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Paulino v. Chartis Claims, Inc.

United States District Court, S.D. Iowa, Davenport Division

May 3, 2013


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For Modesto Paulino, Plaintiff: William J Bribriesco, LEAD ATTORNEY, WILLIAM J BRIBRIESCO & ASSOCIATES, BETTENDORF, IA.

For Chartis Claims Inc, formerly known as AIG Claims Services, Inc., Defendant: Coreen K Sweeney, Stephanie Lynn Marett, NYEMASTER GOODE WEST HANSELL & O'BRIEN PC, DES MOINES, IA.

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This matter comes before the Court on Motion for Summary Judgment brought by Defendant Chartis Claims, Inc., f/k/a AIG Claims Services, Inc. [1] (Chartis). Plaintiff Modesto Paulino (Paulino) resists. The Court held a hearing on the Motion on April 11, 2013. Attorneys Coreen K. Sweeney and Stephanie L. Marett appeared on behalf of Chartis, and attorney William J. Bribriesco appeared on behalf of Paulino. The matter is fully submitted and ready for disposition.


The following facts are either not in dispute or taken in the light most favorable to Paulino as the nonmovant. See Glorvigen v. Cirrus Design Corp., 581 F.3d 737, 739 (8th Cir. 2009). On October 2, 2004, Paulino was working for C-Tec, Inc. (C-Tec), his employer, on a grain bin when he fell approximately seventy feet. Chartis insured C-Tec for any workers' compensation benefits that were to be provided to Paulino. At the time of the fall, Paulino was a Mexican national who did not have proper documentation to work in the United States. The fall fractured several of Paulino's vertebrae and severed his spinal cord, rendering him a permanent paraplegic and wheelchair bound. Paulino was treated in Des Moines, Iowa, and then transferred to the Rehabilitation Institute of Chicago for intensive impatient rehabilitation. On January 4, 2005, Paulino was transferred to the Center for Comprehensive Services (CCS) in Carbondale, Illinois, which is a post-acute rehabilitation center for patients with acquired brain and spinal cord injuries. CCS's treatments were designed to prepare Paulino for a permanent independent living arrangement, and at the time Paulino was transferred to CCS, it was initially projected that he would require a three-to-five month stay at CCS. Paulino indicated that, upon discharge, he would like to live in Chicago, and CCS began making arrangements for an appropriate discharge.

While at CCS, Paulino's medical situation continued to improve, and he continued to progress toward the goal of living in his own home in Chicago upon discharge from CCS. According to a March 20, 2006, progress report, Paulino was independent in meal preparation and consumption, accessed the community independently and was independent with catheterizations, and his anticipated discharge date was listed as April 30, 2006. CCS created a discharge plan indicating that upon discharge, Paulino should have wheelchair accessible housing, an electric hospital bed, a personal care attendant, and access to public transportation. Chartis retained a case manager who, throughout the month of April, sought to arrange a satisfactory living situation

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for Paulino upon discharge from CCS.

Finding housing that could be modified to meet CCS's requirements proved difficult for a number of reasons. First, Paulino believed that Chartis was required to pay for his housing. Second, Paulino faced a combination of external circumstances that made it difficult for him to find housing that he could afford that could be modified by CCS; he is " a paraplegic who is a migrant worker from Mexico with a third grade education, poor English skills, no social security number, no credit history and an income of only $388.00 per week from workers compensation." Order on Judicial Rev. 20, Def. App. 55, ECF No.11-3. [2] Because Paulino was undocumented, he was unable to take advantage of state and federal assistance programs that would help him afford housing. While Chartis was willing to pay for modifications to an apartment, many landlords will not allow modification to be made to an apartment to accommodate Paulino's wheelchair, and those that would permit such modifications required a long-term lease, a sizeable deposit, and proof of steady income beyond Paulino's $388.00 per week. In short, " Paulino cannot just move to Chicago and rent an apartment." Order on Judicial Rev. 20, Def. App. 55, ECF No. 11-3.

As April 30 approached, Chartis proposed discharging Paulino to a hotel for thirty days while permanent housing was located. This option was rejected by Paulino's case manager at CCS, who testified that under federal regulations, Paulino could not be discharged to a nonpermanent living arrangement that was not adequately adapted for Paulino's needs. The state district court noted in its findings that while Chartis continued to state that it would authorize payment for Paulino's medical expenses and would pay to modify Paulino's permanent home, it also continued to warn Paulino that it would not authorize payment for Paulino to stay at CCS once it was no longer medically necessary for him to stay there. Paulino was not discharged from CCS on May 6, 2006, and at that time, Chartis withdrew its authorization for Paulino's continued residence at CCS. Despite Chartis' withdrawal of authorization, Paulino remained at CCS where he continued to accumulate charges varying from $18,000 to $23,250 per month.

