Free Motion for Summary Judgment - District Court of Colorado - Colorado

Case 1:04-cv-01187-PSF-MJW

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-1187-PSF-MJW SUSAN PENA, Plaintiff, v. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, and SUZANNE LIENING, Defendants.

DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON OUTRAGEOUS CONDUCT CLAIM, WITH AUTHORITIES

Defendants Travelers Property Casualty Company of America ("Travelers") and Suzanne Liening ("Liening"), by and through their attorneys, Montgomery, Kolodny, Amatuzio & Dusbabek, L.L.P., respectfully submit their Motion for Summary Judgment on Outrageous Conduct Claim, with Authorities, pursuant to Rule 56(c), Fed.R.Civ.P., as follows: I. INTRODUCTION AND SUMMARY OF ARGUMENT This is an insurance bad faith claim. Plaintiff has voluntarily withdrawn two causes of action originally asserted in her Amended Complaint.1 This motion is directed to the outrageous conduct claim, which is the only remaining cause of action against Liening, the Travelers' claims representative who handled this claim. Travelers and Liening submit that Plaintiff's evidence falls far short of establishing the requisite level of offense necessary to sustain an outrageous

By Order dated April 29, 2005, the Court granted the parties' stipulated motion of dismissal of the First Claim for Relief (Breach of Contract) and the Third Claim for Relief (Breach of Fiduciary Duty).

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conduct claim, for reasons more fully set forth below, and that summary judgment should enter for both Defendants on that claim. II. FACTUAL BACKGROUND Plaintiff has sued her workers' compensation insurer, Travelers, and claims representative, Liening, alleging claims of bad faith breach of contract (Second Claim for Relief) against Travelers only and extreme and outrageous conduct (Fourth Claim for Relief) against both Travelers and Liening. See Amended Complaint and Jury Demand. Plaintiff claims that Travelers and Liening improperly denied her taxicab vouchers and emergency psychiatric treatment. See Amended Complaint, ¶¶ 12-13. Plaintiff sustained a compensable injury under the Colorado Workers' Compensation Act on March 7, 1999, when she fell from a window ledge while attempting to retrieve keys at her job. As a result of her fall, she suffered a fractured left ankle and has since undergone five ankle surgeries. On May 17, 2000, Plaintiff's primary orthopedic physician, Dr. Stephen Morgan of Denver Health, stated that public transportation was unsafe for her and requested that she be provided alternate transportation so that she could attend medical appointments. See medical report from Dr. Morgan and handwritten prescription for vouchers, dated May 17, 2000, attached as Exhibit A. Travelers began furnishing these taxi vouchers to Plaintiff shortly thereafter. After approximately one and a half years of providing the vouchers, in late October 2001, Liening would not authorize additional vouchers until Dr. Morgan provided the necessary clarification of whether the vouchers were still medically reasonable and necessary. Under the Workers' Compensation Rules of Procedure, a health care provider is required to request prior authorization for certain services and "to explain the medical necessity of the service requested

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and provide supporting medical documentation." W.C.R.P. Rule XVI(I)(5). Under section 8-42-101(1)(a), a claimant under the Workers' Compensation Act is entitled to medical treatment "as may reasonably be needed at the time of the injury and thereafter during the disability to cure and relieve the employee from the effects of the injury." Colorado Compensation Insurance Authority v. Nofio, 886 P.2d 714, 716 (Colo. 1994). In response to Travelers' request, Dr. Morgan drafted a letter dated November 1, 2001, which stated: Pena is in need of continuation of taxi-cab vouchers for transportation secondary to reconstruction of her lower extremity. Transportation is essential to her being able to arrive at her scheduled medical appointments and physical therapy appointments. See Dr. Morgan letter dated November 1, 2001, attached as Exhibit B. This letter was forwarded via facsimile by Plaintiff's attorney to Travelers on November 8, 2001. On November 13, 2001, Liening acknowledged receipt of Dr. Morgan's letter but requested medical documentation from him to support his recommendation: "Please advise the medical necessity and documentation to support the request for cab fare . . . ." See Liening letter dated November 13, 2001, attached as Exhibit C. Having received no further information from Dr. Morgan, Liening again wrote to Dr. Morgan on January 3, 2002, to request information to support the need for taxicab vouchers. See Liening letter dated January 3, 2002, attached as Exhibit D. In a December 5, 2001 medical report, Dr. Morgan acknowledged receiving Travelers' request for medical documentation to support the voucher prescription, but stated that Plaintiff's attorney instructed him not to provide any further documentation to Travelers. See Dr. Morgan's December 5, 2001 medical report, at p. 2 of 2, attached as Exhibit E.

