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Dunlap v. AIG, Inc.

Court of Appeals of Iowa

January 9, 2019

THOMAS JAMES DUNLAP, Plaintiff-Appellant,
v.
AIG, INC., COMMERCE AND INDUSTRY INSURANCE COMPANY and AIG DOMESTIC CLAIMS, INC. CORPORATIONS, Defendants-Appellees.

          Appeal from the Iowa District Court for Polk County, Jeanie K. Vaudt, Judge.

         Thomas Dunlap appeals the dismissal of his civil suit against his former employer's workers' compensation insurance carrier following the district court's grant of summary judgment in the insurers' favor.

          Steven J. Crowley and Edward J. Prill of Crowley & Prill, Burlington, for appellant.

          Keith P. Duffy, Coreen K. Sweeney, and Stephanie L. Marett of Nyemaster Goode, P.C., Des Moines, for appellees.

          Heard by Potterfield, P.J., Doyle, J., and Danilson, S.J. [*]

          DOYLE, JUDGE.

         Workers' compensation claimant Thomas Dunlap brought a civil action asserting claims of bad faith and intentional infliction of emotional distress against his former employer's workers' compensation insurance carriers relating to the handling of his workers' compensation claims. Following motions for summary judgment, the district court found Dunlap could not establish elements of his claims and granted summary judgment in favor of the insurers. Dunlap appeals, challenging the district court's ruling in numerous respects. Upon our review, we affirm in part, reverse in part, and remand for further proceedings.

         I. Background Facts and Proceedings.

         In July 2007, Thomas Dunlap sustained a work injury while employed by Action Warehouse. See Dunlap v. Action Warehouse, 824 N.W.2d 545, 548 (Iowa Ct. App. 2012). He filed a claim for workers' compensation and was ultimately awarded benefits in 2009 following a hearing. See id. The deputy workers' compensation commissioner

found the greater weight of the evidence showed Dunlap's low back, left leg, and left arm symptoms were caused by Dunlap's July 2007 work injury, Dunlap had clearly not reached maximum medical improvement, and Dunlap was in a running healing period. The deputy further found Dunlap's employment was terminated because he was unable to work due to his back condition caused by the work injury and was therefore entitled to temporary partial disability and healing period benefits. The deputy declined Dunlap's request for penalty benefits, finding [two doctors' expert] opinions made [his employer's] liability fairly debatable.

Id. at 553-54. The deputy's opinion was affirmed by the workers' compensation commissioner on appeal. See id. at 554. Following a judicial review by the district court, this court affirmed the agency's decision in all respects, including that penalty benefits were not appropriate because the issue of liability was fairly debatable. See id. at 554-60 (reversing the district court's reversal of the agency's determination that the issue of liability was fairly debatable, resulting in our total affirmance of the agency's decision).

         In September 2009, while that agency action and litigation was pending, Dunlap filed a civil action against Action Warehouse and its workers' compensation insurance carriers Commerce and Industry Insurance Company, AIG Domestic Claims, Inc., and AIG, Inc.[1] This is the matter presently at issue on appeal. Relevant here, Dunlap asserted claims of bad faith and intentional infliction of emotional distress against the defendants related to his 2007 work injury and workers' compensation claim. The civil case was stayed a number of times over the years as Dunlap's 2007 workers' compensation claim progressed through the previously described administrative process.

         Meanwhile, in 2013, Dunlap filed a review-reopening petition before the workers' compensation commissioner seeking to review and reopen the 2009 agency decision "to convert the running healing period" and receive permanent total disability benefits. Since the 2009 agency hearing, "Dunlap's medical and physical condition ha[d] deteriorated," and he had "required ongoing and extensive medical care for his low back." "Dunlap developed mental health problems" and experienced "sleep difficulties and disturbances related to his low back symptoms." "As a result of his low back injury and resulting symptoms, [Dunlap] began using a cane to assist with walking," using his right hand to hold the cane. Over time, Dunlap developed bilateral carpal, cubital, and ulnar tunnel syndrome (referred to as "arm injuries" or "2012 injuries" in this opinion). Three doctors opined Dunlap's arm injuries were causally related to his prior 2007 work injury.

         Nevertheless, the defendants denied liability for the arm injuries, relying upon the opinions of Dunlap's neurologist, Dr. Irving Wolfe, who evaluated Dunlap in November 2011. Dr. Wolfe "noted symptoms in both the right and left arms" and referred Dunlap to a hand specialist, who in turn recommended surgeries for Dunlap's arm injuries. The hand specialist is one of the three doctors that opined Dunlap's arm injuries were causally connected to his 2007 work injury.

