Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01407/USCOURTS-azd-2_11-cv-01407-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1441 Petition for Removal- Tort/Non-Motor Vehicle

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Mary Demetrulias, 

Plaintiff, 

v. 

Wal-Mart Stores Inc., a Delaware 

corporation; Claims Management Inc., an 

Arkansas corporation dba AR Claims 

Management Inc., dba Arkansas Claims 

Management Inc.; Wal-Mart Associates 

Inc., a Delaware corporation, 

Defendants.

No. CV-11-01407-PHX-GMS

ORDER 

 Pending before the Court is Defendants’ Motion for Summary Judgment. For the 

reasons discussed below, the Motion is denied.1

 

FACTUAL BACKGROUND 

I. Parties and Initial Injury 

 Plaintiff Mary Demetrulias worked as a cashier for one of Defendant Wal-Mart 

Stores, Inc.’s (“Walmart”) retail stores in Scottsdale, Arizona. (Doc. 111 ¶ 3; Doc. 117 ¶ 

3.) While at work on March 6, 2010, Demetrulias stumbled over a rolled-up rug in a 

darkened back room and fell on her right side. (Id.) Demetrulias immediately reported the 

accident and injury to her Walmart manager. (Doc. 111 ¶ 4; Doc. 117 ¶ 4.) Her workers 

compensation form stated that Demetrulias suffered injuries to her right shoulder, back, 

 

1 The Parties’ requests for oral argument are denied because the parties have had an adequate opportunity to discuss the law and evidence and oral argument will not aid the Court’s decision. See Lake at Las Vegas Investors Group v. Pac. Malibu Dev., 933 

F.2d 724, 729 (9th Cir. 1991). 

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right side, and right knee. (Doc. 111-1, Ex. 4 at WMA 001665.) 

 She soon filed a workers compensation claim with Walmart. (Doc. 111 ¶ 5; Doc. 

117 ¶ 5.) Arizona is one of a few states where Walmart self-insures for workers 

compensation. (Doc. 111 ¶ 1; Doc. 117 ¶ 1.) Defendant Claims Management Inc. (CMI), 

a Walmart subsidiary, handles adjustment of workers compensation claims in Arizona. 

(Doc. 111 ¶ 2; Doc. 117 ¶ 2.) A CMI employee by the name of Karen Person was the 

claims adjuster for Demetrulias over the relevant time period. (Doc. 111 ¶ 6; Doc. 117 ¶ 

6.) Her direct supervisor was Leatta Wittaker, who in turn was supervised by Blynn 

Stewart. (Doc. 118-2, Ex. 102 (Stewart Dep.) at 17:17-18:17.) Person, Wittaker, and 

Stewart all worked on Demetrulias’s file. These adjusters often consult nurse case 

managers (“NCMs”) about medical questions, but the adjusters have the ultimate 

authority on claims decisions. (Doc. 119-1, Ex. 105 (Stephens Dep.) at 39:1-13.) 

 On March 7, 2010, Demetrulias was diagnosed by Dr. Gerald Yacobucci at the 

Orthopedic Clinic with post-traumatic impingement of the right shoulder with secondary 

adhesive capsulitis, and administered several injections for her pain. (Doc. 111 ¶¶ 8, 14; 

Doc. 117 ¶¶ 8, 14.) On April 12, 2010, he released Demetrulias back to “light duty” work 

with specific lift/push/pull imitations. (Doc. 111 ¶ 15; Doc. 117 ¶ 15.) Demetrulias began 

working again for Walmart at a position that largely entailed answering the phones. (Doc. 

111 ¶ 16; Doc. 117 ¶ 16.) She worked in this capacity until June 20, when she left 

because of her condition. (Doc. 111 ¶ 17; Doc. 117 ¶ 17.) 

II. Surgery, Delay, and Injury Expands to Wrist and Hand 

On April 22, while Demetrulias was engaged in her light duty work, she 

complained to Dr. Yacobucci of “the recent onset of tingling and electrical sensation in 

the thumb, index, and middle finger of the right hand . . . [that] began during her 

therapy.” (Doc. 111-3, Ex. 18 at WMA 000190.) Dr. Yacobucci recommended shoulder 

surgery and filed a request with CMI for approval that same day, although apparently not 

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with the adjuster assigned to Demetrulias. (Doc. 111-3, Ex. 18.)2 

 By May 7, neither Demetrulias nor her physician heard back from CMI. 

Demetrulias called CMI and told the adjuster that her surgery was supposed to take place 

on May 10, but that CMI had not yet given approval. (Doc. 111-2, Ex. 5 at WMA 

001286.) She also sent a letter to CMI that stated she needed surgery “ASAP.” (Doc. 117-

1, Ex. 71.) Person, Demetrulias’s claims adjuster, contacted Dr. Yacobucci’s office about 

the shoulder surgery eighteen days later on May 25. (Doc. 111-2, Ex. 5 at WMA 

0001284.) Person heard back from Dr. Yacobucci’s office on June 3, and received the 

request form on June 8. (Doc. 111-2, Ex. 5 at WMA 0001284; Doc. 111 ¶ 27; Doc. 117 ¶ 

27.) It was approved that day. (Doc. 111 ¶ 27; Doc. 117 ¶ 27.) Apparently, Dr. Yacobucci 

requested authorization by fax on May 11, May 20, and again on June 3, but sent that fax 

to the wrong adjuster. (Doc. 111-2, Ex. 5 at WMA 0001284; Doc. 117-1, Ex. 70.) 

Demetrulias eventually underwent the shoulder surgery on June 23, 2010, soon after she 

left her light duty work at Walmart. (Doc. 111 ¶ 28; Doc. 117 ¶ 28.) Nevertheless, 

Demetrulias testified that from April 22 to June 8, 2010, her physical pain was “off the 

charts.” (Doc. 117-1, Ex. 64 (Demetrulias Dep.) at 119:4-122:8.) 

 Dr. Yacobucci had Demetrulias in for a follow-up visit on July 1. (Doc. 111 ¶ 29; 

Doc. 117 ¶ 29.) Demetrulias told Dr. Yacobucci that the tingling in her right hand and 

fingers was getting worse. (Doc. 111-3, Ex. 21 at WMA 000273.) He ordered an EMG, 

or nerve conduction study. (Id.) That request was denied on July 2 by Wittaker, Person’s 

supervisor. (Doc. 111 ¶ 30; Doc. 117 ¶ 30; Doc. 119-1, Ex. 106 (Wittaker Dep.) 65:12-

16.) Wittaker determined that the hand and wrist problem was a preexisting condition 

based on two pieces of evidence. (Id.) First, Demetrulias’s medical records had listed 

“Carpal tunnel syndrome” as a condition she had some time earlier, although the file did 

not specify the hand or hands in which Demetrulias suffered the condition. (Doc. 111-3, 

 

2

 It appears that Demetrulias also had to obtain clearance from a cardiologist for the procedure, but there is evidence that the cardiologist sent clearance that same day, April 22. (Doc. 117-1, Ex. 69.) 

