in the course of his employment. See Fla. Stat. § 440.015. "Under the no-fault system created by the Act, ‘the employee gives up a right to a common-law action for negligence in exchange for strict liability and the rapid recovery of benefits.’ " Morales v. Zenith Ins. Co., 714 F.3d 1220, 1226–27 (11th Cir. 2013), certified question answered, 152 So. 3d 557 (Fla. 2014) (quoting Turner v. PCR, Inc., 754 So.2d 683, 686 (Fla. 2000) ). "As such, ‘workers’ compensation is the exclusive remedy available to an injured employee as to any negligence on the part of that employee's employer.’ " Id. (emphasis added) (quoting Eller v. Shova, 630 So.2d 537, 539 (Fla. 1993) ); see also Ruiz v. Aerorep Grp. Corp., 941 So.2d 505, 507 (Fla. 3d DCA 2006) ("When an employee's injury arises out of the course and scope of his or her employment, worker's compensation is the exclusive remedy for the injury, and the employer is provided with immunity from any other liability for the injury."). This exclusivity of remedy also extends to claims by an injured worker brought against a workers' compensation insurance carrier. See Fla. Stat. §§ 449.11.
Defendant, as a workers' compensation insurer, relies on Section 440.11(4), Florida Statutes, which provides in pertinent part as follows: "[n]otwithstanding the provisions of s. 624.155 [Florida's Civil Remedy Statute], the liability of a carrier to an employee or to anyone entitled to bring suit in the name of the employee shall be as provided in this chapter, which shall be exclusive and in place of all other liability," to support that the instant suit is barred. Fla. Stat. § 440.11(4) (emphasis added).
Defendant's exclusivity argument ignores that the provision cited expressly limits its application to actions brought by workers' compensation claimants or anyone suing in their name. Id. Plaintiff is neither an employee, nor has it brought this action on behalf of an employee. The allegations in the Amended Complaint, which concern Defendant's potential liability for breach of certain contractual obligations and negligent misrepresentations to its insured, do not implicate the exclusivity provision of workers' compensation law. Whether certain defenses are available to the Defendant is a matter to be raised once the Complaint is answered, not at the motion to dismiss stage of the litigation. Accordingly, Defendant's Motion to Dismiss on this basis is also DENIED .
IV. CONCLUSION
Upon consideration of the foregoing, the Court hereby ORDERS as follows:
1. Defendant's Motion to Dismiss, (Dkt. 15), is DENIED .
2. Defendant shall answer the Amended Complaint within fourteen (14) days from May 29, 2020 or from any extended date that may be imposed by extension of the Court's Order Concerning Jury Trials and Other Proceedings in re: Coronavirus Public Emergency. (Dkt. 40)
3. In light of the stay of civil cases due to the ongoing public health emergency, no other deadlines will be reset at this time. The Court will issue an Amended Case Management and Scheduling Order resetting discovery and other deadlines by separate notice upon expiration of the stay.
DONE and ORDERED in Tampa, Florida, this 31st day of March, 2020.