McCRAW v. STATE COMPENSATION INSURANCE FUND

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Court of Appeal, Third District, California.

Terry L. McCRAW, Plaintiff and Appellant, v. STATE COMPENSATION INSURANCE FUND et al., Defendants and Respondents.

No. C021756.

Decided: September 11, 1996

Plaintiff Terry McCraw appeals from the judgment of dismissal entered after the trial court determined McCraw's action against defendants State Compensation Insurance Fund (SCIF), Denise Launey, Sacramento Legal Department, Sharon Menke, and Lydia Wytrzes, M.D., is barred by the exclusive remedy provisions of the Workers' Compensation Act.

McCraw contends he properly pleaded intentional torts, which may be pursued outside the workers' compensation arena, and the trial court erroneously “considered the questions of fact in its determination rather than restricting itself to questions of law.” Accordingly, he believes the court erred in sustaining defendants' demurrers and in dismissing the action. We disagree and shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

On August 20, 1990, McCraw suffered a work-related injury to his neck and back when an office chair in which he was sitting fell over. He filed a claim for workers' compensation benefits. SCIF was the workers' compensation insurer for McCraw's employer.

After eight months of conservative treatment, McCraw's physician, Dr. Daniel Newman, referred him to Dr. Praveen Prasad, a neurosurgeon, for a surgical consultation. Dr. Prasad examined McCraw in May 1991, and concluded that he needed a lumbar fusion.

Soon thereafter, SCIF directed McCraw to submit to a medical examination and evaluation by Dr. Lydia Wytrzes. In connection with that examination, SCIF asked Dr. Wytrzes to report to SCIF on a number of matters, including whether McCraw needed further treatment to cure or relieve the effects of his injury and whether McCraw's condition was “permanent and stationary.”1

Dr. Wytrzes examined McCraw on August 26, 1991, and prepared a report which was directed to SCIF's claims representative, Denise Launey. Dr. Wytrzes opined that “a lumbar fusion would probably be [McCraw's] best chance of improvement and recovery.” She further opined that McCraw's condition was not yet “permanent and stationary for rating purposes” because the possibility of any “permanent residua” from McCraw's injury would depend on “any complications from surgery and his subsequent recovery.”

In December 1991, McCraw was seen by Dr. James Zucherman, an orthopedic surgeon, who concluded that McCraw was “likely a surgical candidate” but recommended a multidisciplinary evaluation to confirm this. SCIF authorized the evaluation, which McCraw underwent in April 1992.

In the interim, Launey had written to Dr. Wytrzes in February 1992, asking whether McCraw's condition could be considered “permanent and stationary” given that “surgery has not been performed nor authorization requested.” According to McCraw, Launey fraudulently failed to send “current doctor reports or information of continuing medical assessment.” Dr. Wytrzes responded in March 1992, stating, “[a]s it appears this patient chooses not to undergo surgery, I would consider him permanent and stationary as of my evaluation dated August 26, 1991.”

In May 1992, after he had undergone the multidisciplinary evaluation recommended by Dr. Zucherman, McCraw was told by Dr. Zucherman that he was “not a good candidate for further fusion procedures” and that the only surgery which reasonably could be considered would have unpredictable results. Accordingly, Dr. Zucherman recommended a pain rehabilitation program.

Due to his “severe and unrelenting pain” and his belief that SCIF would not authorize further medical treatment due to Dr. Wytrzes's determination that his condition was permanent and stationary, McCraw attempted suicide in June 1992.

In November 1992, after the pain rehabilitation recommended by Dr. Zucherman did not relieve his symptoms, McCraw returned to Dr. Prasad for another examination. Dr. Prasad opined that surgery was not likely to help.

McCraw learned of the possibility of the implantation of a morphine pump for pain control. SCIF authorized McCraw's referral to the Auburn Pain Rehabilitation Medical Clinic for pain management treatment. In November 1993, the Auburn clinic recommended that McCraw be evaluated by Dr. Lee Snook for consideration of either a morphine pump or a spinal cord stimulator. Dr. Snook opined that a morphine pump would be helpful to McCraw.

