Court Opinion

ID: 9541885
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:29:21.259925+00
Date Added: 2024-06-11T15:05:08.525727
License: Public Domain

HAIRE, Judge,
dissenting:
The issue presented in this appeal is whether the superior court had jurisdiction *301to consider plaintiffs’ claim for damages resulting from the allegedly tortious manner in which USF & G administered plaintiffs’ claim for workers’ compensation benefits. It was assumed for the purposes of USF & G’s motion to dismiss that the allegations of plaintiffs’ complaint were true. The superior court concluded that it had no jurisdiction, relying on this court’s opinion in Sandoval v. Salt River Project Agricultural Improvement & Power District, 117 Ariz. 209, 571 P.2d 706 (1977).
In my opinion, Sandoval is clearly controlling and dispositive. Since the majority labors mightily to distinguish Sandoval, I find it necessary to quote liberally from Sandoval in order to demonstrate its applicability. Sandoval, like this appeal, involved a claim for damages arising from the allegedly tortious manner in which the plaintiff’s claim for workers’ compensation benefits had been administered. In Sandoval, we discussed Sandoval’s complaint as follows:
“Sandoval’s ‘third claim for relief’ asserts claims against both the employer and its Workmen’s Compensation administering agent, Swett & Crawford. The allegations of the third claim all relate to the motive and intent of the defendants underlying the issuance of notices of claim status in the Workmen’s Compensation proceedings, and the alleged wrongful denial of benefits in the processing of his Workmen’s Compensation claim. The conduct of the defendants in making decisions and issuing notices of claim status in Sandoval’s Workmen’s Compensation proceedings is described in the third claim for relief as being intentionally ‘false and erroneous;’ constituting ‘intentional wrongful suspension of compensation benefits;’ and, as causing ‘undue hardship and great mental suffering and emotional distress.’ It is stated in the third claim that the claims being made against the defendants are: ‘for the torts of injurious falsehood, intentional breach of fiduciary duties, false representations, negligence, recklessness, wilful and wanton and outrageous conduct, and intentional infliction of mental suffering.’
“Although Sandoval asserts that in the Superior Court action he is not ‘making claim for benefits to which he is entitled under the Workmen’s Compensation Act,’ it is obvious from his complaint that all of the claims are based entirely upon the assertion that Salt River Project and Swett & Crawford either intentionally or negligently failed to provide him with benefits he was or may be entitled to under the Workmen’s Compensation laws.” 117 Ariz. at 213, 571 P.2d at 710.
In discussing the jurisdictional issue raised by Sandoval’s claim, we stated:
“In our opinion the trial court correctly concluded that claims of this nature lie within the exclusive jurisdiction of the Industrial Commission. The Arizona Workmen’s Compensation Act establishes a comprehensive system for the adjudication of all controversies arising out of the processing of the injured workman’s claim for benefits, see McMurray v. Industrial Commission, 25 Ariz.App. 614, 545 P.2d 462 (1976), and the jurisdiction of the Industrial Commission is exclusive in that regard. See Liberty Mutual Insurance Co. v. Western Casualty & Surety Co., 111 Ariz. 259, 527 P.2d 1091 (1974); Lowery v. Universal Match Corporation, 6 Ariz.App. 98, 430 P.2d 444 (1967); Industrial Commission v. Superior Court, supra [5 Ariz.App. 100, 423 P.2d 375 (1967)]. Thus in O’Connor v. Howard P. Foley Co., 17 Ariz.App. 151, 496 P.2d 141 (1972), the Court of Appeals affirmed the trial court’s dismissal of an action by an injured employee against his employer. The employee had become dissatisfied with the Workmen’s Compensation proceedings and filed an action in the superior court alleging that the employer had breached a contractual duty to abide by the Workmen’s Compensation laws and rules. This attempted circumvention of the Industrial Commission and the processes involved in the Workmen’s Compensation statutory scheme was not allowed. In Hixon v. State Compensation Fund, 115 Ariz. *302392, 565 P.2d 898 (App.1977), the appellate court affirmed the trial court’s dismissal of a complaint alleging intentional infliction of mental and emotional distress by two State Compensation Fund employees in conspiring to improperly terminate the plaintiff’s workmen’s compensation benefits. The Court of Appeals held that the supérior court lacked jurisdiction, noting that if the appellant's benefits had been improperly terminated, appellant’s sole remedy was to proceed before the Industrial Commission.” 117 Ariz. at 213-214, 571 P.2d at 710-711.
We then held:
“We hold that regardless of the intentional or negligent manner in which a decision is made, the Workmen’s Compensation law provides the exclusive remedy for review of any administrative decision made by a carrier or self-insured employer in which the basic contention of the claimant is that he has been wrongfully deprived of benefits due under the Workmen’s Compensation laws. Any other holding would result in multiple jurisdictions being engaged in the resolution of the same basic questions with the possibility of conflicting results. A good illustration of this possibility is evidenced by the case at hand. While this appeal was pending, the Industrial Commission ruled in the employer’s favor in the Workmen’s Compensation proceeding on Sandoval’s contentions concerning the alleged ‘wrongful and erroneous’ Notices of Claim Status and the alleged wrongful deprivation of compensation benefits.” 117 Ariz. at 214, 571 P.2d at 711.
In discussing the remedies available to Sandoval, we stated:
“If the carrier deprives the claimant of benefits by failing to comply with the Notice of Claim Status previously issued or in any other manner, A.R.S. § 23-1061(J) provides a remedy whereby the claimant may invoke the Commission’s jurisdiction to force compliance.
“Sandoval complains that the mere forcing of compliance does not give him an adequate remedy, and that he should be allowed to recover damages. As a policy matter, there might be some basis for this contention. However, rights under the Workmen’s Compensation laws are completely statutory, and such arguments are best addressed to the legislature.” 117 Ariz. at 215, 571 P.2d at 712.
The majority’s attempts to distinguish Sandoval are unconvincing. The law would be better served by a forthright statement by the majority, supported by legal reasoning, that it finds Sandoval unpersuasive and therefore refuses to follow its holding.
It makes no sense to attempt to distinguish Sandoval on the basis that it “did not involve an allegation of bad faith against an insurance carrier.” When stripped of excess verbiage, the allegations in Sandoval and in this case are substantially similar in legal theory. They both assert claims for damages based upon the allegedly tortious manner in which the carrier or its representative administered the plaintiff’s claim for workers’ compensation benefits.
Likewise, the majority can find no support in Sandoval’s statement that its holding did not entirely preclude the possibility of an actionable tort within the jurisdiction of the superior court. The complete statement in this regard from Sandoval is:
“Our holding does not entirely preclude the possibility that an actionable tort within the jurisdiction of the superi- or court might be committed by a self-insured employer or compensation carrier while engaged in the processing of a workmen’s compensation claim. For example, if an investigator hired by the Salt River Project were to break into Mr. Sandoval’s home and put a concealed tape recorder in his living room, he would clearly have a remedy in the superior court for that wrong, regardless of whether his claim for workmen’s compensation benefits was subsequently granted or denied. See, e.g., Unruh v. Truck Insurance Exchange, 7 Cal.3d 616, 102 Cal.Rptr. 815, 498 P.2d 1063 (1972). But where the essence of the *303claim is the alleged wrongful deprivation of benefits, the Industrial Commission has the exclusive jurisdiction to adjudicate that controversy.” 117 Ariz. at 214-215, 571 P.2d at 711-712.
The majority also relies on the “intentional injury” exception to the exclusive remedy provisions of A.R.S. § 23-1022(A). They reason that since Noble held that the tort of bad faith is an intentional tort, the remedy sought by Franks in this case falls within the statutory exception. The language of A.R.S. § 23-1022(A) furnishes no support for the majority’s position. That section initially provides that the right to recover compensation pursuant to the workers’ compensation act for injuries sustained by an employee:
“is the exclusive remedy against the employer ..., and against the employer’s workers’ compensation insurance carrier or administrative service representative, ... except that if the injury is caused by the employer’s wilful misconduct ... and the act causing the injury is the personal act of the employer ... and the act indicates a wilful disregard of the life, limb or bodily safety of employees, the injured employee may either claim compensation or maintain an action at law for damages against the person or entity alleged to have engaged in the wilful misconduct.”
From the statutory language it is immediately apparent that the exception applies only to wilful misconduct of the employer, where the act causing the injury is the personal act of the employer. Here, the alleged misconduct or intentional acts were those of the insurance carrier, not the employer. Additionally, the remedy provided by A.R.S. § 23-1022(A) under the exception is the right to claim compensation or maintain an action at law for damages. From this provision it becomes clear that the “injury” referred to in the exception is the injury which gives rise to the claimant’s rights to workers’ compensation benefits, not some later injury which would not entitle the claimant to workers’ compensation coverage.
Before departing from the discussion of the provisions of A.R.S. § 23-1022(A), I wish to make one further observation. Pri- or to 1980, the exclusive remedy provisions of § 22-1022(A) and § 23-906(A) did not expressly apply to “the employer’s workers’ compensation insurance carrier or the administrative service representative” of the carrier.1