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Ex. 22 at WMA 000055-56.) Wittaker did not clarify that ambiguity. In fact, 

Demetrulias’s previous carpal tunnel was in her left hand and arm. (Doc. 120-1, Ex. 114 

¶¶ 3-4.) Second, Wittaker stated that the initial March injury report did not mention any 

hand or wrist injuries, (Doc. 111-3, Ex. 23 (Wittaker Dep.) at 67:3-68:22), although the 

April 22 report from Dr. Yacobucci described “the recent onset of tingling and electrical 

sensation in the thumb, index, and middle finger of the right hand . . . [that] began during 

her therapy.” (Doc. 111-3, Ex. 18 at WMA 000190.) 

 There was apparently some behind-the-scenes discussion between Person and a 

NCM named Jo Lynn Culppepper about Demetrulias’s wrist injury. Culpepper contacted 

Demetrulias on July 14, and there was a back-and-forth about whether the hand and wrist 

issue was related to the March incident or was related to a previous wrist injury. (Doc. 

111-2, Ex. 5 at WMA 001278.) Culpepper told Demetrulias to have Dr. Yacobucci call 

her during the next day’s appointment to see whether there was a different diagnosis that 

would allow an EMG test. (Id.) Dr. Yacobucci called Culpepper the next day, and told 

her that Demetrulias was “considerably worse” than the last time he saw her. (Id.) 

Culpepper gave verbal authorization for a c-spine MRI and EMG. (Id.) Demetrulias had 

the EMG on July 21, 2010, twenty days after the initial request. (Doc. 111-3, Ex. 24 at 

WMA 000328.) The reported findings of the EMG were consistent with right carpal 

tunnel syndrome. (Id.) 

Culpepper made the following notation in Demetrulias’s file: “Because the file is 

taking a turn regarding affected body parts as well as [treatment], NCM recommends 

IME [independent medical examination].” (Doc. 111-2, Ex. 5 at WMA 001278.) Person 

formally requested an IME on July 19, 2010. (Doc. 111 ¶¶ 34-35; Doc. 117 ¶¶ 34-35.) On 

July 26, Stewart, one of Person’s supervisors, reviewed Demetrulias’s file. He noted that 

“NCM has recommended an IME to limit the extent of Injury. Depending on what the 

IME says, we will likely have a reserve change coming.” (Doc. 111-2, Ex. 5 at WMA 

001277.) With regard to the “limit the extent of Injury” comment, Stewart stated that he 

did not get a chance to “edit” the comment because he was “in a rush.” (Doc. 118-2, Ex. 

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102 (Stewart Dep.) at 126:1-10.) In any event, the IME was scheduled for September 1. 

(Doc. 111 ¶ 29; Doc. 117 ¶ 29.) 

All treatment was put on hold pending the IME. (Doc. 111-2, Ex. 5 at WMA 

001276.) Dr. Yacobucci visited again with Demetrulias on July 29. (Doc. 112, Ex. 27 at 

WMA 000357.) Because previous efforts had failed to relieve the carpal tunnel pain, he 

recommended surgery. (Id.) In a letter to Walmart he wrote: “The carpal tunnel issue has 

already been addressed in a conservative fashion with cortisone instillation without 

improvement. At this point, it would be appropriate to move forward with definitive 

treatment in the form of a right wrist carpal tunnel release. We will begin the scheduling 

process today and obtain authorization from the carrier.” (Id. at 000371.) CMI did not 

approve the referral because of the IME request and told this to Demetrulias. (Doc. 111-

2, Ex. 5 at WMA 001276.) At another follow-up visit with Dr. Yacobucci on August 12, 

the doctor remarked that Demetrulias “has a diagnosis of carpal tunnel syndrome on the 

ride side which has failed conservative management and we are awaiting authorization to 

move forward with carpal tunnel release. The patient has a diagnosis of cervical spinal 

pathology which is currently being assessed by Dr. Levine via an IME.” (Doc. 117-2, Ex. 

75 at WMA 006208.) 

The IME was performed by Dr. Levine on September 1, 2010. (Doc. 111 ¶ 42; 

Doc. 117 ¶ 42.) He determined that the carpal tunnel condition was work related and 

recommended wrist surgery. (Id.) CMI formally accepted the report on September 15. 

(Doc. 111-2, Ex. 5 at WMA 001273.) Meanwhile, Dr. Yacobucci noted on September 9 

that Demetrulias’s shoulder was “actually regressing” and that “[t]he problem, at this 

point, is that we are in a holding pattern, awaiting the opinion of the IME Specialist. The 

shoulder, however, does need continued ongoing care, otherwise, we are looking at a 

decrease in function and increasing pain.” (Doc. 117-2, Ex. 77.) After CMI accepted the 

IME report on September 15, Dr. Yacobucci again requested wrist surgery. (Doc. 111 ¶¶ 

43-44; Doc. 117 ¶¶ 43-44.) It was approved on September 16 (id.), and Demetrulias 

underwent the surgery on October 13, 2010 (Doc. 111 ¶ 48; Doc. 117 ¶ 48). 

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III. Delay in Receiving Catapres and Stellate Blocks 

November 4 brought another follow-up visit with Dr. Yacobucci, who thought that 

Demetrulias’s wrist was not looking good post-operation and required immediate 

physical therapy. (Doc. 117-2, Ex. 78.) CMI authorized eight physical therapy sessions 

on November 8, 2010. (Doc. 117-3, Ex. 80.) During her physical therapy sessions, 

Demtrulias’s ability to move her hand began to diminish. (Doc. 112-2, Ex. 43 at 000104-

05.) By November 16, Demetrulias’s right hand began to swell and she had trouble 

moving her fingers. (Doc. 111 ¶¶ 49-50; Doc. 117 ¶¶ 49-50.) Dr. Yacobucci believed 

Demetrulias might be developing Complex Regional Pain Syndrome (“CRPS” or 

“RSD”), and referred her to Dr. Stephen Borowsky, a specialist. (Doc. 111 ¶¶ 50, 52; 

Doc. 117 ¶¶ 50, 52.) Dr. Yacobucci submitted preauthorization paperwork to CMI for the 

referral and for a stellate ganglion block to treat the CRPS. (Doc. 111 ¶ 52; Doc. 117 ¶ 

52.) CMI denied the request on November 17 (Doc. 117-3, Ex. 81), but reversed and 

approved the first block the next day (Doc. 111 ¶ 53; Doc. 117 ¶ 53). It requested 

preauthorization paperwork for any subsequent treatment. (Id.) 

Dr. Borowsky performed the first stellate block on November 24. (Doc. 111 ¶ 54; 

Doc. 117 ¶ 54.) To facilitate treatment, he prescribed a medication called Catapres, which 

operates to block the sympathetic nervous system. (Doc. 112-1, Ex. 37.) He prescribed 

Catapres “DAW,” or “dispense as written” (Doc. 117-1, Ex. 65 (Borowsky Dep.) at 

44:18-45:9), because the generic version was not as reliable in his experience (Id). 