Thereafter, a workers' compensation judge found that McCraw's disability was not yet permanent and that he remained temporarily disabled. The judge ordered SCIF to provide McCraw further medical care, including the morphine pump.

In July 1994, SCIF petitioned for reconsideration, challenging McCraw's disability status as well as his need for a morphine pump. “Given the complexity and disparity of the record,” the Workers' Compensation Appeals Board granted the petition “in an abundance of caution” and remanded the matter for further proceedings.

Dr. Eugene Carragee then examined McCraw and opined “[t]his is a valid circumstance for the use of a morphine pump.”

On March 10, 1995, McCraw commenced the present civil action, alleging that the conduct of SCIF and its employees constituted various intentional torts, including fraud, misrepresentation, deceit, conversion, injurious falsehood, intentional infliction of emotional distress and abuse of process. In addition, McCraw alleged that Dr. Wytrzes acted negligently when she relied on information provided to her by Launey and reported to SCIF that McCraw's condition was “permanent and stationary” because he had not sought surgery. In essence, McCraw claimed that SCIF fraudulently misrepresented his medical status to Dr. Wytrzes (withholding Dr. Zucherman's report that McCraw was likely a surgical candidate) in order to obtain a “permanent and stationary” determination from Dr. Wytrzes, and that Dr. Wytrzes acted negligently in determining McCraw's medical condition was permanent and stationary without ordering current medical reports. According to McCraw, SCIF used Dr. Wytrzes's permanent and stationary determination to refuse or delay the delivery of various benefits to McCraw and that, as a result, he suffered “neglected medical care, additional nerve damage, additional emotional damage, additional physical damage, additional psychology [sic] damage, loss of quality of life, loss of consortium, loss of confidence, loss of ability to concentrate and general loss of health.” McCraw also alleged SCIF's attorneys helped to perpetrate this fraud.

Defendants filed demurrers to McCraw's complaint, contending, among other things, that the Workers' Compensation Appeals Board has exclusive jurisdiction over McCraw's claims because they involve the delay and/or refusal to provide workers' compensation benefits. The trial court sustained the demurrers without leave to amend and dismissed McCraw's action on the ground it falls within the exclusive remedy provisions of the Workers' Compensation Act.

DISCUSSION

I

On appeal from a judgment of dismissal entered upon the sustaining of a demurrer without leave to amend, we treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Although a demurrer generally tests the sufficiency of the complaint alone and not the evidence or extrinsic matters, a complaint may be read as if it includes matters judicially noticed or matters found in recitals in exhibits attached to the complaint. (Ibid.; Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 877; Code Civ. Proc., § 430.30, subd. (a); 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 896, p. 337.) “‘Such matters may show the complaint fails to state a cause of action though its bare allegations do not disclose the defect.”’ (Four Star Electric, Inc. v. F & H Construction (1992) 7 Cal.App.4th 1375, 1379, citation omitted.)

A demurrer may be sustained without leave to amend where the facts are not in dispute and the nature of the plaintiff's claim is clear but, under substantive law, no liability exists. (Seidler v. Municipal Court (1993) 12 Cal.App.4th 1229, 1233.) When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action on any theory. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)

This does not mean, however, that the plaintiff need only tender the complaint to the reviewing court and hope we can discern a cause of action. It is the plaintiff's burden to show either that the demurrer was sustained erroneously, or that the trial court's denial of leave to amend constitutes an abuse of discretion. (Savage v. Trammell Crow Co. (1990) 223 Cal.App.3d 1562, 1576; Bush v. California Conservation Corps (1982) 136 Cal.App.3d 194, 200.) An appellant's lack of legal counsel does not entitle him to special treatment on appeal. (Harding v. Collazo (1986) 177 Cal.App.3d 1044, 1055-1056.) It is appellant's responsibility to support claims of error with argument and citation of authority; this court is not obligated to perform that function for him. (Estate of Hoffman (1963) 213 Cal.App.2d 635, 639.) Moreover, an appellant may not simply incorporate by reference arguments made, and papers filed, in the trial court, rather than brief the arguments on appeal. (Garrick Development Co. v. Hayward Unified School Dist. (1992) 3 Cal.App.4th 320, 334.)

