Case Title: Alston v. St. Paul Ins. Companies

Citation: 389 Pa. Super. 396, 567 A.2d 663

Docket Number: 

State: pennsylvania

Court: Pennsylvania Supreme Court

Date: 1989-12-08T00:00:00Z

Document:
389 Pa. Superior Ct. 396 (1989) 567 A.2d 663 Calvin ALSTON and Dorothy Alston, his wife, Appellants, v. ST. PAUL INSURANCE COMPANIES, John T. Williams, M.D. and Vocational Rehabilitation Services, Inc. and Janet H. Rohrer. Supreme Court of Pennsylvania. Argued June 5, 1989. Filed December 8, 1989. Reargument Denied December 27, 1989. *397 Joseph Lurie, Philadelphia, for appellants. Andrew J. Gallogly, Philadelphia, for St. Paul, appellee. Paul A. Barrett, Scranton, for Vocational Rehabilitation, appellee. Before CIRILLO, President Judge, and BROSKY, ROWLEY, McEWEN[*], OLSZEWSKI, TAMILIA, POPOVICH, JOHNSON and MELINSON, JJ. CIRILLO, President Judge: This is an appeal from an order of the Court of Common Pleas of Delaware County granting summary judgment in favor of St. Paul Insurance Companies, Vocational Rehabilitation Services, Inc., and John T. Williams, M.D. We affirm. On April 24, 1981, while working on a ladder as a carpenter, appellant, Calvin Alston, fell and sustained numerous injuries including avulsion fractures of both wrists, a compression fracture of his spine, and aggravation of degenerative changes in his neck and back. Alston's workmen's compensation carrier, St. Paul Insurance Companies (St. *398 Paul), assigned Alston's file to Robert Dunham, a claims examiner, and began paying benefits. Shortly thereafter, St. Paul contracted with appellee, Vocational Rehabilitation Services, Inc. (Vocational Services), to obtain Alston's medical records, to monitor his recovery, and to report to St. Paul. In late February, 1982, Vocational Services assigned Alston's file to Janet Rohrer, a "rehabilitation nurse," and employee of Vocational Services. In February, March, and early April, 1982, J. Brendan Wynne, D.O., met with Alston and evaluated his medical condition. During this time, Dr. Wynne treated Alston for aggravation of his pre-existing degenerative condition and possible traumatic pericarditis. Dr. Wynne indicated to Ms. Rohrer that he was unable to calculate a firm date upon which Alston could return to work. Ms. Rohrer reported Dr. Wynne's findings to St. Paul, after which the company representatives allegedly held an in-house conference and apparently decided to institute a more aggressive approach toward Alston. On May 14, 1982, Ms. Rohrer met with Mr. and Mrs. Alston to discuss Alston's medical treatment and prognosis. At that time, Ms. Rohrer indicated that she intended to schedule an appointment with appellee, John T. Williams, M.D., whom she allegedly described as a "miracle worker." According to the Alstons, Ms. Rohrer indicated that Dr. Williams would treat and cure Mr. Alston, although the appointment was ostensibly for the purpose of obtaining an independent medical examination. On August 31, 1982, Alston appeared for Dr. Williams' examination. Alston claims that at no time prior to that examination was he informed that an independent medical examination would occur, or that Dr. Williams had the ability to sign a physician's affidavit of recovery, or that he was entitled to have his own physician accompany him to the examination. Allegedly without the benefit of Alston's prior medical records, x-rays, or contact with his prior treating physicians, Dr. Williams conducted a twenty minute examination, and at the conclusion of that exam, told *399 Alston that he was ready to return to work. Immediately after Alston's departure, Dr. Williams notified Ms. Rohrer that he would sign an affidavit of recovery, which he did in fact execute later that same day. Having secured the affidavit of recovery, a representative of St. Paul allegedly approached Alston in the hopes of negotiating a lump sum settlement of his workmen's compensation benefits. Alston rejected the offer as insufficient, and shortly thereafter St. Paul filed a petition to terminate Alston's benefits. Alston's benefits were discontinued for nineteen months, until proceedings before a referee denied St. Paul's petition to terminate, and reinstated the benefits. The referee also imposed attorney's fees upon St. Paul. St. Paul appealed the referee's decision to the Workmen's Compensation Appeal Board, who affirmed the underlying decision, but reversed the award of attorney's fees on its own finding of "reasonable contest." No appeal was taken from this decision. On July 6, 1984, Alston commenced this civil tort action through a complaint seeking both compensatory and punitive damages from St. Paul, Vocational Services, and Dr. Williams. The gravamen of Alston's action is the allegation that the named defendants engaged in a course of tortious conduct through which they conspired to fraudulently deny Alston's benefits due under the Pennsylvania Workmen's Compensation Act. This conspiracy, Alston averred, was advanced by the parties' negligent and intentional misrepresentation of facts to Alston. A motion for summary judgment was filed on behalf of all three appellees. In that motion, the appellees argued that our decision in Rosipal v. Montgomery Ward, 360 Pa.Super. 