Demetrulias took the prescription to Walmart that same day, but was told there was no 

authorization. (Doc. 120-1, Ex. 114 ¶ 11.) When Demetrulias contacted CMI, Person 

claimed that she did not know what was going on in the pharmacy. (Doc. 119-1, Ex. 104 

(Person Dep.) at 119:3-123:20, 132:16-133:15.) Catapres showed up in the pharmacy as a 

smoking patch, which meant Person was unable to approve Catapres as “medical.” (Id.) 

So she tried to get Dr. Borowsky to prescribe something else. (Id.) Dr. Borowsky wrote a 

letter to CMI chastising them for the apparent denial of coverage for Catapres: “Your 

failure to authorize Catapres presents an obstacle to treating a very difficult and possibly 

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disabling pain syndrome.” (Doc. 112-1, Ex. 37.) In that same letter, Dr. Borowsky noted 

that “future stellate blocks are planned.” (Id.) 

When the request for more blocks was made and when Catapres was authorized is 

a matter of substantial dispute between the parties. Dr. Borowsky claimed that his office 

called for authorization on either November 24 or 29 (Thanksgiving was in the middle). 

(Doc. 117-1, Ex. 65 (Borowsky Dep.) at 32:16-33:12.) His practice with workers 

compensation cases is to have his secretary call the insurance company for authorization. 

(Id. at 102:25-104:17.) Person claims that she did not receive any written requests for 

blocks from Dr. Borowsky. (Doc. 111-1, Ex. 6 (Person Dep.) at 135:9-137:2.) However, 

written requests are not necessary; doctors could call and Person would fax an 

authorization form. (Doc. 111 ¶ 57; Doc. 117 ¶ 57.) CMI faxed Dr. Borowsky’s office a 

preauthorization form on December 9, 2010. (Doc. 111 ¶ 58; Doc. 117 ¶ 58.) What Dr. 

Borowsky did with the December 9 form is unclear. 

In the interim, Demetrulias called Person on November 29, and was told that 

Catapres had not yet been authorized and that authorization for the second stellate 

ganglion block was “pending.” (Doc. 120-1, Ex. 114 ¶ 17.) Person asked for Dr. 

Borowsky to fax information on why the second block was needed and why generic 

medication was inappropriate. (Doc. 117-3, Ex. 82.) Demetrulias asked to speak to the 

higher authority, but was told simply that authorization was pending. (Doc. 120-1, Ex. 

114 ¶ 20.) She eventually spoke with Stewart, who told her only that authorization takes 

time. (Id. ¶ 21.) Several more calls were placed to Person from November 29 to 

December 9, and Person said that approval was pending and she needed authorization 

from a higher authority. (Id. ¶ 19.) 

Wittaker circulated the following email to two NCMs on December 9, the same 

day the preauthorization form was faxed to Dr. Borowsky: “HELP!!!!!!!!!!!!!!!!!!!!! This 

is [Person]’s claim and we need help.” (Doc. 112-3, Ex. 48.) She described the stellate 

block requests and then stated “I think we should get an Addendum IME to address the 

RSD/CRPS diagnosis and reign [sic] the medical back under control. Also should we be 

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paying for this anti hypertensive medication to treat the RSD? What are your 

recommendations? We need to know ASAP!” (Id.) The NCMs responded that 

“authorization was given once already for Stellate ganglion block for diagnosis RSD” and 

to seek an IME “to address if RSD is a true work injury.” (Id.) 

On December 15, Catapres and the second stellate block were approved. (Doc. 

120-1, Ex. 114 ¶ 25.) Demetrulias filled the Catapres prescription on December 16 (Doc. 

112-3, Ex. 49 at 22), and Dr. Borowsky administered the second stellate block on 

December 20 (Doc. 111 ¶ 66; Doc. 117 ¶ 66). Person claims that Catapres had been 

authorized since November 30. (Doc. 111-2, Ex. 6 (Person Dep.) at 125:9-14.) At some 

point after November 30, though, the pharmacy continued to refuse to dispense the 

medication (Doc. 111 ¶ 73; Doc. 117 ¶ 73), or filled it with a generic substitute (Doc. 111 

¶ 78; Doc. 117 ¶ 78). 

There is evidence the delay in receiving the second stellate block and Catapres 

harmed Demetrulias. Dr. Borowsky testified: “From the fact that we could not reproduce 

any kind of noticeable improvement after the subsequent blocks compared to the first, 

that we had a good chance of getting this under much better control if we had been able 

to treat this aggressively in the beginning.” (Doc. 117-1, Ex. 65 (Borowsky Dep.) at 

46:17-47:9.) He concluded: “I don’t know exactly what the result would have been, but 

the likelihood is that we would have had a much better situation than what we have.” (Id.

at 49:6-12.) Likewise, Demetrulias’s hand doctor, Dr. Beth Purdy, testified that “I cannot 

say with 100 percent certainty . . . that getting that second block would . . . clearly have . . 

. offered her resolution, remission of this subsequent pain and disability. What I can say 

with medical probability, very confidently, is that getting . . . that block . . . within the 

next week or so after the first one would have offered her the best chance of being able to 

. . . see improvement.” (Doc. 117-1, Ex. 66 (Purdy Dep.) at 114:10-25.) Dr. Purdy made 

similar statements regarding the Catapres delay: “I think . . . it offers the opportunity . . . 

for a better outcome. And obviously it doesn’t offer a guarantee of a better outcome, but . 

. . I truly feel that it . . . contributed to the loss of opportunity that . . . this could have . . . 

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played out in a far more positive manner.” (Id. at 115:1-20.) Demetrulias’s expert 

testified that that “it is my opinion to a reasonable degree of medical probability that 

Demetrulias would have improved if she had gotten the second block earlier.” (Doc. 119-

1, Ex. 110 ¶ 4.) 

IV. Back and Forth

At any rate, subsequent stellate blocks were approved. Dr. Borowsky called 

Stewart, Person’s supervisor, on April 11. (Doc. 111 ¶¶ 108-09; Doc. 117 ¶¶ 108-09.) In 

the course of their conversation, Stewart asked Dr. Borowsky some pointed questions, 

and Dr. Borowsky became angry. (Id.) Stewart told Dr. Borowsky that there was 

surveillance of Demetrulias pushing a shopping cart with both hands. (Id.) Borowsky 

asked to see the video. (Id.) In fact, there was no such video, but Stewart never called Dr. 

Borowsky back to correct his statement. (Doc. 111 ¶ 111; Doc. 117 ¶ 111.) Nevertheless, 

Stewart approved the treatment requested by Dr. Borowsky. (Doc. 111 ¶ 110; Doc. 117 ¶ 

110.) He made a note that he approved two blocks “just so the patient will not have to 

wait four weeks to get approval for 2nd one.” (Doc. 111-2, Ex. 5 at WMA 001324.) No 

alteration to Demetrulias’s medical care was made based on the statements of Stewart 

regarding the surveillance. (Doc. 111 ¶ 114; Doc. 117 ¶ 114.) 