II

As best we can discern from McCraw's appellate briefs, he believes the trial court erred in determining that the exclusive remedy provisions of the workers' compensation system preempt his action because, according to McCraw, intentional torts are not within the scope of the workers' compensation system, he pleaded intentional torts, and this is all that is required pursuant to Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616.2

Our review discloses the trial court correctly sustained defendants' demurrers without leave to amend.

The Workers' Compensation Act (Lab. Code, § 3201 et seq.) sets forth an elaborate scheme for the compensation of employees injured in the course and scope of their employment. It provides that the right to recover workers' compensation benefits is “the sole and exclusive remedy” available to an injured employee against his employer. (Lab. Code, § 3602.) Moreover, the Workers' Compensation Appeals Board has exclusive jurisdiction over disputes regarding an employee's right to compensation, including disputes over the delay or discontinuance of benefits. (Lab. Code, § 5300, subds. (a), (b); Marsh & McLennan, Inc. v. Superior Court (1989) 49 Cal.3d 1, 5, 7.) This exclusive jurisdiction extends to claims against the employer's workers' compensation insurer. (Lab. Code, § 3850, subd. (b); Marsh & McLennan, Inc. v. Superior Court, supra, at p. 6.)

There is, however, a narrow, judicially-created exception to the Workers' Compensation Appeals Board's exclusive jurisdiction when the insurer's conduct is so extreme and outrageous that it “goes beyond the normal role of an insurer.” (Unruh v. Truck Insurance Exchange, supra, 7 Cal.3d at pp. 630-631; accord Marsh & McLennan, Inc. v. Superior Court, supra, 49 Cal.3d at p. 6.)

This does not mean the mere allegation by an employee that the insurer committed intentional torts is sufficient to escape the exclusive remedy provisions of the Workers' Compensation Act. Instead, specific factual allegations objectively establishing reprehensible conduct by the insurer are necessary; conclusory assertions that the insurer's conduct was outrageous or reprehensible are not sufficient. (Stoddard v. Western Employers Ins. Co. (1988) 200 Cal.App.3d 165, 171; Santiago v. Employee Benefits Services (1985) 168 Cal.App.3d 898, 905-906; Ricard v. Pacific Indemnity Co. (1982) 132 Cal.App.3d 886, 893-894.)

Furthermore, an insurer's delay or refusal to pay benefits, even if done intentionally, in bad faith and with full knowledge of the hardship to the injured claimant, and even if the delay or refusal creates emotional distress separate from the original injury, is insufficient to avoid exclusive jurisdiction. (Mitchell v. Scott Wetzel Services, Inc. (1991) 227 Cal.App.3d 1474, 1479; Stoddard v. Western Employers Ins. Co., supra, 200 Cal.App.3d at p. 171; Argonaut Ins. Co. v. Superior Court (1985) 164 Cal.App.3d 320 [[[[complaint alleging that insurer's refusal to authorize surgery was intentional and malicious and caused employee's despondency and suicide was insufficient to avoid exclusive jurisdiction].)

Under such circumstances, the injured employee's remedy is to petition the Workers' Compensation Appeals Board for the imposition of a 10 percent penalty against the insurer pursuant to Labor Code section 5814. (Marsh & McLennan, Inc. v. Superior Court, supra, 49 Cal.3d at p. 8; Mitchell v. Scott Wetzel Services, Inc., supra, 227 Cal.App.3d at pp. 1480, 1482.)

In determining whether a claim falls within the workers' compensation system, all doubt should be resolved in favor of finding jurisdiction within the system. Thus, a close case should be held to come within the system. (Mitchell v. Scott Wetzel Services, Inc., supra, 227 Cal.App.3d at p. 1480.)

McCraw claims the allegations in his complaint fall within the exception to exclusive jurisdiction set forth in Unruh v. Truck Insurance Exchange, supra, 7 Cal.3d 616. We disagree.

