HEINTZ v. TRUCKS FOR YOU INC (1999)

¶ 1 Martin Emery Heintz appeals the dismissal of the suit he filed against his employer Trucks For You, Inc., for alleged bad faith in handling his workers' compensation claim.   There was no controversy that Mr. Heintz sustained a serious job-related injury in a motor vehicle collision that was not his fault.   Mr. Heintz contended that Trucks For You acted in bad faith by (1) waiting an unreasonable time to make an offer for subrogation apportionment of settlement proceeds paid by the driver who caused the accident, and (2) delaying payment of a portion of the trial court's permanent partial disability award that he contends was “undisputed,” despite an appeal of that award by Trucks For You. Trucks For You convinced the trial court that Mr. Heintz had failed to state a cognizable claim against it because (1) Trucks For You was approved to bear its “own risk” for workers' compensation without insurance, (2) a cause of action for bad faith lies only against an insurance company that acts unreasonably in the performance of an insurance contract, and (3) all of the acts constituting the alleged bad faith occurred prior to a final award by the workers' compensation court.

¶ 2 The motion to dismiss of Trucks For You included a copy of the order by the administrator of the workers' compensation court that exempted Trucks For You from carrying compensation insurance and permitting Trucks For You to carry its own risk.   In responding to the motion to dismiss, Mr. Heintz likewise attached evidentiary materials to support his positions that Trucks For You unreasonably delayed settlement of the subrogation controversy and disregarded his notice and demand for payment of the “undisputed” portion of the award.   “[When] matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment.”   12 O.S.1991 § 2012(B).

¶ 3 Where a summary judgment record contains evidentiary materials which indicate “there is no substantial controversy as to a fact material to plaintiff's cause of action, and this fact is in the defendant's favor, the plaintiff has the burden of showing that evidence is available which would justify trial of the issue.”  Weeks v. Wedgewood Village, Inc., 1976 OK 72, ¶ 13, 554 P.2d 780, 785 (footnote omitted).  “Summary judgment should be granted where facts set forth in detail [by the evidentiary material] show there is no substantial controversy as to any material fact.”  Id. at ¶ 12, 554 P.2d at 784 (footnote omitted).

¶ 4 The evidentiary materials and admissions in Mr. Heintz's petition and response reveal that there is no dispute concerning the following events:

 ¶ 5 The evidentiary materials and admissions in Mr. Heintz's petition and response reveal that there is no substantial controversy that the conduct of Trucks For You, upon which Mr. Heintz relies to show bad faith, predates a final award by the workers' compensation court.   In Anderson v. U.S. Fidelity and Guar. Co., 1997 OK 124, ¶ 1, 948 P.2d 1216, the supreme court gave an unequivocal negative answer to the question:

Does Oklahoma law recognize the tort of bad faith for unjustified denial of workers' compensation ․ or the assertion of a groundless defense, based on ․ conduct that predated the claimant's workers' compensation award?

Anderson reaffirmed prior holdings in Whitson v. Oklahoma Farmers Union Mut. Ins. Co., 1995 OK 4, ¶ 9, 889 P.2d 285, 287 (citation omitted).   The Whitson court held that bad faith liability “arises ․ only after there has been an award,” and Goodwin v. Old Republic Ins. Co., 1992 OK 34, ¶ 14, 828 P.2d 431, 435, held that a common law tort action lies for “bad faith-intentional failure to pay benefits under an award.”   See also Cooper v. National Union Fire Ins. Co., 1996 OK CIV APP 52, 921 P.2d 1297.

¶ 6 The Anderson case also dispelled any uncertainty that may have been caused by the case of McGehee v. State Insurance Fund, 1995 OK 85, 904 P.2d 70.  Anderson made it clear that McGehee should not be read as recognizing that pre-award conduct could form the basis of a bad faith claim.

 ¶ 7 The law is similarly clear that Trucks For You incurred no “undisputed” liability under the award entered by the workers' compensation trial judge until the three-judge panel decided the appeal brought by Trucks For You.   The case of Parks v. Norman Municipal Hospital, 1984 OK 53, ¶ 5, 684 P.2d 548, 549-50 (footnotes omitted), held that an appeal to a three-judge panel is an “intra-court re-examination of compensation claims.”   The three-judge panel review is the successor to the en banc review which “was to be regarded not as a separate appellate tribunal but as a division of a first-instance court.”  Id., 684 P.2d at 550.  Parks stresses that “the decision reached on intra-court re-examination replaces by substitution that of the single judge.”  Id. at ¶ 8, 684 P.2d at 550 (footnote omitted).

¶ 8 In the event of an unsuccessful appeal to the three-judge panel by an employer or insurer, the legislature has provided for the recovery of interest on the award.   85 O.S. Supp.1998 § 3.6(A).   In addition, in cases where there has been an unreasonable denial of benefits, the legislature has authorized the assessment of costs.   85 O.S. Supp.1998 § 30.   In the absence of some indication that these remedies are inadequate, the courts must defer to the legislature's wisdom and refrain from extending the tort of bad faith for the delay in paying benefits that is occasioned by an appeal of an award to the three-judge panel.   Indeed, the supreme court has held that “[t]here is no reason to allow a tort cause of action for a too aggressive defense of a workers' compensation claim,” which has included an unsuccessful appeal.  Whitson, 1995 OK 4, ¶ 10, 889 P.2d at 288.¹

¶ 9 In reviewing this case, we have assumed that an own risk employer is obligated to deal fairly and in good faith when handling its employees' workers' compensation claims and is liable for bad faith under the same circumstances as an insurance carrier.   We make this assumption based on the supreme court's statement in Lum v. Lee Way Motor Freight, Inc., 1987 OK 112, ¶ 30, 757 P.2d 810, 819, that “own-risk insurers are, by virtue of their permit, authorized to ‘transact’ workers' compensation insurance in Oklahoma much the same as stock companies or mutual associations issuing insurance covering the liability of employers.”   The court further observed “[t]heir liability for injuries sustained during the life of the own-risk permit is analogous to that of insurance carriers.”  Id.

 ¶ 10 We merely assume the liability for bad faith, rather than decide it as did the trial court, because Mr. Heintz's cause of action fails on the narrower grounds that the alleged bad-faith conduct predated a final award.   Such assumptions for purposes of appellate review facilitate a decision of a particular case, but leave the issue for decision in a more appropriate case.   See Anderson, 1997 OK 124, ¶ 10, 948 P.2d at 1217, discussing the appellate assumption made in McGehee v. State Insurance Fund, 1995 OK 85, 904 P.2d 70.

¶ 11 The trial court correctly dismissed Mr. Heintz's bad faith suit against Trucks For You and its adjustor agent, and that dismissal is AFFIRMED.

FOOTNOTES

1.   Mr. Heintz has also acknowledged that Trucks For You has sought supreme court review of the three-judge panel's order.  “Generally, a judgment is not final in the sense that it is conclusive upon the parties until the losing party has failed within the time allowed by law to perfect his appeal, or having properly perfected his appeal until the highest court whose decision is invoked by either party upholds the decision of the trial court.”  State ex rel. Derryberry v. Kerr McGee Corp., 1973 OK 132, ¶ 32, 516 P.2d 813, 820 (citations omitted).

REIF, J.

¶ 12 BOUDREAU, V.C.J., and STUBBLEFIELD, P.J., concur.