 Walmart has continued to provide coverage under workers compensation to 

Demetrulias for her claim. (Doc. 111 ¶ 144; Doc. 117 ¶ 144.) Behind the scenes, CMI 

uses a series of goals to help control costs. Its supervisors set monthly and annual goals to 

close workers compensation files. (Doc. 118-2, Ex. 102 (Stewart Dep.) at 95:11-96:12.) 

Supervisors like Stewart keep their teams appraised daily on achievements, or lack 

thereof. (Id., Ex. 107 at 97:12-98:23.) This plan includes a “Blitz Wednesday,” where 

extra effort is expended to close files. (Id., Ex. 107 at 12:8-13:18.) 

 On June 15, 2011, Demetrulias filed suit against Walmart, CMI, and related 

entities in Maricopa County Superior Court. (Doc. 1-1.) Defendants removed this case to 

federal court on July 15. Demetrulias asserted claims for bad faith and intentional 

infliction of emotional distress. She further seeks punitive damages. After discovery 

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concluded, Defendants filed the instant Motion for Summary Judgment on July 27, 2012 

DISCUSSION 

I. Legal Standard 

 Summary judgment is appropriate if the evidence, viewed in the light most 

favorable to the nonmoving party, demonstrates “that there is no genuine dispute as to 

any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 

P. 56(a). Substantive law determines which facts are material and “[o]nly disputes over 

facts that might affect the outcome of the suit under the governing law will properly 

preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 

248 (1986). “A fact issue is genuine ‘if the evidence is such that a reasonable jury could 

return a verdict for the nonmoving party.’” Villiarimo v. Aloha Island Air, Inc., 281 F.3d 

1054, 1061 (9th Cir. 2002) (quoting Anderson, 477 U.S. at 248). When the nonmoving 

party “bear[s] the burden of proof at trial as to an element essential to its case, and that 

party fails to make a showing sufficient to establish a genuine dispute of fact with respect 

to the existence of that element, then summary judgment is appropriate.” Cal. 

Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th 

Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986)). 

 The role of the judge is “not himself to weigh the evidence and determine the truth 

of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 

U.S. at 249. Answering that question involves examination of “direct and circumstantial 

proof and the permissible inferences that may be drawn from such evidence.” Triton 

Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995). 

II. Analysis 

 A. Bad Faith 

Demetrulias claims that Walmart’s3

 handling of her workers compensation claim 

violated its duty of good faith and fair dealing. Under Arizona law, a workers 

 

3

 For the sake of clarity, the Court refers to all Defendants collectively as “Walmart” in this section of the Order. 

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compensation claimant can bring an action against her employer’s workers compensation 

insurer for breach of the duty of good faith and fair dealing. Mendoza v. McDonald’s 

Corp., 222 Ariz. 139, 149, 213 P.3d 288, 298 (Ct. App. 2009). The duty of good faith 

arises because “[a]n insurance contract is not an ordinary commercial bargain; implicit in 

the contract and the relationship is the insurer’s obligation to play fairly with its insured.” 

Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234, 237, 995 P.2d 276, 279 (2000) 

(internal quotation marks omitted). An insurance relationship carries some duties of a 

fiduciary nature. Among them are “[e]qual consideration, fairness and honesty.” 

Rawlings v. Apodaca, 151 Ariz. 149, 155, 726 P.2d 565, 571 (1986). “[A]n insurer that 

intentionally and unreasonably denies or delays payment breaches the covenant of good 

faith owed to its insured.” Id. at 156. 

As an initial matter, Walmart’s primary defense—that it ultimately paid on 

Demetrulias’s claim—is unavailing. While a “typical” bad faith situation involves denial 

of benefits or coverage, see Deese v. State Farm Mut. Auto. Ins. Co., 172 Ariz. 504, 507, 

838 P.2d 1265, 1269 (1992) (citing cases examining failure to honor a claim), the 

Arizona Supreme Court has affirmed that delays in approval and actions taken while 

processing a claim can support a bad faith action. See Zilisch, 196 Ariz. at 238 (duty 

breached when insurer “intentionally denies, fails to process or pay a claim without a 

reasonable basis”); Deese, 172 Ariz. at 509 (“Plaintiff[ ] contends that State Farm acted 

unreasonably in the manner in which it processed her claim, without regard to its ultimate 

merits. State Farm’s argument is that because it ‘paid [the Plaintiff] all of the benefits that 

the contract provided, . . . [it] has not acted in bad faith towards her, regardless of how 

the decision was reached.’ In fact, the finding of bad faith in this case is predicated 

precisely on the manner in which State Farm reached its decision.”) 

 To aid in analyzing a bad faith insurance claim, Arizona employs a two-pronged 

test that has an objective and subjective component. First is the objective inquiry: did the 

insurer act unreasonably toward the insured? Clearwater v. State Farm Mut. Auto. Ins. 

Co., 164 Ariz. 256, 260, 92 P.2d 719, 723 (1990). Second is the subjective: did the 

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insurer act “knowingly or with reckless disregard as to the reasonableness of its actions”? 

Id. 

 Unreasonable actions include failure to “immediately conduct an adequate 

investigation,” failure to “act promptly in paying a legitimate claim,” “forc[ing] an 

insured to go through needless adversarial hoops to achieve its rights under the policy,” 

“lowball[ing] claims,” and similar conduct. Zilisch, 196 Ariz. at 238. The nature of the 

insurance relationship under Arizona law requires insurers to give “equal consideration” 

to the needs of their insureds and not treat the claims process as a battlefield. Id. 

Nevertheless, insurers can challenge claims that are “fairly debatable.” Id. at 237. 

As far as the subjective question of the insurer’s intent goes, “[t]he ‘intent’ 

required here is an ‘evil hand’—the intent to do the act. . . . [T]he insurer must intend the 

act or omission and must form that intent without reasonable or fairly debatable grounds. 

But an ‘evil mind’ is not required; the insurer need not intend to harm the insured.” 

Rawlings, 151 Ariz. at 160. Intent is established if the insurer lacked a “founded belief” 

that its conduct was permissible. Id. “The founded belief is absent when the insurer either 

knows that its position is groundless or when it fails to undertake an investigation 

adequate to determine whether its position is tenable.” Id.

That means a bad faith plaintiff has to show something more than negligence to 

prevail. Id.; see also Miel v. State Farm Mut. Auto. Ins. Co., 185 Ariz. 104, 110, 912 P.2d 

1333, 1339 (Ct. App. 1995) (“Mere mistake and inadvertence are not sufficient to 

establish a claim for bad faith.”). After all, “[i]nsurance companies . . . are far from 

perfect. Papers get lost, telephone messages misplaced and claims ignored because 

paperwork was misfiled or improperly processed. Such isolated mischances may result in 

a claim being unpaid or delayed. None of these mistakes will ordinarily constitute a 

breach of the implied covenant of good faith.” Rawlings, 151 Ariz. at 157. 

