good morning ma'am please the court my name is robert hom i appear here on behalf of kenny ingram and wiley harrison henri and nelson is with me in the court room today too i would like to reserve several minutes for the end gibson versus casey the arizona supreme court recognized that duties may be found when they embody public policy last friday arizona supreme court explained that the primary sources for determining public policy are federal and state statutes in arizona we have a statute eris twenty three dash nine three zero which makes it clear that a claim of processing representative separate from an insurance carrier may be found to have acted in bad faith in this case that is an entirely appropriate result because we have a contract between r t w and the carrier in this case the says t w has the total responsibility for investigation e r six fifteen it says they are responsible for making come pence ability to terminations and in this case that's what happened they are the one who decided to deny the claim g a r c did nothing more than rubber stamp that so so the district court understood arizona law to require something beyond the traditional t p a relationship do you think that was wrong that arizona law does not require something beyond the traditional t p a relationship or are you arguing that there is something here that's beyond the traditional t p a relationship it no the a relationship is sufficient under the public policy i think in reading heroes vs alcoa last week it made clear i have been interpreted in this under the understand that came out in two thousand  when they said a sufficient relationship it can't be public policy and i cite that language from stanley at page twenty one of the brief which says we no longer require a formal relationship when public policy favors the recognition of duty and then they go into what we call the stanley factors which basically are matters of control but in looking at heroes versus alcoa at paragraph fifteen of that decision last friday they say unlike you duties based on special relationships duties based on public policy do not necessarily require special relationship so why does pope why why would some separate notion of public policy come into play here because that is the public policy of our legislature number one to recognize they claim processing can do that and secondly it supports the worker's compensation policy of this case worker's compensation demands that proper decisions get made so that injured workers employees can get benefits when they're needed immediately and it's the processing representative that controls that outcome but you square all this with was sparks where it seemed to say we require something more we require joint venture at least the industry of a joint venture relationship and going down the factors if if the law had been as you've described it today in arizona they would there be no need to do that because the  claims processing entity would would automatically be liable right sparks was decided on the basis of joint and several liability and so if you look at the factors that sparks went into they examined the relationship between the t p a and the carrier eris section nine three zero and what we're arguing for today examines the relationship between the t p a and the insured so so that was a different basis there's two basis is to do it on direct liability or on this joint venture and that was a rather loosely defined a joint venture in sparks are you do your honor but it is limited to the joint venture on the claim adjusting activities on the conduct if we look at it go back to stanley again it says special relationships can be found under contract and conduct under taken and that comes from stanley that cited in our brief to and what the t p a does in this case is undertakes the duty of good faith that e r six one six they say that they will manage claims consistent with state and federal laws and best practices within the industry which is the covenant of good faith and fair dealing so that is the special relationship that would qualify under a stanley analysis because it's this who fish and sea of the relationship your honor not the formality of to be an exclusive duty and it should not be an exclusive duty and that is shown in the satchel and it shown in our case law i realize there is a dichotomy that's the word i like to use between jurisdictions on whether a cheapie a can be liable or not and arizona has always come down on the side that a cheapie a can be liable if they found it early on and sparks using a joint and several liability they continued that and far part of the significant facts and far were that both had decided to deny the claim and in this case r t w in its answer admits that they jointly denied this claim with g a i c we alleged in paragraph forty one ga i see an r t w denied the claim they admit that so it was a joint undertaking if i'm not entirely understanding the r t w made a recommendation and the insurer then denied the claim it seems a little different don't you need to satisfy either the joint venture requirements of sparks or of some sort of other something more than what appears to be the facts here well there's there's a little bit what that r t w do to create this special obligation directly to your client all right first of all r t w had a contract that they were responsible for the investigation and pense ability determinations and in making this recommendation and please note that every time they say in their brief that they only made a recommendation that that it was ga i see they have no citation to the record for that that is a disputed issue a fact in this case isn't is the import of what you're arguing is that you'd always have a good faith claim against the independent adjuster yes you know arizona that you wish us to essentially hold i gather that you can always sue the adjuster for good faith even if the adjuster is totally independent and without a joint venture yes your honor that is the direct liability theory that was a spouse by the arizona supreme court engaged cliff in that case well but they get cliff the case is totally different is it not because that person was an employee of the insurer and it seems to me that's totally different than a situation where you've got an independent adjusting agency over here that contracts with the insure to go out and do the adjusting now and get cliff wasn't the person involved actually an employee of the insurer ingate cliff the nonparty to the contract was a subsidiary of the insurance carrier but the operative facts your honor pointed out engaged cliff is that there was a contract to manage claims that the nonparty hired the adjusters and that the nonparty actually adjusted the claims that was the basis for finding the sufficient relationship for direct liability to an on party were but wasn't of facts also  that there was a unity of control between the parent and subsidiary so for purposes of deciding whose employee they considered them all together well there is a unity of control here to your honor because