On May 24, 2006, Paulino filed a Petition with the Iowa Workers' Compensation Commissioner seeking alternate medical care under Iowa Code § 85.27. An arbitration hearing was held before Deputy Commissioner David Rasey on September 6, 2007. Chartis argued that continued residence at CCS was not reasonable because the expenses included " clearly non-medical expenses such as rent, food, utilities and cable TV services." Dep. Comm'r Arb. Dec. 7, Def. App. 24, ECF No. 11-3. Deputy Commissioner Rasey issued a proposed decision on October 30, 2007, finding that Paulino was not entitled to an award of medical benefits in the form of living expenses at CCS after May 6, 2006. Specifically, the deputy found that Paulino did not establish that Chartis " failed to provide reasonable care" and that Paulino's " unrealistic insistence that defendants bear liability for nonmedical living expenses such as food, rent and utilities [was] also a contributing complication" to his inability to find suitable housing. Dep. Comm'r Arb. Dec. 7, Def. App. 24, ECF No. 11-3. The deputy also found that Paulino did not meet his burden of proof and failed to establish that the disputed

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costs were reasonable or that they were the type of costs Chartis was required to pay under § 85.27. Accordingly, Deputy Commissioner Rasey denied Paulino's claim for alternate medical care.

Paulino appealed the proposed decision to Commissioner Christopher Godfrey. As an initial matter, Commissioner Godfrey noted that the " issue of contention" was whether Paulino's continued stay at CCS was " medically necessary" even though Chartis would be required to pay nonmedical living expenses. Appeal Decision 3, Def. App. 29, ECF No. 11-3. After noting the difficulty Chartis encountered finding Paulino suitable living conditions, which was due, in part, to Paulino's incorrect expectations that Chartis was responsible to permanently pay for his living arrangements, Commissioner Godfrey concluded that Paulino's continued stay at CCS beyond May 6, 2006, was " a reasonable and necessary medical expense" and was therefore compensable under § 85.27. Appeal Decision 6, Def. App. 32, ECF No. 11-3. Commissioner Godfrey noted that living expenses, while generally not compensable after an injury, were recoverable due to the special circumstances of this case. He further noted that the " moral, ethical, and legal obligation of CCS" would not allow the facility to discharge Paulino until a permanent living situation had been arranged; and, accordingly, Chartis was required to pay Paulino's living expenses at CCS until a suitable residence could be arranged. Appeal Decision 8, Def. App. 34, ECF No. 11-3.

Chartis sought review of this decision in the Iowa District Court for Polk County, and the petition was denied on July 1, 2009, by the Honorable Arthur E. Gamble, Chief Judge of the Fifth Judicial District of Iowa, who also noted that living expenses, while rarely given, were an appropriate award in this extraordinary case. Regarding Commissioner Godfrey's legal conclusions, Judge Gamble, found that " given the extraordinary facts of this case, Paulino's claimed expenses do not as a matter of law fall outside the purview of section 85.27." Order on Judicial Rev. 20, Def. App. 55, ECF No.11-3. Regarding the Commissioner's factual finding that the expenses were reasonable and necessary, Judge Gamble noted that Commissioner Godfrey had made credibility determinations regarding the dispute as to the conditions of Paulino's discharge and that the court must give appropriate deference to agency findings, even where the evidence is in conflict or where reasonable minds might disagree about the conclusion to be drawn from the evidence. The court concluded substantial evidence supported Commissioner Godfrey's factual finding that the expenses were " reasonable and necessary" as required by § 85.27. Order on Judicial Rev. 23, Def. App. 58, ECF No. 11-3.

On April 26, 2011, Paulino filed a petition against Chartis in the Iowa District Court for Scott County alleging bad faith denial of benefits as of May 6, 2006, and seeking consequential and punitive damages, including past and future medical expenses, pain and suffering, including mental anguish, and permanent injury and disability, as well as lost wages and future loss of earning capacity. Chartis removed the action to this Court on July 28, 2011.


A. Jurisdiction

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