570, 521 A.2d 49 (1987), alloc. granted 516 Pa. 635, 533 A.2d 93 (1987), appeal dismissed 517 Pa. 460, 538 A.2d 495 (1988), holding that an employee's tort action against her employer was barred by the exclusivity provision of the Workmen's Compensation Act, precluded Alston's action. On March 3, 1988, the Honorable Frank T. Hazel entered an order granting summary judgment in *400 favor of St. Paul, Vocational Services, and Dr. Williams. This appeal followed. Alston advances the following two issues for our review: (1) whether the trial court properly concluded that the Workmen's Compensation Act provides statutory immunity from a civil lawsuit to workmen's compensation insurance carriers who inflict injuries outside the scope of employment, by malicious and fraudulent conduct and by abuse of the legal process to terminate workmen's compensation benefits; and (2) whether the trial court properly granted statutory immunity under the Workmen's Compensation Act to appellees Williams and Vocational Services, neither of whom are employers or insurance carriers. Pennsylvania Rule of Civil Procedure 1035(b) provides, in pertinent part, that on a motion for summary judgment: Pa.R.C.P. 1035(b); Dume v. Elkcom Co., 368 Pa.Super. 280, 533 A.2d 1063 (1987). When reviewing a trial court's imposition of summary judgment, we have stated: Alston initially claims that the trial court erred in granting summary judgment in favor of St. Paul, Vocational Services, and Dr. Williams because their allegedly tortious conduct "did not arise in the scope of [his] employment under the act; did not occur on the employer's premises and did not occur while [he] was acting in furtherance of his employer's interest." Since the incidents which gave rise to the cause of action occurred months after the initial on-the-job injury, Alston maintains that they do not fall within the ambit of the exclusivity provision of the Workmen's Compensation Act. We cannot agree. Pennsylvania is an industrialized state. In order to promote certainty in the legal affairs of Pennsylvania's industrial base, while protecting employees and their families from economic devastation arising from work-related injuries, our legislature formulated Pennsylvania's Workmen's Compensation Act. The Act was designed to assure quick, fair, and certain compensation for employment-related injuries without requiring the complainants to resort to the courts for recovery. See Blouse v. Superior Mold Builders, Inc., 363 Pa.Super. 516, 518, 526 A.2d 798, 799 (1987). The Act specifically delineates the coverage which it affords. Section 301(a) provides: 77 P.S. § 431. Although this "no-fault" system of recovery applies equally to all employment-related injuries, the legislature determined that employers should not be accountable for those injuries inflicted by third persons, as a result of nonemployment related matters. This concept is embodied in section 301(c), which states: 77 P.S. § 411(1) (emphasis added). Aside from this exception, the Workmen's Compensation Act clearly sought to provide the injured worker with his or her exclusive remedy at law. In essence, the Act was based on a theory of "trade-offs." On the one hand, the employer is forced to surrender the numerous defenses which might be available in an employee's action at common law. However, the injured employee's recourse is strictly confined to those remedies provided by the statute itself, thus providing the employer with some degree of certainty in its legal affairs. Section 303(a) integrates the exclusivity principle into our statutory scheme, and provides: *403 77 P.S. § 481 (emphasis added). Commenting upon this section of the Act, our supreme court has stated: Lewis v. School District of Philadelphia, 517 Pa. 461, 471, 538 A.2d. 862, 867 (1988) (citations omitted); see also 2A A. Larson, Workmen's Compensation Law, § 65.11 (1987 ed.). In short, the exclusivity provision "bars tort actions flowing from any work-related injury." Kline v. Arden H. Verner Co., 503 Pa. 251, 256, 469 A.2d 158, 160 (1983). We note at the outset that this suit was not brought against Alston's statutory "employer." Rather, Alston instituted this civil action against St. Paul, his employer's workmen's compensation insurance carrier, as well as those individuals retained by St. Paul to shepherd his case through the compensation process. This fact, however, does not alter our analysis of Alston's claim. The same immunity from tort liability enjoyed by an employer has been extended to workers' compensation insurers by section 305 of the Act. Section 305 provides, in pertinent part: 77 P.S. 501 (emphasis added); see Jadosh v. Goeringer, 442 Pa. 451, 275 A.2d 58 (1971) (employer's workmen's compensation insurer was included within term "employer" as used in immunity provisions of Workmen's Compensation Act and shares employer's immunity from common-law liability); DeJesus v. Liberty Mutual Insurance Company, 439 Pa. *404 180, 268 A.2d 924 (1970) (same); Brown v. Travelers Insurance Company, 434 Pa. 507, 254 A.2d 27 (1969) (same); Leonard v. Harris Corp., 290 Pa.Super. 370, 434 A.2d 798 (1981) (same). In Brown, supra, our supreme court stated: 434 Pa. at 514, 254 A.2d at 29. Similarly, in Jadosh, supra, Justice O'Brien opined: 442 Pa. at 455-56, 275 A.2d at 61. In short, it is abundantly clear that the express language of section 305, coupled with judicial interpretation of that section in relation to section 303(a), confers all of the employer's immunities and protections under the Act to the workmen's compensation insurer. The legal immunity which is afforded to employers and their compensation insurers extends not only to acts of negligence, but also to claims based on intentional, wanton and willful misconduct, such as those advanced in the case before us today. In Poyser v. Newman & Company, 514 Pa. 32, 522 A.2d 548 (1987), the appellant, Stephen Poyser, filed suit against his employer, seeking redress for physical injuries he suffered while in the course of his employment. Poyser claimed that Newman disregarded governmental safety regulations and deliberately exposed him to a known hazard. Having committed willful and wanton disregard for his safety, Poyser maintained that Newman's actions rose to the level of an intentional tort, which should pierce the shield of immunity. Newman, on the other hand, asserted that it was immune from Poyser's trespass action because of the exclusivity provision in section 303(a). The trial court agreed with Newman and granted its motion for judgment on the pleadings. We affirmed, and the supreme court did likewise, reasoning: 514 Pa. at 38, 522 A.2d at 551. Applying Poyser to a case where an employee allegedly sustained injuries as the result of the employer's intentional failure to warn of the known dangers of toxic chemicals, we stated: Blouse, 363 Pa. Super at 521, 526 A.2d at 801. The immunity discussed above has recently been extended to civil tort actions arising from the handling of a worker's compensation claim. In Rosipal v. Montgomery Ward, 360 Pa.Super. 570, 521 A.2d 49 (1987), alloc. granted 516 Pa. 635, 533 A.2d 93 (1987), appeal dismissed 517 Pa. 460, 538 A.2d 495 (1988), Joann Rosipal, an employee at Montgomery Ward, sustained an injury on her employer's premises while performing her duties as a security guard. Montgomery Ward filed a notice of compensation payable, and initiated wage indemnity payments. Almost two *407 months later, Montgomery Ward, along with its workmen's compensation carrier, Aetna Insurance Company, filed a petition for termination of compensation supported by a physician's affidavit of recovery. Rosipal's benefits were curtailed; however, following a hearing before a workmen's compensation referee, compensation benefits were reinstated. Rosipal then commenced a civil action against Montgomery Ward alleging economic duress, intentional infliction of emotional distress, procuring a "false, fraudulent and perjured affidavit [of recovery]," and breach of compensation agreement. In response, Montgomery Ward filed preliminary objections in the nature of a demurrer, averring that it was immune from Rosipal's action pursuant to section 303(a) of the Act. The trial court overruled Montgomery Ward's demurrer, and concluded that Rosipal's claim "did not arise from an employment related accident such as would be covered by the Workmen's Compensation Act." Following a petition to review to this court, we reversed the order of the trial court, and sustained Montgomery Ward's demurrer thereby dismissing the complaint. In rejecting the trial court's finding that the injury did not arise from an employment related accident such as would be covered by the Act, we stated: 360 Pa.Super. at 573-74, 521 A.2d at 50-51 (emphasis added). *408 It is apparent from our supreme