 “The appropriate inquiry [at this point] is whether there is sufficient evidence 

from which reasonable jurors could conclude that in the investigation, evaluation, and 

processing of the claim, the insurer acted unreasonably and either knew or was conscious 

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of the fact that its conduct was unreasonable.” Zilisch, 196 Ariz. at 238. Typically, the 

insurer’s belief in the fair debatibility of a claim is “a question of fact to be determined by 

the jury.” Id. at 237. Nevertheless, the plaintiff bears the ultimate burden at trial and must 

offer significantly probative evidence that calls into question the insurer’s belief in the 

fair debatibility of the claim. See Knoell v. Metro. Life Ins. Co., 163 F. Supp. 2d 1072, 

1077 (D. Ariz. 2001). 

1. Delay in Shoulder Surgery 

The first example of alleged bad faith cited by Demetrulias is the delay between 

the request and authorization for the shoulder surgery. Dr. Yacobucci recommended that 

Demetrulias undergo surgery on April 22, 2010, but Walmart did not approve the surgery 

until June 8. Demetrulias has testified that she suffered extensive pain because of the 

delay, which leaves remaining the questions of the unreasonableness of the delay and 

whether Walmart acted knowingly in delaying approval for the shoulder surgery. 

Demetrulias has presented some evidence that authorization was requested several 

times by Dr. Yacobucci’s office from April 22 to June 3. (Doc. 117-1, Ex. 70.) The 

uncontroverted evidence presented by Walmart, however, is that Dr. Yacobucci had been 

faxing the surgery requests to the wrong office. (Doc. 111-2, Ex. 5 at WMA 0001284.) 

The first time Walmart contacted Dr. Yacobucci was on May 25, when Person called 

after hearing from Demetrulias that she was preparing to undergo shoulder surgery. (Doc. 

111-2, Ex. 5 at WMA 0001284.) This May 25 phone call prompted another exchange 

between Person and Dr. Yacobucci that ultimately led to approval on June 8. (Doc. 111-

2, Ex. 5 at WMA 0001284; Doc. 111 ¶ 27; Doc. 117 ¶ 27.) 

While confusion existed, the only admissible evidence demonstrates that the 

source of the confusion was Dr. Yacobucci’s office. As soon as the fax was sent to 

Person, the approval process went relatively smoothly. Walmart’s conduct cannot be 

considered unreasonable; indeed, there is no evidence of neglect on its part. The delay in 

shoulder surgery does not support a bad faith claim. 

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 2. Initial Carpal Tunnel Denial 

The next instance of delay was Walmart’s initial refusal to cover the carpal tunnel 

injury. Dr. Yacobucci had requested an EMG on Demetrulias’s hand and wrist on July1, 

2010, after learning that the tingling in Demetrulias’s right hand and figures—which he 

first reported on April 22—had worsened. (Doc. 111-3, Ex. 21.) CMI supervisor Wittaker 

denied coverage on July 2 for two reasons: (1) Demetrulias’s medical records had listed 

carpal tunnel syndrome as a previous condition and (2) there was no recent medical 

evidence of a hand or wrist problem. (Doc. 119-1, Ex. 106 (Wittaker Dep.) at 68:10-22.) 

It is undisputed that the earlier carpal tunnel injury was to the left hand, not the right 

(Doc. 120-1, Ex. 114 ¶¶ 3-4), and that Dr. Yacobucci had reported hand and wrist issues 

on April 22, about six weeks after the initial injury (Doc. 111-3, Ex. 18 at WMA 

000190). The question, however, is not whether a jury could find that Wittaker’s 

investigation was inaccurate, but that it was inadequate. 

 “[A]n insurer cannot reasonably and in good faith deny payments to its insured 

without thoroughly investigating the foundation for its denial.” Lennar Corp. v. 

Transamerica Ins. Co., 227 Ariz. 238, 246, 256 P.3d 635, 643 (Ct. App. 2011) (quoting 

Egan v. Mut. of Omaha Ins. Co., 620 P.2d 141, 146 (Cal. 1979)). Demetrulias has 

presented enough evidence to raise questions about the thoroughness of Wittaker’s 

investigation. Demetrulias’s medical records did not specify to which wrist the older 

carpal tunnel diagnosis applied. (Doc. 111-3, Ex. 22 at WMA 000055-56.) Walmart’s 

expert stated that the duty to investigate would include determining whether the carpal 

tunnel injury was related to the right or left hand. (Doc. 120-1, Ex. 121 (McCoy Dep.) at 

95:1-10.) Moreover, even if the injury was to the left hand, Arizona law recognizes that 

subsequent workplace injuries can aggravate pre-existing injuries, and coverage for that 

aggravated injury properly lies with the workers compensation insurer. See Indus. 

Indemnity Co. v. Indus. Comm’n of Ariz., 152 Ariz. 195, 199, 731 P.2d 90, 94 (Ct. App. 

1986). 

 Furthermore, there is evidence that Wittaker’s examination of the medical records 

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themselves was deficient. She claims that she examined the medical records and did not 

see any injuries to the hand or wrist. Doc. 119-1, Ex. 106 (Wittaker Dep.) at 68:10-22.) 

But Walmart had Dr. Yacobucci’s April 22 report where he noted that Demetrulias 

complained of “the recent onset of tingling and electrical sensation in the thumb, index, 

and middle finger of the right hand. She states this began during her therapy.” (Doc. 111-

3, Ex. 18 at WMA 000190.) Viewed as a whole, Demetrulias has presented enough 

evidence to raise issues of fact as to whether Wittaker’s conduct was unreasonable. 

 She must also show that Walmart employees were not merely negligent, but knew 

their conduct was unreasonable. Arizona courts describe this element as lacking a 

“founded belief” in the propriety of a course of action. Specifically, a founded belief can 

be absent “when the insurer either knows that its position is groundless or when it fails to 

undertake an investigation adequate to determine whether its position is tenable.” 151 

Ariz. at 160 (emphasis added). A failure to investigate theory may result in some overlap 

in the first two elements of the bad faith analysis. Thus where a plaintiff proceeds on the 

theory that her claim was denied or delayed because the insurer failed to adequately 

investigate her claim, the evidence may support both the objective unreasonableness of 

the insurer’s actions and also the existence of the subjective “evil hand.” Consequently, 

there is sufficient evidence that the denial of coverage for carpal tunnel syndrome was in 

bad faith. 

 3. IME Request 

Demetrulias cites the Summer 2010 IME request made by Walmart as further 

evidence of bad faith. The day that authorization was given to Dr. Yacobucci to proceed 

with the EMG on Demetrulias’s hand and wrist, Nurse Culpepper recommended an IME. 

(Doc. 11-2, Ex. 5 at WMA 001278.) Person requested the IME on July 19, 2010 (Doc. 