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On November 28, 2001, Pena requested a workers' compensation administrative hearing on the issue of the vouchers. After a hearing on March 26, 2002, an Administrative Law Judge ("ALJ") found that Travelers' conduct in denying vouchers was a willful and unreasonable denial of medical treatment and fined Travelers $100 per day from December 6, 2001 to March 26, 2002. The penalties, which could have been up to $500 per day under the statute, were reduced by the ALJ's finding of some culpability on the part of Plaintiff's attorney in instructing Dr. Morgan not to cooperate with Travelers' request for additional information. Since the ALJ hearing, Travelers has continued to provide Plaintiff with these taxi vouchers without interruption to this day. See Excerpt from Deposition of Plaintiff, at p. 60, ll. 14-20, attached as Exhibit F. Even during the time period when Travelers refused to authorize

additional vouchers pending receipt of the information from Dr. Morgan, Plaintiff attended some medical and physical therapy appointments. Plaintiff herself admits that no health care provider has told her that her condition worsened as a result of the interruption in taxi cab vouchers. See Exhibit G, Deposition of Plaintiff, at p. 60, ll. 21-25 through p. 61, ll. 1-6. On June 16, 2003, Plaintiff commenced this action by filing a complaint, which was later amended, in state court in Boulder District Court. Defendants removed the action to this Court. III. STATEMENT OF UNDISPUTED MATERIAL FACTS 1. Plaintiff sustained a compensable injury under Colorado's Workers'

Compensation Act on March 7, 1999, when she sustained a fractured left ankle. 2. On May 17, 2000, Plaintiff's primary orthopedic physician stated that public

transportation was unsafe for her and requested that she be provided alternate transportation to attend medical appointments.

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3. 4.

Travelers began furnishing these taxi vouchers to Plaintiff shortly thereafter. In October 2001, after approximately one and a half years of providing the

vouchers, Travelers' Liening would not authorize additional vouchers until Dr. Morgan provided the necessary clarification of whether the vouchers were still medically reasonable and necessary. 5. Both Colorado's Workers' Compensation Rules of Procedure and Workers'

Compensation Act require that insurers only provide medical care that is medically necessary. 6. By letter dated November 1, 2001, Dr. Morgan wrote that Plaintiff needed a

continuation of taxi vouchers for transportation to arrive at her scheduled medical appointments and physical therapy appointments. 7. After receiving this letter on November 8, 2001, Liening, by letter dated

November 13, 2001, acknowledged receipt of Dr. Morgan's letter and requested medical documentation from him to support his recommendation. 8. By letter dated January 3, 2002, Liening again wrote Dr. Morgan to request

medical documentation to support the need for taxicab vouchers. 9. In a December 5, 2001 medical report, Dr. Morgan acknowledged receiving

Travelers' request for medical documentation but stated that he was advised by Plaintiff's attorney not to provide any further information to Travelers. 10. Since a March 26, 2002 administrative hearing regarding the subject of taxi

vouchers, Travelers continues to provide these vouchers to Plaintiff. 11. Plaintiff attended some physical therapy and medical appointments during the

time period when Travelers refused to authorize additional taxi vouchers.

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12.