court's pronouncement in Poyser, as well as our holdings in Blouse and Rosipal, that when employees sustain injuries during the course of their employment, because of an intentional wrongdoing by their employer, the employees' exclusive remedy, for the injury itself or the handling of the claim, lies within the framework of the Workmen's Compensation Act, not in a civil action sounding in tort. The express terms of section 305 extend this statutory immunity to workers' compensation insurers, as well as to the employers of the injured worker. Pennsylvania's Workmen's Compensation statute provides a host of administrative remedies for those claimants who believe their compensation has been wrongfully suspended or terminated by the workmen's compensation insurer. Aggrieved claimants can receive interest on all past due compensation; litigation costs; and counsel fees where the insurer did not have a reasonable basis to contest the claim. In addition, they can receive remuneration for fees paid to witnesses, medical examinations, and lost time to attend the proceedings to contest the termination or suspension. Moreover, they may recover against the insurer in an amount up to twenty percent of the benefits due in cases of unreasonable or excessive delays. Those insurers who repeatedly or unreasonably fail to pay prompt compensation may have their license to transact business revoked or suspended by the Insurance Commissioner. See generally, 77 P.S. §§ 774.1-997. Thus, in addition to assuring quick, fair and certain compensation, our legislators also considered the plight of an injured worker who might be intimidated or disadvantaged by the superior bargaining position of an insurance company, and responded with sanctions and procedures designed to obviate the need for common law actions. This system may not be perfect, but its weaknesses should be cured by further legislation rather than the creation of a parallel scheme for judicial inquiry into an area so carefully legislated by our General Assembly. "Where statutory remedies are provided, the procedure *409 prescribed by the statute must be strictly pursued to the exclusion of other methods of redress." Interstate Traveler Services v. Commonwealth Department of Environmental Resources, 486 Pa. 536, 542, 406 A.2d 1020, 1023 (1979). We are not unfamiliar with case law emanating from other jurisdictions which allow common law actions against workmen's compensation insurers. See, e.g., R. Schnechter, Bad Faith Handling of Workers' Compensation Claims: Demise of the Exclusivity Provision, 24 Trial 66 (1988); B. Lown, Remedies of Workers Compensation Claimants Against Workers' Compensation Carriers, 30 New Hamp. B.J. 21 (1988). However, as Chief Justice Nix noted in Poyser, our lawmakers considered the issue of intentional acts while drafting our Workmen's Compensation Act, and nonetheless decided to preclude civil tort actions stemming from those acts. Reconsideration of that policy determination is more appropriately left to the wisdom of our General Assembly, and not the courts. Addressing a claim similar to the one before us today, Chief Justice Phillips of the Texas Supreme Court cogently noted: Aranda v. Insurance Company of North America, ___ Tex. ___, ___, 748 S.W.2d 210, 218 (1988) (Phillips, C.J. dissenting). Having viewed all the evidence proffered in *410 this case in the light most favorable to Alston, and resolving any doubts against entry of judgment, we conclude that Judge Hazel properly determined that appellees were entitled to judgment as a matter of law. We also dismiss Alston's claim that the trial court erred when it held appellees Williams and Vocational Services immune from suit. The social policies underpinning the grant of immunity to employers and their compensation insurers apply equally to those individuals employed by the insurer to review the case. To hold otherwise would thwart the clear legislative mandate of providing workmen's compensation benefits as the employee's exclusive remedy. Order affirmed.