111 ¶¶ 34-35; Doc. 117 ¶¶ 34-35), and it was scheduled for September 1, 2010 (Doc. 111 

¶ 42; Doc. 117 ¶ 42). An insurer is “entitled to seek an independent medical examination” 

to ensure further medical treatment is necessary. Mendoza, 222 Ariz. at 159. However, “it 

may not use the process to breach the implied covenant of good faith and fair dealing.” 

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Bennett v. Ins. Co. of State of Penn., No. 1 CA–CV 10–0815 2012 WL 424913 at *3 

(Ariz. Ct. App. Feb. 9, 2012). 

The parties dispute the justification for the IME. Walmart claims the IME was 

ordered because medical treatment was expanding beyond the shoulder and back injuries 

to the hand and wrist. Using the IME in this way would be permissible. On the other 

hand, Stewart, one of the adjusters, stated in the claim notes that the IME’s purpose was 

“to limit the extent of the injury.” (Doc. 111-2, Ex. 5 at WMA 001277.) When pressed at 

deposition about the meaning of this comment, Stewart stated that he regretted being 

unable to “edit” the comment out because he was “in a rush.” (Doc. 118-2, Ex. 102 

(Stewart Dep.) at 126:1-10.) Using the IME as a claim-trimmer is not permissible. See 

Mendoza, 222 Ariz. at 159 (“McDonald's claim file reflects it sought independent 

medical examinations for the purpose of ‘cutting’ or closing Mendoza's claim. Although 

McDonald's workers’ compensation expert witness testified references to cutting or 

closing claims were simply ‘jargon,’ and referred to acceptable goals of processing 

workers’ compensation claims, a jury could certainly conclude otherwise.”) 

Here the evidence could support both a finding of unreasonable conduct and an 

“evil hand.” Using an IME to “limit the extent of the injury” could show that Walmart 

“inten[ded] the act or omission and . . . form[ed] that intent without reasonable or fairly 

debatable grounds.” Rawlings, 151 Ariz. at 160. Because a reasonable jury could credit 

the explanation of either Walmart or Demetrulias, Demetrulias can also use the IME 

denials to support her bad faith claim. 

 4. CRPS and Catapres Delays 

Demetrulias next relies on the delay in getting approval for CRPS stellate block 

treatments and her Catapres medication during November and December of 2010. The 

timeline is unclear as the parties vigorously dispute how the authorization for CRPS 

treatment proceeded. Walmart asserts that Dr. Borowsky did not formally request the 

second stellate block treatment until around December 9 (Doc. 111 ¶ 58; Doc. 117 ¶ 58), 

and approval was granted on December 15 (Doc. 120-1, Ex. 114 ¶ 25). It also claims that 

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Catapres was available to Demetrulias as of November 30. (Doc. 111-2, Ex. 6 (Person 

Dep.) at 125:9-14.) In contrast, Demetrulias has evidence that Dr. Borowsky requested 

the second block as early as November 24 or 29 (Doc. 117-1, Ex. 65 (Borowsky Dep.) at 

32:16-33:12), and that she was continually told authorization was pending over the next 

two weeks (Doc. 120-1, Ex. 114 ¶¶ 19-21). She also asserts that Catapres was not 

approved until December 15, and that it was dispensed as a generic, in contravention of 

Dr. Borowsky’s prescription. (Id. ¶ 25; Doc. 112-1, Ex. 37; (Doc. 117-1, Ex. 65 

(Borowsky Dep.) at 44:18-45:9.) Demetrulias has presented evidence that her doctors 

conveyed to Walmart the urgent need for rapid authorization of Catapres and successive 

stellate block treatments to address CRPS. 

In light of the conflicting evidence, the Court must view the facts in the light most 

favorable to Demetrulias, the nonmoving party. Assuming that CMI delayed approval 

from November 24 or 29 until December 15 and failed to provide updates, despite the 

sense of urgency conveyed by Demetrulias and her doctors, that delay could constitute 

bad faith. Evidence that an insurer failed to “act promptly in paying a legitimate claim” is 

evidence of objectively unreasonable conduct. Zilisch, 196 Ariz. at 238. 

Demetrulias has also presented evidence that Walmart was intentionally dragging 

its feet, which satisfies the second prong of the bad faith test. Walmart’s IME had 

determined that the right carpal tunnel injury was work related and that treatment was 

necessary. (Doc. 111 ¶ 42; Doc. 117 ¶ 42.) Treatment of the right carpal tunnel injury is 

what led to the discovery of the CRPS. But Demetrulias points to an email from Wittaker 

on December 9th to two nurses that suggests Walmart nevertheless sought to avoid 

paying for the stellate block treatments and the medication: “HELP!!!!!!!!!!!!!!!!!!!!! This 

is Karen[ Person]’s claim and we need help. . . . I think we should get an Addendum IME 

to address the RSD/CRPS diagnosis and reign [sic] the medical back under control. Also 

should we be paying for this anti hypertensive medication to treat the RSD? What are 

your recommendations? We need to know ASAP!” (Doc. 112-3, Ex. 48) (emphasis 

added). This comment raises an issue of fact as to the motivations behind the delay in 

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approval for treatment, thus necessitating trial on the issue of Walmart’s handling of the 

CRPS claim. 

 5. Stewart’s Surveillance Claim to Dr. Borowsky 

Demetrulias also relies on the comments made by Stewart to Dr. Borowsky in an 

April 2011 conversation. In that conversation, Stewart told Dr. Borowsky that there are 

doctors who believe CRPS was not a real condition, which would explain why Walmart 

“ha[s] gone this far fighting about this.” (Doc. 118-2, Ex. 102 (Stewart Dep.) at 168:5-

15.) He then claimed that Walmart had surveillance video of Demetrulias pushing a 

shopping cart with both hands. (Doc. 111 ¶¶ 108-09; Doc. 117 ¶¶ 108-09.) That statement 

was false—no such video existed. (Doc. 118-2, Ex. 102 (Stewart Dep.) at 170:15-

171:20.) Stewart claims that he had mixed up several conversations in his mind, 

including one with Demetrulias’s store manager, which led to the claim. (Id.) He did not 

call back to correct his mistake. (Id.) The entire conversation upset Dr. Borowsky greatly, 

made Demetrulias cry, and caused her to worry that Dr. Borowsky would no longer treat 

her. (Doc. 117-1, Ex. 64 (Demetrulias Dep.) at 270:25-273:20.) Nevertheless, Dr. 

Borowsky continued to treat Demetrulias as before, and no alterations in her treatment 

occurred. (Doc. 111 ¶¶ 112, 114; Doc. 117 ¶¶ 112, 114.) In fact, Stewart approved all of 

the treatment requested by Dr. Borowsky. (Doc. 111 ¶ 110; Doc. 117 ¶ 110.) 