Plaintiff admits that no health care provider has told her that her condition

worsened as a result of the interruption in taxi vouchers between October 2001 and March 2002. 13. Neither Plaintiff nor her attorney ever contacted Travelers or Liening to request

emergency psychiatric treatment. Deposition of Suzanne Liening, p. 131, ll. 19-24 and p. 132, ll. 16-19, attached as Exhibit H. 14. Neither Plaintiff nor her attorney ever contacted the workers' compensation nurse

case manager, who was hired by Travelers to facilitate the care and treatment of Plaintiff, to request emergency psychiatric treatment. See Deposition of Lynn Best, R.N., at p. 65, ll. 1-8, attached as Exhibit I. IV. STANDARD OF REVIEW Summary Judgment is appropriate, if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P.56(c). The moving party must show the absence of a genuine issue of material fact. Kaul v. Stephan, 83 F.3d 1208, 1212 (10th Cir. 1996). Once that burden is met, the opposing party may not rest upon its pleadings, but must identify specific facts showing a genuine issue of material fact for trial. An issue is genuine only if a reasonable jury could return a verdict for the non-moving party. Id. Further, only disputes over facts that might affect the outcome of the trial will properly preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). To defeat a motion for summary judgment, the opposing party must point to more than a "scintilla of evidence" in support of her case. Id. at 252. Unsubstantiated and conclusory

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allegations do not create an issue of fact.

Eisken v. Network Multi-Family Sec. Corp.

49 F.3d 1470, 1475 (10th Cir. 1995). If the opposing party is unable to meet its burden of showing a genuine issue as to a material fact for trial, summary judgment in favor of the moving party is appropriate. Id. V. CHOICE OF LAW Under Colorado's choice of law rules, Colorado substantive law applies to this action on the basis of diversity jurisdiction. "A federal court sitting in diversity . . . must apply the substantive law of the forum state, including its choice of law rules." Vitkus v. Beatrice Co., 127 F.3d 939, 941 (10th Cir. 1997). VI. LEGAL ARGUMENT Plaintiff Fails to State A Claim for Extreme and Outrageous Conduct. Plaintiff's allegations, even viewed in the light most favorable to her, are not sufficient to maintain her claim of extreme and outrageous conduct. Plaintiff alleges a wrongful denial of workers' compensation benefits to pay for taxi vouchers and emergency psychiatric care, which caused the Plaintiff to be deprived of medical care. While Defendants dispute and deny these allegations, they in any event fall well short of the type of offense that could give rise to an outrageous conduct claim under Colorado law. Colorado recognized the tort of outrageous conduct in Rugg v. McCarty, 173 Colo. 170, 476 P.2d 753, 756 (1970) (adopting Restatement (Second) of Torts § 46 (1965)). To prevail on

a claim of outrageous conduct under Colorado law, the plaintiff must prove that (1) the defendant engaged in extreme and outrageous conduct; (2) the defendant engaged in such conduct recklessly or with the intent of causing the plaintiff severe emotional distress; and (3) defendant's

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conduct caused plaintiff to suffer severe emotional distress. Culpepper v. Pearl Street Building, Inc., 877 P.2d 877, 882 (Colo. 1994); McCarty v. Kaiser-Hill Co., 15 P.3d 1122, 1126 (Colo. App. 2000). "Although the question of whether conduct is outrageous is generally one of fact to be determined by a jury, it is first the responsibility of a court to determine whether reasonable persons could differ on the question." Culpepper, 877 P.2d at 883 (emphasis added); Therrien v. United Air Lines, Inc., 670 F. Supp. 1517, 1524 (D. Colo. 1987) (stating that it is for the trial court to determine in the first instance whether the conduct complained of rises to the level of outrageous conduct as a matter of law). "As a threshold matter, the trial court must determine whether the proof of outrageousness is sufficient as a matter of law." Archer v. Farmer Bros. Co., 70 P.3d 495, 499 (Colo. App. 2002). Outrageous conduct is defined as conduct that is "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." Culpepper, 877 P.2d at 882 (citing Destefano v. Grabrian, 763 P.2d 275, 286 (Colo.1988)) (emphasis added). In applying Colorado law, the Tenth Circuit has observed that the "defendant's conduct must be more than unreasonable, unkind or unfair; it must truly offend community notions of acceptable conduct." Grandchamp v. United Air Lines, Inc., 854 F.2d 381, 383 (10th Cir. 1988). In Culpepper, the Colorado Supreme Court affirmed a trial court's summary judgment order in favor of defendants, because the plaintiffs produced no evidence that the defendants intended to cause them emotional distress or acted recklessly in cremating the wrong body. Id. at 883. The Culpepper court noted that negligent conduct does not support recovery on an outrageous conduct claim. Id.