what a did they controlled all the information that went to the carrier they directed this investigation to look for a deviation they decided who was interviewed who was not interviewed  and they said they controlled all the information that went to the carrier and so are you arguing that as a matter of law they are liable or are you saying that there are issues of fact that still need to go to a jury hear well that at a minimum there are issues fact because what they did was completely control it and in some cases that is up for the trial court to decide that determination has to be made first but i think so what is the fact dispute i'm still not clear what you think the jury needs to decide here what's disputed what the extent of their control was in the denial what the extent of their activity was and what the extent of the activity was by the carrier to make this denial because r t w made the decision and they controlled the entirety of the investigation but if a jury were to find that ga i see did some investigation on its own or had someone really look at the claim and make their own evaluation then you would lose no because some investigation still gets suspect to shared control which is enough to have liability with the t p a so i guess i'm back to being confused because it seems like you are arguing that you went as a matter of law i don't understand what you think the jury needs to decide how a jury could decide something that would cause you to lose because if there isn't such a thing then you're not asking for a jury to decide anything if if if the facts are such that gee i see did the enough control to let g r t w off the hook i suppose we could lose on but i do say that there is enough here for you to decide this is a matter of law on our rights and i have to just determined by the contract pardon me why it wasn't the issue of control determined by the contract well i think it should be determined by the contract and in this case the contract says r t w has the responsibility to make compensable a determination so what if i understood your argument correctly though you believe that independent claims processors are liable under the statute for you know all circumstances at least is that pertains to workers compensation because that's our state public policy under the statute and that's where public policy comes from our legislature and our courts have always recognized found a way that the party responsible if but there is no case the that states the proposition that you are urging today precisely and enter a zone is there there is not your honor and there's not one against us either that thank you which sold the arises out of contract arizona courts have clearly said in the rollings case from the supreme court that it can only arise by virtue of a contractual relationship and it's not delicate will so to the extent he argues by merely performing administrative functions that somehow the duty non bailable do a good faith has been transferred to arizona courts of expressly so that that's not the case the only circumstance in which courts have found that a third party administrator may have a duty of good faith is where there is a joint venture and in that narrow context the court is analogizing that a third party administrator was in essence a party to the contract so it is harmonized with the holding of brawling where it said that you must be a party to the contract nor to have a duty a good faith for example sparks the third party ministry or was a soliciting agent with the insurer it marketed in the ministry of the policy issued certificates coverage building collected premiums handled the investigation prepared the sales brochure that induced the insured to actually get the insurance they actually made the brochures that were handed out at the local insurance office in far they marked the t p a marketed the insurance policy again the t p collected premiums they provided guidelines for the insurer and they received a commission of the previous collected in a percentage of the renewal commissions in that case so in essence you have this between the t p a and the insurer such that they stand in the same shoes for purposes of being a part of the contract good cliff can actually be harmonized with that as well in that case you have a and i i do think the facts are slightly different than what's been represented in this court the the nonparty of the contract was actually the parent corporation not the subsidiary is the subsidiary that actually entered into the insurance contract and so the whole issue was whether you could hold the parent corp liable for a duty of good faith even though it in a part of the contract and like joint venture the court analyzed how closely the parties were related in terms of what they were what they were doing through respect to their duties the parent corporation gave clip hired the claims adjusters and manage the claim office it determined insurance eligible eligibility benefits and premiums for coverage on policies the service letter that was sent to the insured indicated that it was responsible the parent corp for the service and had the ability to cancel the insurance plan at any point time so i mean gay cliff is just really an offspring of sparks and far which says you must have this comingling where you're standing in the same shoes and therefore you are party to the contract so contractual privity is still the bedrock of the duty of good faith in arizona there's no case that's held otherwise well in this case r t w marketed itself saying it had an ability to reduce costs by  denying claims and they could do it faster and cheaper and at some point down that road isn't there a good faith kind of claim that someone could bring i mean if  they're not an appropriate claim shouldn't there be a claim of good faith against the adjuster perhaps in some case but not in this one i take two issues with your question one the marking materials i don't think are in this record before this four refers to these these representation or marketing tools if you will shore and i think is improper for the trial court even refer to them but to the merits on them one they don't they did not advertise that they would deny claims and they did they advertise that they would close claims faster which could be paying out there lorrie parlance and lower costs which again could be paying out meritorious claims and lowering costs in the insurance context could be a variety of things that could be pencils it could be stationary employees salaries it could be a variety of things it's not just premiums and paying out claims so the fact that they could close claims faster because they are more efficient or any other reason  is not evidence that there is some sort of joint venture and in addition to that those marketing materials are from two thousand and seven and there's no evidence that they were in effect at the relevant time or that they actually induced guy act to purchase the contract there's simply no foundation for that marking presentation that was ever present to the trial court