When an insurer makes a false statement to a treating doctor, there is a question 

whether the purpose of such a statement would be to reduce treatment in contravention of 

the evidence before both the doctor and insurer. While Stewart has attributed his 

statement to a mix-up from conversations with other Walmart employees, a jury could 

reasonably find otherwise. First, Stewart never called Dr. Borowsky back to correct his 

mistake. Second, Wright, Demetrulias’s store manager and the potential source for the 

surveillance claim, denies telling Stewart that he saw Demetrulias using both of her 

hands. (Doc. 119-1, Ex. 111 (Wright Dep.) at 74:21-80:16.) Whether the statement was 

an honest mistake or an intentional falsehood is not for the Court to decide at this phase. 

The issue presented is for the jury to resolve. 

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 6. Walmart Policies and Procedures 

Demetrulias finally contends that all of these actions by Walmart, while 

independently examples of bad faith, are informed by Walmart claims management 

practices and policies. Now, “[t]he evolution of the law of bad faith has not reached the 

point where it is wrong for an insurance company to make a profit, much less follow 

good business practices.” Knoell, 163 F. Supp. 2d at 1078. “For instance, . . . a company 

keeping statistics on resolution of claims and looking to their ‘bottom line’ are reasonable 

internal procedures.” Id. But setting arbitrary goals for reduction in claims paid or 

linking salaries and bonuses to claim payouts can be unreasonable. Zilisch, 196 Ariz. at 

238 (finding that such practices provided “evidence . . . from which a jury could find that 

State Farm acted unreasonably and knew it”). 

Here, the effect of the policies on Walmart’s claims processing is an issue of fact 

inappropriate for summary judgment. A jury could find that the goals set by Walmart 

were arbitrary and placed unreasonable pressure on employees to deny claims. Its 

supervisors set monthly and annual goals to close workers compensation files. (Doc. 118-

2, Ex. 102 (Stewart Dep.) at 95:11-96:12.) A typical goal appears to be “100 percent,” or 

to close the same number of claims that are opened. (Id.) Stewart constantly kept his team 

informed on where they were in relation to the 100% goal. (Id. at 97:12-98:23.) This plan 

included a “Blitz Wednesday” toward the end of the month, where extra effort is 

expended to close files. (Doc. 119-1, Ex. 107 at 12:8-13:18.) Walmart has not shown that 

such a goal reflects reality, namely that each month the number of claims that come in 

and the number of claims where medical evidence justifies closure are equivalent. This 

situation is similar to Zilisch, where the Arizona Supreme Court held that a jury could 

reasonably find arbitrary goals as evidence of bad faith. So may Demetrulias here. 

Demetrulias also discusses the Walmart policy of “roundtabling” difficult claims, 

and contests that this policy also amounts to bad faith. Person and Stewart both testified, 

however, that her claim was not roundtabled. (Doc. 111 ¶¶ 135-36; Doc. 117 ¶¶ 135-36.) 

Demetrulias relies on the testimony of her expert that, since similar claims are 

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roundtabled, Demetrulias’s must have been. (Doc. 117 ¶ 387.) “Expert witnesses may 

testify if they are qualified and if their testimony will assist the trier of fact in 

understanding the evidence or determining a fact in issue.” United States v. Binder, 769 

F.2d 595, 602 (9th Cir. 1985) overruled on other grounds by United States v. Morales, 

108 F.3d 1031 (9th Cir.1997) (en banc). Demetrulias’s expert does not use “scientific, 

technical, or other specialized knowledge”, Fed. R. Evid. 702(a), to refute the testimony 

of Person and Stewart. He instead gives his opinion that Demetrulias’s claim fits 

Walmart’s definition of a high dollar claim and therefore was likely roundtabled in 

accordance with Walmart’s practice of roundtabling high dollar claims (Doc. 117 ¶ 387). 

Such speculation about how Walmart classifies claims is improper expert testimony. 

There is no evidence that Demetrulias’s expert has advanced knowledge beyond that of a 

jury in evaluating the meaning of Walmart’s policies, which makes his testimony 

unhelpful under Rule 702. Demetrulias offers nothing more than the fact that Walmart 

roundtables high dollar claims and that her expert thinks her claim would fit that 

description. Such speculation is insufficient to create a genuine issue of material fact in 

light of the clear testimony of Stewart and Person. Accordingly, Demetrulias cannot 

incorporate the roundtable policy into her bad faith claim. 

 7. Independent Injury 

Demetrulias has presented evidence that Walmart acted in bad faith while 

handling her claim. But an element of bad faith, like any other tort, is causation and 

damages. Walmart vigorously contends that Demetrulias cannot show injury separate 

from the ultimate injury that Walmart covered. Looking at the evidence presented by 

Demetrulias as a whole, there is sufficient evidence to create an issue of fact whether the 

actions of Walmart employees and the concomitant delays in obtaining medical 

procedures caused Demetrulias physical and mental injury. For example, during the 

summer and fall of 2010, while delays occurred due to the initial denial for carpal tunnel 

and wait for the IME, Dr. Yacobucci noted that her shoulder was “regressing” and there 

was “a decrease in function and increasing pain.” (Doc. 117-2, Ex. 77.) Demetrulias has 

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also presented evidence that the delays in receiving the second stellate block and 

Catapres likely worsened her chances of recovery. (Doc. 117-1, Ex. 65 (Borowsky Dep.) 

at 46:17-47:9; Doc. 117-1, Ex. 66 (Purdy Dep.) at 114:10-25; Doc. 119-1, Ex. 110.) In 

addition, Demetrulias has testified of her own physical pain and emotional suffering as a 

result of these delays. (Doc. 117-1, Ex. 64 (Demetrulias Dep.) at 119:4-122:8, 160:25-

167:2, 256:25-257:7.) That evidence is sufficient to defeat a motion for summary 

judgment. 

Demetrulias has carried her burden under Rule 56 to defeat Walmart’s Motion for 

Summary Judgment and proceed to trial on the bad faith claim. 

B. Punitive Damages 

 Punitive damages are available in a bad faith insurance action when there are 

“‘circumstances of aggravation or outrage, such as spite or malice, or a fraudulent or evil 

motive on the part of the defendant, or such a conscious and deliberate disregard of the 

interests of others that the conduct may be called wilful or wanton.’” Rawlings, 151 Ariz. 

at 162 (quoting W. Prosser & W. Keeton, Law of Torts § 2 at 9-10 (5th ed. 1984)). This 

time, there must an “evil mind” guiding the “evil hand.” Id. Needless to say, “this remedy 

is only to be awarded in the most egregious of cases, where there is reprehensible conduct 

combined with an evil mind over and above that required for commission of a tort.” 

Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326, 332, 723 P.2d 675, 681 (1986). 

Summary judgment on the question of punitive damages is inappropriate if “a 

reasonable jury could find the requisite evil mind by clear and convincing evidence.” 