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Moreover, the outrageous conduct cause of action is not merely a damage-enhancement claim to be appended to another tort action, as Senior Judge Kane observed in Visor v. Sprint/United Mgmt. Co., 965 F. Supp. 31, 33 (D. Colo. 1997): The tort contemplates an extreme level of independently ascertainable misconduct from which the "ineluctable conclusion" is the calculated or reckless infliction of severe mental suffering. Gard v. Teletronics Pacing Sys. Inc. 859 F. Supp. 1349, 1354 (D. Colo. 1994) (applying Colorado law). It is not meant to be an "incantation to augment damages" in an employment discrimination or any other state or federal tort action. Id. Outrageous conduct is not a claim easily stated because of the extremely high level of culpability required to constitute the tort. In Rawson v. Sears Roebuck & Co., 530 F. Supp. 776 (D. Colo. 1982), the court, in dismissing an outrageous conduct claim for failure to state a claim, observed: In many, if not most, civil lawsuits the plaintiff believes that the defendant's conduct has been outrageous. Most lawsuits also cause the plaintiff (and often the defendant) emotional stress. Yet very few fact situations give rise to a cognizable claim for intentional infliction of emotional distress. The spate of complaints precipitated by the Rugg v. McCarty case which include claims for outrageous conduct tend to make the critical reader think that there is a lot less there than meets the eye. It has not been enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by `malice,' or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort. Rest. 2d, Torts 46, comment d, at 73. Id. at 780. (Emphasis added). A survey of cases arising in the factual context of insurance claims handling demonstrate that allegedly improper claim handling ­ with factual allegations more egregious than those alleged by Plaintiff in this case ­ fall short of stating a claim for outrageous conduct under

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Colorado law. See e.g., Wilson v. State Farm Mut. Auto. Ins. Co., 934 F.2d 261 (10th Cir. 1991) (insurer's failure to pay PIP benefits and making gender and racial slurs to insured did not amount to outrageous conduct); Schultz v. Allstate Ins. Co., 764 F. Supp. 1404 (D. Colo. 1991) (insurer's change of position to deny claim previously admitted, offering "lowball" settlement to insured, and requiring insured to sue for benefits not outrageous conduct); Buell v. Security General Life Ins. Co., 779 F. Supp. 1579 (D. Colo. 1991) (cancellation of group health policy covering insured with lung cancer, challenging whether post-cancellation benefits owed, and requiring quarterly submission of new claim forms not outrageous). Cases from factual contexts other than insurance are also instructive as to the high level of offense which is required to sustain an outrageous conduct claim, and thus underscore the deficiency in Plaintiff's claim. See e.g., Lindemuth v. Jefferson Co. School Dist., 765 P.2d 1057 (Colo. App. 1988) (affirming grant of summary judgment to coach who prompted firing of other coach by advising school board that other coach had been convicted of child molestation, reasoning that reasonable persons could not characterize conduct as atrocious and utterly intolerable in a civilized community); Brooks v. Page, 773 P.2d 1098 (Colo. App. 1988) (television commentator spitting, stomping on photo of local soccer player during broadcast not outrageous); Schrader v. E. G.& G., Inc., 953 F. Supp. 1160 (D. Colo. 1997) (sexual harassment at workplace and termination of employee who refused to continue relations with supervisor did not meet high standard set forth under Colorado law for establishing outrageous conduct claim). The allegations in this case, even if true, do not state a claim of extreme and outrageous conduct. As a matter of law, the alleged conduct simply does not go beyond all possible bounds