         After "defense counsel conferenced with Dr. Wolfe," Dr. Wolfe in April 2012 opined in a report there was "no causality regarding [Dunlap's arm conditions and] symptoms in regard to" Dunlap's 2007 work injury. A month later, Dr. Wolfe "clarified his medical opinions in a report requested by [Dunlap's] counsel," opining, "It is possible (e.g., less than 51%) that [Dunlap's arm injuries] while not directly caused by the . . . 2007, work-related injury are a result of the natural consequences of [Dunlap's] back injury requiring him to ambulate with the use of a cane." Dr. Wolfe stated further testing could rule out other possible causes such that his opinion of a causal connection could rise from possible to probable. Nevertheless, the defendants continued to deny liability based upon Dr. Wolfe's opinions.

         Following a hearing in November 2014, the deputy concluded Dunlap established his arm injuries were directly related to his 2007 work injury "or arose as a sequela of that work injury," and the defendants were "responsible for each of these compression neuropathy conditions." The deputy granted Dunlap's request for alternate medical care, ordered the defendants to "continue to pay [Dunlap] healing period benefits," and ordered the defendants to pay certain costs such as filing fees, transcript fees, doctors' reporting fees, and reimbursement for fees related to Dunlap's independent medical evaluation. However, the deputy found the issue of permanent disability was not ripe for determination at that point because Dunlap had not reached maximum medical improvement.

         In a rehearing application, Dunlap asserted several challenges to the deputy's decision. The deputy subsequently determined the permanent disability issue was ripe and concluded Dunlap is permanently and totally disabled as a result of his low back and mental health injuries. The deputy awarded Dunlap compensation for his permanent total disability and ordered the defendants to pay Dunlap's mileage claim related to his travel for his evaluation, among other things.[2]

         In 2015, the district court in the civil case granted Dunlap's first motion to amend his petition, including adding a claim of bad faith related to his 2012 injuries and permanent-disability-benefits award. The civil matter subsequently culminated in a motion for summary judgment filed by the defendants at the end of 2016. While the summary judgment matter was pending, Dunlap on March 22, 2017, filed a second motion to amend his previously amended petition seeking to add a claim of abuse of process against the defendants.

         A hearing on the defendants' summary judgment motion was held March 31, 2017. Before ruling on Dunlap's second motion to amend, the district court entered its ruling partially granting and partially denying the defendants' summary judgment motion. The court found the claims asserted by Dunlap in his first amended petition against the defendants could be broken down into three components as follows: (1) bad faith for the defendants' handling of his 2007 and 2012 injuries, (2) bad faith for the defendants' handling of his mileage claim, and (3) intentional infliction of emotional distress. After considering all the relevant evidence in the record, the district court determined no issues of material fact existed concerning the defendants' handling of Dunlap's 2007 workers' compensation claim to establish the defendants acted in bad faith, and the defendants were accordingly entitled to summary judgment on those related issues as a matter of law. The court found the defendants' actions in handling or mishandling of Dunlap's initial workers' compensation claim was fully litigated before the agency and again on appeal of the agency's decision. Citing our 2012 opinion upholding the agency's award of benefits to Dunlap, as well as the agency's denial of penalty benefits, the district court found it had been previously determined the defendants had "a reasonable basis for [their] position that no benefits were owing to Dunlap." See Dunlap, 824 N.W.2d at 558. The court reasoned Dunlap was therefore precluded from re-litigating the issue in his civil case. The court further concluded that even if issue preclusion did not apply, it would still find, for the reasons found by the agency and affirmed on appeal, that the defendants had a reasonable basis for their position that Dunlap was not owed benefits related to his 2007 work injury. The court found supporting opinion evidence in the record that Dunlap did not establish causation made the issue fairly debatable. Consequently, the court found Dunlap could not show the defendants acted in bad faith in initially denying his initial workers' compensation claim, and the defendants were entitled to summary judgment with respect to that aspect of Dunlap's bad-faith claim.

         However, the district court did find a genuine dispute of material fact existed as to the defendants' handling of Dunlap's later claims concerning injuries in his arms. Though the defendants cited an expert's opinion for its position that Dunlap's arm injuries were not caused by his 2007 work injury, the district court found their reliance on that opinion was not reasonable under the circumstances. The court concluded that, on this claim, the defendants "took a position that reasonable minds could not hold in light of the quantity and quality of conflicting expert opinions provided on the issue."