In 1980, these statutes were amended so as to include the above quoted language. Laws 1980, Ch. 246, §§ 21 and 26. This legislative action occurred shortly after the issuance of this court’s opinion in Sandoval. Therefore, it would appear that such amendments constitute a legislative recognition and adoption of the exclusive remedy holdings of Sandoval, especially since the statutory reference to remedies against “administrative service representatives” could only apply to actions by these service representatives in the processing of workers’ compensation claims.
The majority also indicates that somehow Franks was entitled to assert his bad faith claim in the superior court because he allegedly requested a § 23-1061(J) hearing before the Industrial Commission, but did not receive one. This reasoning is unsound. If the Industrial Commission failed to comply with its statutory duties, the appropriate remedy is to seek review in this court through the filing of a Rule 10 Special Action—Industrial Commission, or perhaps the filing of a petition for special action relief in the superior court in the nature of mandamus.
The majority’s next contention is that a refusal to allow Franks to assert his bad *304faith claim in the superior court would result in the complete abolishment or “abrogation” of his bad faith claim, a result which allegedly is prohibited by the provisions of art. 18, § 6 of the Arizona Constitution. That provision is as follows:
“Section 6. The right of action to recover damages for injuries shall never be abrogated, and the amount recovered shall not be subject to any statutory limitation.”
The contention is faulty on two bases.
First, as pointed out in Sandoval, A.R.S. § 23-1061(J) gives Franks a remedy for relief before the Industrial Commission for his claim relating to the alleged wrongful administration of his workers’ compensation claim. The mere fact that he would prefer other or different relief from that to which he is entitled under the statute does not mean that his rights have been “abrogated”. His concerns should be addressed to the legislature with a request that statutory amendments be enacted so as to give the Commission the express power2 to impose penalties and sanctions for carrier misconduct. This has been accomplished in many jurisdictions in response to problems of the nature voiced by Franks. See, e.g., Old Republic Ins. Co. v. Whitworth, 442 So.2d 1078 (Fla.App.1983); Messner v. Briggs & Stratton Corp., 120 Wis.2d 127, 353 N.W.2d 363 (Wis.App.1984) (discussing recently enacted Wisconsin statutes which constitute a legislative overruling of Coleman v. American Universal Ins. Co., 86 Wis.2d 615, 273 N.W.2d 220 (1979), a case relied on by the majority).
I additionally note that the provisions of art. 18, § 6 are totally inapplicable to the tort of bad faith, since it has only recently been created by judicial decision. Art. 18, § 6 does not apply to causes of action which have been created subsequent to the adoption of the Arizona Constitution. See Industrial Commission v. Frohmiller, 60 Ariz. 464, 140 P.2d 219 (1943); Rail N Ranch Corp. v. State, 7 Ariz.App. 558, 441 P.2d 786 (1968).
In conclusion, my concerns on the issues presented in this appeal have been previously stated in Sandoval, a holding which fits this case like the proverbial glove.3 Sandoval is in accord with the majority of the decisions in other jurisdictions which have considered the issue. See Robertson v. Travelers Ins. Co., 95 Ill.2d 441, 69 Ill.Dec. 954, 448 N.E.2d 866 (1983). I would affirm the judgment of dismissal entered by the superior court.

. A.R.S. § 23-906(A) now provides:
"A. Employers who comply with the provisions of § 23-961 or 23-962 as to securing compensation, and the employers' workers’ compensation insurance carriers or administrative service representatives, shall not be liable for damages at common law or by statute, except as provided in this section, for injury or death of an employee wherever occurring, but it shall be optional with employees to accept compensation as provided by this chapter or to reject the provisions of this chapter and retain the right to sue the employer as provided by law.”

. The majority correctly notes that in Still v. Industrial Commission, 146 Ariz. 433, 706 P.2d 759 (Ariz.App.1985), this court held that the Industrial Commission had no authority to impose sanctions or impose penalties against an insurance carrier for the tort of bad faith. However, the Still court pointed out that relief was available to a claimant under A.R.S. § 23-1061(J) and § 23-966(A). I would further suggest that pursuant to A.R.S. § 23-107(A)(6), the Commission might well have the authority to enact rules which would establish sanctions and penalties to be assessed on the basis of carrier misconduct.

. From a policy standpoint, in my opinion the legislature should enact additional legislation giving the Industrial Commission the express authority to impose sanctions and penalties in this and other areas involved in the processing of workers’ compensation claims.