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of decency so as to be regarded as atrocious and utterly intolerable in a civilized community. See Culpepper, 877 P.2d at 882. Under Colorado law, the "defendant's conduct must be more than unreasonable, unkind or unfair; it must truly offend community notions of acceptable conduct." Grandchamp, 854 F.2d at 383. Plaintiff cannot meet this high standard. Here, Liening refused to authorize additional taxi vouchers after nearly one and a half years since the doctor's last prescription until she received further medical support. When Liening received the request from Plaintiff for additional vouchers, Liening immediately requested the medical bases, including documentation, for the request from Plaintiff's physician. Dr. Morgan responded only with a brief letter dated November 1, 2001. See Exhibit B. When Liening viewed this letter as incomplete, she requested on two occasions in writing further medical support for the continuation of vouchers. See Exhibit C and D. Plaintiff's doctor would not cooperate because

of instructions from Plaintiff's own attorney not to do so. See Exhibit E. Whether Liening and Travelers acted reasonably in denying taxi vouchers to Plaintiff is a jury question; however, whether this conduct was so atrocious and intolerable as to state a claim of outrageous conduct is not and should therefore be dismissed as matter of law pursuant to Rule 56(c). To the extent Plaintiff claims that Defendants denied her emergency psychiatric treatment as an additional basis for her claim of outrageous conduct, this claim lacks evidentiary support. What the evidence in this case does establish is that neither Plaintiff nor her attorney ever contacted Travelers or Liening to request emergency psychiatric treatment. See Exhibit H, Deposition of Suzanne Liening, p. 131, ll. 19-24 and p. 132, ll. 16-19. Moreover, neither Plaintiff nor her attorney contacted the workers' compensation nurse case manager, who was

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hired by Travelers to facilitate the care and treatment of Plaintiff, to request emergency psychiatric treatment. See Exhibit I, Deposition of Lynn Best, R.N., at p. 65, ll. 1-8. Defendants could not deny alleged emergency treatment of which they were not aware. Plaintiff has no competent evidence to suggest that Travelers denied her emergency psychiatric treatment. Thus, these allegations also fail to meet the requisite threshold for a claim of outrageous conduct. VII. CONCLUSION

Both state and federal courts have dismissed claims of outrageous conduct in cases in which the conduct is alleged to have been more egregious than that which is alleged here. Plaintiff simply cannot sustain the heavy burden of proof to establish her claim of outrageous conduct and therefore summary judgment should enter on this claim in favor of Defendants Travelers and Liening. Respectfully submitted on August 9, 2005, MONTGOMERY, KOLODNY, AMATUZIO & DUSBABEK, L.L.P.

/s/ Erik Neusch Kevin F. Amatuzio Erik R. Neusch 475 17th Street, Suite 1600 Denver, Colorado 80202 Telephone: 303-592-6600 Facsimile: 303-592-666 e-mail [email protected] e-mail [email protected] ATTORNEYS FOR DEFENDANTS

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CERTIFICATE OF SERVICE I hereby certify that I did on the 9th day of August, 2005, serve a true and correct copy of the foregoing DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON OUTRAGEOUS CONDUCT CLAIM, WITH AUTHORITIES, via the U.S. District Court ECF system to the following: Counsel for Plaintiff Marc Bendinelli, Esq. W. Joseph Lapham II Bendinelli Law Office, P.C. 11184 Huron Street, Suite 10 Denver, Colorado 80234

/s/ Jacqueline Sims Barnes

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