[1] ROWLEY, J., files a dissenting statement and joins dissenting statement by JOHNSON, J. Concurring and dissenting opinion by BROSKY, J. Dissenting statement by JOHNSON, J. MELINSON, J. joins dissenting statement by ROWLEY and JOHNSON, JJ. *411 BROSKY, Judge, concurring and dissenting. I am in general agreement with the dissenting members of the panel that the term "injury", within the meaning of the Workmen's Compensation Act, does not include fraudulent actions of an insurer as alleged here. Thus, were an individual able to demonstrate that an insurer fraudulently deprived him or her out of benefits I would find such an action outside the scope of the Act and subject to redress in tort. However, I hesitate to join completely in dissent simply because the Workmen's Compensation Appeal Board found that the insurer had a "reasonable contest." This finding, which was neither appealed nor pursued further, it seems to me, would be preclusive of a fraud action in the present case since it would be res judicata in any subsequent proceedings, including the one contemplated here. I simply cannot see the appellant moving to trial in the face of a conclusive determination that the insurer had a reasonable contest to further workmen's compensation claims. However, in general, I find the majority's analysis quite suspect. It is true that Pennsylvania is an industrialized state and that workmen's compensation provides a useful purpose with mutual trade-offs by both employer and employee. However, nowhere within the concept of work related injury under the Act can you reasonably fit a fraudulent deprivation of a rightfully acquired benefit under the Act. Nor are the purposes of the Act furthered to any perceivable degree by providing a shield to insurers relating to post accident matters and unconnected to the workplace. Allowing a tort action against an insurer which happens to fraudulently deprive an individual of a benefit should not in any way hinder or impair industrial growth and operation, nor should it work to unfairly impose unlimited liability to a good faith employer for events occurring naturally during the course of operating a business. These are general purposes, on the employer's side, for passage of the Act. In contrast, preventing an individual from the subject action will in no way aid the injured employee in assuring *412 fair and prompt monetary compensation for injury suffered in the workplace regardless of fault. This is the primary purpose for passage of the Act on the employee's side and certainly it cannot be beneficial to this interest to limit the legal responsibility of an insurer who engages in fraudulent practices to limit its own expenditures to injured employees. Thus, I can concur only in the result reached by the majority. ROWLEY, Judge, dissenting. I join the Dissenting Statement by Judge Johnson. I also join in the compelling analysis by Judge Brosky contained in the last two paragraphs of his Concurring and Dissenting Opinion. However, I do not agree with Judge Brosky's conclusion that the findings by the Workmen's Compensation Appeal Board are res judicata as to the claims asserted by appellants in the present case. MELINSON, J., joins. JOHNSON, Judge, dissenting. For the reasons set forth in my Dissenting Opinion in Rosipal v. Montgomery Ward, 360 Pa.Super. 570, 521 A.2d 49 (1987), and because I continue to believe that Kuney v. PMA Insurance Company, 379 Pa.Super. 598, 550 A.2d 1009 (1989) (pet. for alloc. filed at 241 E.D. Allocatur Docket 1989, 3-13-89) is a correct statement of the law, I must dissent. I cannot believe that our legislature intended the use of the word "injury" in the Workers' Compensation Act to encompass intentional fraudulent acts of insurance companies and their employes designed to deny benefits due Pennsylvania workers. Cf., Reed v. Hartford Accident and Indemnity Co., 367 F. Supp. 134 (E.D.Pa. 1973). MELINSON, J., joins. [*] Judge McEwen did not participate in the decision of this case. [1] In dismissing Alston's claims, we expressly overrule our panel decision in Kuney v. PMA Insurance Company, 379 Pa.Super. 598, 550 A.2d 1009 (1988). The majority in Kuney relied upon Reed v. Hartford Indemnity Company, 367 F. Supp. 134 (E.D.Pa. 1973), in finding that the immunity provided to employers under the Workmen's Compensation Act did not extend to an insurer when its conduct was "separate and apart" from claimant's work-related injury. We note, however, that after the injuries occurred which gave rise to the Reed case, the Pennsylvania Workmen's Compensation Act underwent a substantial revision. In 1972, the General Assembly eliminated the phrase "accident in the course of employment," and broadened the language to encompass "an injury to an employee . . . arising in the scope of his employment and related thereto." 77 P.S. § 411(1). Without the "accident" language, the employee could no longer avoid the exclusive remedy provision by showing that the injury did not arise from an "accident." See Note, Intentional Employer Misconduct and Pennsylvania's Exclusive Remedy Rule after Poyser v. Newman & Co.: A Proposal for Legislative Reform, 49 U.Pitt.L.Rev. 1127, 1129 (1988). More importantly, Kuney contravenes the express statutory language contained in section 305, and our supreme court's mandate in Poyser.