Thompson v. Better-Bilt Aluminum Prods. Co., 171 Ariz. 550, 558, 832 P.2d 203, 211 

(1992). The evil mind can be shown by some combination of “evil actions”, “spiteful 

motives”, or “outrageous, oppressive or intolerable conduct that creates a substantial risk 

of tremendous harm to others.” Volz v. Coleman Co., Inc., 155 Ariz. 567, 570, 748 P.2d 

1191, 1194 (1987). Put another way, the court considers “the nature of the defendant’s 

conduct, including the reprehensibility of the conduct and the severity of the harm likely 

to result, as well as the harm that has occurred[,] . . . [t]he duration of the misconduct, the 

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degree of defendant’s awareness of the harm or risk of harm, and any concealment of it.” 

Thompson, 171 Ariz. at 556. The primary question where punitive damages have been 

requested is motive, because gross negligence and reckless disregard are not enough. 

Volz, 155 Ariz. at 570-71. Because a defendant rarely admits to an “evil mind,” improper 

motive is often inferred from sufficiently oppressive, outrageous, or intolerable conduct. 

Id. at 162-63; Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 498, 733 P.2d 1073, 1081 

(1987). 

 Demetrulias relies on the same actions by Walmart that supported her bad faith 

claim to support her claim for punitive damages. She relies in particular on the statements 

by Stewart to Dr. Borowsky about surveillance and claims those statements were 

intentional false statements that demonstrate spite and oppressiveness. As discussed 

above, a jury could find that Stewart intentionally made false statements to Dr. Borowsky 

regarding the existence of surveillance tape and incorporate those statements in a larger 

picture of bad faith. If the jury so finds, the Court cannot then say that no reasonable jury 

would also find that conduct outrageous and intolerable. Such deliberate interference by 

the insurer in the doctor-patient relationship, if it occurred, could create a “substantial 

risk of harm” for Demetrulias. It is the defendant’s motive in the face of a serious risk of 

harm that justifies punitive damages. While Stewart actually approved the treatment for 

Demetrulias shortly after his conversation with Dr. Borowsky, the purpose of punitive 

damages is to punish and deter outrageous conduct rather than to directly compensate for 

harm suffered. See Volz, 155 Ariz. at 570 (“Punitive damages are awarded in order to 

punish the wrongdoer and deter others from emulating the same conduct.”) The inquiry 

therefore focuses on the motives of the defendant and how those motives accentuate the 

risk of harm. Stewart’s comments are evidence that could support a finding of punitive 

damages. 

 In addition, a jury could find in the evidence presented by Demetrulias a pattern or 

practice of Walmart deliberately dragging its feet in the face of statements by 

Demetrulias, her physicians, and Walmart’s own IME that Demetrulias had real injuries 

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that needed immediate treatment. Comments by Walmart adjusters that they needed to 

use their policies to “limit the extent of the injury” and “reign [sic] the medical back 

under control” in the face of statements by doctors that rapid treatment was necessary 

could provide a basis for finding the delays were “‘motivated by spite, actual malice, or 

intent to defraud’ or by a ‘conscious and deliberate disregard for the interests and rights 

of” Demetrulias. Quintero v. Rogers, 221 Ariz. 536, 541, 212 P.3d 874, 879 (Ct. App. 

2009). As it stands at the summary judgment stage, there is sufficient evidence before the 

Court on which a jury could award punitive damages by clear and convincing evidence. 

Summary judgment for Walmart is therefore inappropriate. 

C. Intentional Infliction of Emotional Distress

Walmart has also moved for summary judgment on Demetrulias’s claim of 

intentional infliction of emotional distress (IIED). Demetrulias asserts that the same 

conduct that supported her bad faith claim also supports the IIED claim. Three elements 

make up an IIED claim: “[F]irst, the conduct by the defendant must be ‘extreme’ and 

‘outrageous’; second, the defendant must either intend to cause emotional distress or 

recklessly disregard the near certainty that such distress will result from his conduct; and 

third, severe emotional distress must indeed occur as a result of defendant's conduct.” 

Ford v. Revlon, Inc., 153 Ariz. 38, 43, 734 P.2d 580, 585 (1987) (citing Restatement 

(Second) of Torts § 46(1) (1965)). The adjectives “extreme” and “outrageous” are not just 

for show; evidence of callousness or insensitivity will not suffice. See Mintz v. Bell Atl. 

Sys. Leasing Int'l, Inc., 183 Ariz. 550, 555, 905 P.2d 559, 564 (Ct. App. 1995). The 

plaintiff must show that the defendant’s acts were “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.” Id. at 554. The question of 

whether the acts complained of by a plaintiff are sufficiently extreme or outrageous is 

answered by the court. See Patton v. First Fed. Sav. & Loan Ass’n of Phoenix, 118 Ariz. 

473, 476, 578 P.2d 152, 155 (1978). 

Defendants have only challenged Demetrulias’s claim that their actions were 

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outrageous; its Motion does not address the other elements of an IIED claim, and so the 

Court limits its examination to that issue. While the standards for punitive damages and 

IIED claims both use the term “outrageous” to describe the type of conduct that falls 

within their ambit, an examination of the cases reveals that IIED claims require an even 

higher level of outrageousness than those where punitive damages have been approved. 

There can thus be facts that support punitive damages but not an IIED claim. Cases where 

there has been a sufficient finding of outrageousness contain stark and repulsive facts 

that strike at very personal matters, such as willful ignorance of rampant sexual 

harassment, Ford, 153 Ariz. at 39-42, Coffin v. Safeway, Inc., 323 F. Supp. 2d 997, 1005-

06, a doctor who hid the reason for an infant’s death from its mother, Lucchesi v. 

Frederic N. Stimmell, M.D., Ltd., 149 Ariz. 76, 79-81, 716 P.2d 1013, 1016-18 (1986), or 

conspiracy to hide a child from a father, Pankratz v. Willis, 155 Ariz. 8, 744 P.2d 1182 

(Ct. App. 1987). 

The doctor-patient relationship is a very personal matter. If a jury found that 

Stewart lied to Dr. Borowsky in an attempt to influence the care Dr. Borowsky was 

providing to his patient, it could also find that such conduct rises to the level of 

outrageousness necessary for an IIED claim. This stems from the existence of a “special 

relationship” between an insurer and the insured. Rowland v. Great States Ins. Co., 199 

Ariz. 577, 586, 20 P.3d 1158, 1167 (Ct. App. 2001) (recognizing the existence of the 

“special relationship”). The existence of that relationship means that the level of 

outrageousness necessary to succeed on an IIED claim is lessened. Recognizing, as 

Arizona courts have, the unique relationship between an insured and her insurer, a jury 

could find that exploitation of that power relationship for purposes of financial gain was 

outrageous, for largely the same reasons discussed in the section on punitive damages. 

Enough evidence is before the Court to allow a jury to make that determination. 

Consequently, summary judgment for Walmart on the IIED claim is denied. 

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CONCLUSION

Demetrulias has produced evidence that Walmart, in a series of actions, acted with 

bad faith in administering her claim. She has also presented evidence sufficient to get to 

the jury on her IIED claim and request for punitive damages. 

IT IS THEREFORE ORDERED that Walmart’s Motion for Summary Judgment 

(Doc. 110) is DENIED.

Dated this 10th day of January, 2013. 

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