and i would back up and say plaintiffs ask for up at the six d relief in order to brief this very issue they had every opportunity conducted will thirty six deposition of any of the agents from who actually saw hammer down these facts who what when and why these this contract was performed and formulated and what the duties of perspective duties of the companies were and none of that evidence was developed for this court  coverage and i'm not sure in looking at the citation on the record that i'm if i have the right one can you to can you explain we even you don't need to necessarily refer to the record can you explain me what the evidence was on th informing guy act that she would like to file a denial on these claims and then she sets force her reasoning right for all i see that and then the follow up email says a denial approved that's from guy ak and know who's  was that the angela angie did yes yes and that's from guy ak and that's your cue seventy four just for the courts record and it says upon review of the investigation the various rulings provided by defense counsel agree with the not which to me that clearly shows that guy reviewed everything that they had been provided and made its determination to deny well that was what puzzled me because it says approved denial not the nile well you have some going around making something and then they contract between archie w and guy ak it does it does have authority at certain thresholds understand that i just looking at the record puzzled me because that's all i saw is that is that the extent of the record that's developed on this other than that there's a deposition testimony from net where she specifically says i wanted to make the recommendation for them to deny it and it was their decision and i can provide you the you know that i think we're going to is this a fact dispute that needs to be resolved though so i mean it's a jury could look at this and decide that actually the insured did not make its own decision or do any investigation they just accepted it and they always just accepted the recommendation would you lose then absolutely not i mean i think you have to show the elements of joint venture to even get to that issue if you say if you have an insurer who who instructs a claims adjuster to deny the claim and the insurer doesn't act independently then you may  with regard to the statute that they cited i did file a twenty eight j letter with the court that specifically said that twenty four six one which is the primary provision  specifically said that the acts not intended to provide any private right a cause of action on behalf of the shared so i think that cuts against their argument that statute provides it an addition to hazy continental case specifically i would say rejected the fact that that statute supplements the common law of bad faith in arizona the issue in that case is whether the court would adopt that particular statute as the sole basis being a bad faith claim and in rejecting it it specifically noted that is its own unique provision the courts are not looking to it in terms of a bad faith common law case and it noted several differences in it specifically that the statute provides significantly less damages than normal bad faith would it also noted that the only person who can bring it is the is the administrators component of it it's not individual so it significantly distinguished that particular statute in terms of its public policy breach of the duty of good faith and fair dealing is the same and i would also note that there's a public policy considerations for why this court should not impose a duty that no errors on a court has ever recognised first the meineke case has recognised that under the negligence claim there is no duty whatsoever and it's reasoning for that is that the relationship is sufficiently attenuated between and a third party administrator and insured that it's not it's not valid to do so it also recognise that you risk double recovery because you're suing the insurer in this case which was a guy who had settled in this case and the third party administrator for the same exact harm  third it recognized the mule case which is going to my supplement that arizona courts just do not recognize the duty to ensure in negligence case to the extent that they cite negligent cases negligent cases involving a negligent claim which includes their most recent one from the arizona supreme court that was just this last friday i think they're an opposite because they're only dealing with a negligence claim not a not a bad faith or i'm sorry a breach of a duty of good  so if we agree with you that you need a joint venture so we're looking at sparks and far how do we know looking at sparks and far that all of the facts that existed in sparks and far were necessary to the joint venture i mean it seems like you want to read those as when they list the facts they mean that to be the entirety of the legal test and all of that is an element that needs to be satisfied and i don't know if we can read it that way it's not really clear that all those facts are necessary i agree can i mean that the sparks and far clearly say these are not the universe of things that can be considered but they're the only cases in arizona that provide any guidance and so i think although they're not the universe they are persuasive to look at those factors and none of them are meant here none not a single one didn't have a joint venture agreement r t w didn't have joint ownership cliff answers one of our earlier questions if we were to accept the argument in it here to the general rule that bad faith liability may be imposed only against a party to the insurance contract we would  also deprive a plaintive from redress against the party primarily responsible for damages that's the public policy and common law of our supreme court i'd like to go to the statute twenty four sixty one that my opponent mentioned because that makes the point for me that statute deals with the unfair claims process seen act and in that case the legislature knew how to limit its application it says this unfair claims processing act will not create civil liabilities they didn't do that with twenty three nine three zero there is nothing limiting the application of the statute in that it says claim process and they shall be liable not only that but the unfair claim processing act is discusses liability between a carrier and the department of insurance nine three  zero discusses liability between the claim administrators and the insured the final thing i'd like to mention is we kind of had this problem and c n lee there was no duty because there wasn't a doctor patient relationship that's the only way that duty could arise and the court and that's case said we are not going to require formal relationships when there is a sufficient relationship that was the policy again i think arizona has always been on the side of the t p a liability through one method or another thank you counsel thank you thank you both for your arguments today the case just heard to be submitted for