In Unruh, it was alleged that an insurance investigator placed the injured employee under surveillance, caused her to become romantically involved with him, took her to Disneyland, and enticed her to cross a rope bridge and a barrel bridge. As the employee crossed, the investigator shook the bridge violently, requiring the employee to show her agility. The entire sequence of events was filmed secretly. Upon learning of the deception practiced upon her, the employee suffered a physical and mental breakdown requiring hospitalization. (7 Cal.3d at p. 621.) The court determined the insurer's deceitful course of conduct in its investigation was so extreme and outrageous that the insurer in effect had stepped out of its role as an insurer and out of the exclusive remedy provisions of the workers' compensation system. (7 Cal.3d at pp. 630-631; accord Marsh & McLennan, Inc. v. Superior Court, supra, 49 Cal.3d at p. 6.)

Other cases that have applied the Unruh exception involve similarly outrageous and extreme conduct. For example, in Jablonski v. Royal Globe Ins. Co. (1988) 204 Cal.App.3d 379, the insurer not only fraudulently denied that a compensation policy existed so as to induce the injured employee not to seek benefits, it destroyed evidence of its fraudulent behavior and documents relevant to the employee's claim. (Id., at pp. 383, 390-391, 394.) In Teague v. Home Ins. Co. (1985) 168 Cal.App.3d 1148, a workers' compensation carrier hired an investigative agency to surveil an injured applicant for the alleged purpose of harassing and humiliating him. The investigators trespassed upon the applicant's property by illegally entering his garage and vehicle for surveillance purposes. (Id., at pp. 1151-1153.)

In the present case, no such outrageous and extreme conduct is alleged. Instead, the crux of McCraw's complaint is that: Launey, on behalf of SCIF, made misrepresentations to Dr. Wytrzes regarding McCraw's need for surgery, and whether he would be pursuing surgical options, in order to obtain an opinion from Dr. Wytrzes that McCraw's medical status was permanent and stationary so SCIF could deny him further temporary benefits and medical treatment; SCIF did in fact deny him further medical treatment; SCIF thus “converted” McCraw's temporary disability benefits; SCIF's attorneys helped to perpetrate this fraud in their representation of SCIF before the Workers' Compensation Appeals Board; and the aforementioned conduct emotionally distressed McCraw and caused him to attempt suicide.

In other words, the gravamen of McCraw's complaint is for withheld compensation, and for claimed emotional distress arising out of or incidental thereto. Hence, his civil claim is barred by the exclusive jurisdiction provisions of the Workers' Compensation Act. (Schlick v. Comco Management, Inc. (1987) 196 Cal.App.3d 974, 981; Santiago v. Employee Benefits Services, supra, 168 Cal.App.3d at pp. 903-906.)

That McCraw alleges defendants' actions were intentional and fraudulent does not alter this outcome. (Mitchell v. Scott Wetzel Services, Inc., supra, 227 Cal.App.3d at p. 1479; Stoddard v. Western Employers Ins. Co., supra, 200 Cal.App.3d at p. 172.) Accordingly, the trial court did not err in sustaining defendants' demurrers without leave to amend and in dismissing the action on the ground it is barred by the exclusive remedy provisions of the Workers' Compensation Act.

DISPOSITION

The judgment is affirmed.

FOOTNOTES

1.  Temporary disability benefits cease when an employee's medical condition becomes permanent and stationary (Ritchie v. Workers' Comp. Appeals Bd. (1994) 24 Cal.App.4th 1174, 1179); the employee is then entitled to permanent disability indemnity. (Ibid.)

2.  McCraw also suggests that in sustaining defendants' demurrers the trial court inappropriately made factual determinations “rather than restricting itself to questions of law.” He is wrong. The trial court did not determine questions of fact. It simply concluded the facts as alleged in McCraw's complaint show “on its face that the action is barred by the exclusive remedy of workers' compensation.” In other words, accepting the facts as alleged, the court held the complaint does not state a cause of action because workers' compensation is McCraw's exclusive remedy.

SCOTLAND, Associate Justice.

SPARKS, Acting P.J., and SIMS, J., concur.