         On the bad faith claim relating to the defendants' failure to pay mileage, the court found it lacked jurisdiction to decide the issue because Dunlap failed to exhaust his administrative remedies to resolve the claim. The court concluded an "alternate medical care petition provide[d] [Dunlap] with his exclusive remedy, and there is no dispute that he failed to exhaust it." Consequently, the court held it lacked jurisdiction over this claim. Nevertheless, the court further reasoned that if it had jurisdiction to address the issue, it would conclude the defendants had a reasonable basis for their delay in payment of Dunlap's mileage, since the delay was

reasonably attributable to the initial provision by [Dunlap] of incomplete information to the [defendants] and subsequent verification of the missing information by the [defendants] once the missing information was provided. The communication disconnect and delay ran both directions and amounted to nothing more, and nothing less. It did not rise to bad faith by the [defendants].

         Finally, the court noted Dunlap must establish, as an element of a claim for intentional infliction of emotional distress, that the defendants "engaged in extreme and outrageous conduct," defined as "conduct so extreme as to go beyond all possible bounds of decency and to be regarded as atrocious and utterly intolerable in a civilized community." The court reasoned that while the defendants "tracking and oversight of [Dunlap's] claims file was shoddy, . . . their management of his claims file was not so extreme as to go beyond all possible bounds of decency and to be regarded as atrocious and utterly intolerable in a civilized community." "Under this record, reasonable minds-while perhaps not impressed by the [defendants'] handling of [Dunlap's] claims-could not differ regarding their lack of liability for intentional infliction of emotional distress upon [Dunlap]." The court determined summary judgment was proper on the issue. Accordingly, the district court concluded all but one of Dunlap's claims must be dismissed. Both Dunlap and the defendants filed motions requesting the district court reconsider its summary judgment ruling.

         While the parties' motions to reconsider were pending, the district court entered its ruling on other motions pending in the case. The court denied the paragraph of Dunlap's second motion to amend his petition to add an abuse-of-process claim against the defendants. The court noted "Iowa law does not extend abuse-of-process claims to cases arising from alleged abuses committed by defendants in administrative proceedings," and the court declined Dunlap's request to expand the scope to include actions before administrative agencies.

         In August 2017, after reconsidering the issues raised in the parties' motions to reconsider the court's summary judgment ruling, the district court determined the defendants were entitled to summary judgment on the one issue it did not dismiss in its earlier ruling. Upon further consideration, the court noted the defendants relied upon an expert's opinion given in two separate letters opining Dunlap's arm injuries were not caused by his earlier back injury. The court concluded Dunlap did not meet

his burden in responding to this evidence by producing his own evidence supporting his argument that it would be unreasonable for the [defendants] to rely upon [their expert's] two "no causation" opinions. There is no evidence before the court that a jury could reasonably rely upon in concluding reliance on a medical doctor's twice-stated and consistent no-causation opinion was unreasonable.

         Accordingly, the district court found the defendants' "motion to reconsider and their motion for summary judgment as to the second period claim should be granted." The court denied Dunlap's motion to reconsider and dismissed his amended petition.

         Dunlap now appeals the district court's grant of summary judgment in favor of the defendants.

         II. Scope of Review.

         The appellate courts review rulings on motions for summary judgment for correction of errors at law. See Homan v. Branstad, 887 N.W.2d 153, 163 (Iowa 2016). Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits show there is no genuine issue of material fact, and the moving party is entitled to a judgment as a matter of law. Iowa R. Civ. P. 1.981(3); Mueller v. Wellmark, Inc., 818 N.W.2d 244, 253 (Iowa 2012). The district court's findings of fact are binding on us if supported by substantial evidence. Iowa R. App. P. 6.904(3)(a). If the moving party has shown there is no genuine issue regarding any material fact, entitling the moving party to judgment as a matter of law, summary judgment is appropriate. See Iowa R. Civ. P. 1.981(3). Therefore, our review is limited to two questions: (1) whether there is a genuine dispute regarding the existence of a material fact, and (2) whether the district court correctly applied the law to the undisputed facts. See Homan, 887 N.W.2d. at 164.

         A fact is material if it may affect the lawsuit's outcome. See id. There is a genuine dispute as to the existence of a fact if reasonable minds can differ as to how the factual question should be resolved. See id. "Even if facts are undisputed, summary judgment is not proper if reasonable minds could draw from them different inferences and reach different conclusions." Walker Shoe Store v. Howard's Hobby Shop, 327 N.W.2d 725, 728 (Iowa 1982).

         In reviewing summary judgment rulings, we view the record in the light most favorable to the nonmoving party. See Homan, 887 N.W.2d at 163-64. This includes drawing all legitimate inferences that the record supports in favor of the nonmoving party. See id. at 164. The nonmoving party is also given the benefit of any doubt in determining whether granting summary judgment is appropriate. See Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, ...


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