Aleman v. Zenith Ins. Co.

Court of Appeals of Texas,

El Paso.

Rita ALEMAN, Appellant,

v.

ZENITH INSURANCE COMPANY and Rossana Salerno, Appellees.

No. 08–09–00168–CV.

|

May 4, 2011.

Attorneys & Firms

*818 Robert E. Riojas, Riojas Law Firm, PC, El Paso, TX, for Appellant.

Milton C. Colia, Kemp Smith, P.C., El Paso, TX, for Appellees.

Before RIVERA, JJ.

OPINION

ANN CRAWFORD McCLURE, Justice.

Rita Aleman filed suit against Zenith Insurance and Rossana Salerno alleging bad faith in the denial of her worker’s compensation claim. She appeals from a summary judgment granted in favor of Zenith and Salerno. For the reasons that follow, we affirm.

FACTUAL SUMMARY

Aleman was employed as a packer by Autotronics, an automotive parts manufacturer. Her job duties required her to package car parts into containers. Zenith provided worker’s compensation insurance for Autotronics and Salerno was employed by Zenith as a claims examiner.

*819 On July 17, 2006, Aleman filed an injury report alleging she had suffered an on-the-job injury to her right hand on June 28, 2006 while closing shells which were unusually resistant, forcing her to use excessive pressure. Autotronics immediately referred Aleman to Dr. Manouchehr Refaeian and she consulted with him the same day. Dr. Refaeian diagnosed her with a right carpal tunnel syndrome.

Trey Gillespie, Zenith’s litigation director, testified on deposition that Zenith handled Aleman’s condition as a compensable injury but it continued to investigate the claim. As part of the investigation, Salerno took Aleman’s statement and spoke with the employer about Aleman’s duties. Aleman’s supervisor refuted Aleman’s claim that she packaged 600 orders a day as the entire packaging department, which consisted of three employees, packaged only 160–165 orders per day. According to Gillespie, that discrepancy had a negative impact on Aleman’s credibility. Gillespie and Salerno also reviewed the available medical information. Aleman stated she was still in pain five to six weeks after the date of the injury, but that was inconsistent with carpal tunnel syndrome.

Based on the information they had gathered, Gillespie and Salerno decided to contest compensability on August 15, 2006 and Zenith sent notice to Aleman denying any further worker’s compensation benefits. Zenith subsequently requested a peer review of the claim to determine the correct diagnosis and whether the medical condition could have been caused by Aleman’s work activities. Gillespie explained that he decided to contest compensability before requesting the peer review because he did not believe they would receive the peer review before the statutory sixty-day deadline for filing the dispute expired.¹ Zenith had received notice of Aleman’s claim on July 17, 2006 so that the deadline for contesting compensability would not have expired until September 17, 2006. Thomas C. Diliberti, M.D. performed the peer review on August 21, 2006 and determined that a definitive diagnosis had not been established and the limited information provided regarding the work injury was inconsistent with the diagnosis of carpal tunnel syndrome. Likewise, he concluded that the medical records did not support any significant medical treatment. Dr. Diliberti recommended a referral to an orthopedic specialist for a definitive diagnosis and treatment plan. Although the peer review report was dated August 21, 2006, *820 Zenith did not receive the report until November 13, 2006.

Aleman contested the denial of benefits and the Texas Department of Insurance–Department of Worker’s Compensation conducted a benefit review conference on October 2, 2006. Aleman claimed that she had sustained a compensable injury based on a positive carpal tunnel syndrome. TDI–DWC determined on November 7, 2006 that Aleman sustained a compensable occupational disease/injury on June 30, 2006. Zenith did not appeal that decision and paid Aleman the accrued and unpaid benefits.

On December 12, 2006, Gillespie received a peer review report from Timothy Fahey, D.C. which questioned whether the carpal tunnel syndrome arose out of Aleman’s work activities.

TDI–DWC selected Gregory Baker, D.C. as the designated doctor. Dr. Baker examined Aleman on February 2, 2007 and concluded she had De Quervain’s carpal tunnel syndrome but found that it was not work-related.

On February 6, 2007, Gillespie and Salerno transferred Aleman’s claim into the Zenith Health Care Network for ongoing medical care given the possibility of future surgery. On February 9, 2007, Zenith filed a dispute with TDI–DWC contesting that the compensable injury extended to carpal tunnel release to De Quervain’s release.

TDI–DWC conducted a contested case hearing on benefit review conference on April 5, 2007 to address Zenith’s dispute of the carpal tunnel syndrome to the compensable injury sustained on June 28, 2006.

Aleman filed suit alleging Zenith and Salerno violated provisions of the Texas Insurance Code, the Texas Deceptive Trade Practices Act, and the common law duty of good faith and fair dealing by denying her worker’s compensation claim in bad faith.² More specifically, she alleged *821 that Zenith and Salerno (1) violated Section 541.060(a)(7) of the Insurance Code by refusing to pay a claim without conducting a reasonable investigation. Aleman further alleged that the same conduct violated Sections 17.50(a)(3) and 17.50(a)(4) of the Deceptive Trade Practices Act³ and the common law duty of good faith and fair dealing because Zenith and Salerno knew or should have known there was no reasonable basis to deny Aleman’s claim. Zenith and Salerno filed a motion for traditional and no evidence summary judgment contending that Aleman could not prove that (1) there was no reasonable basis for the denial of her claim; and (2) Zenith and Salerno denied Aleman’s claim knowing there was no reasonable basis for the denial. The trial court granted summary judgment without specifying the precise basis for its ruling.

BAD FAITH

Aleman raises four issues on appeal challenging the order granting summary judgment. In Issues One through Three, she contends that she presented at least a scintilla of evidence that Zenith and Salerno acted in bad faith by ignoring information which showed that Aleman had a compensable repetitive trauma injury, and by failing to conduct a proper and objective investigation before denying her claim. In Issue Four, Aleman alleges that she presented at least a scintilla of evidence that Zenith and Salerno acted in bad faith by failing to provide her with a reasonable and clear explanation for their denial of her claim.

Traditional Summary Judgment

We begin by addressing the traditional summary judgment motion. The standard of review for traditional summary judgment under Scown v. Neie, 225 S.W.3d 303, 307 (Tex.App.-El Paso 2006, pet. denied).

An insurer has a common law duty to deal fairly and in good faith with its insured in the processing and payment of claims. Giles, 950 S.W.2d at 56.

Giles, 950 S.W.2d at 55.

Evidence that merely shows a bona fide dispute about the insurer’s liability on the contract does not rise to the level of bad faith. Vandeventer v. All American Life & Casualty Company, 101 S.W.3d 703, 722 (Tex.App.-Fort Worth 2003, no pet.).

Carpal Tunnel Syndrome

Zenith contested Aleman’s claim on two different occasions. First, it contested compensability on August 15, 2006. TDI–DWC found that Aleman had sustained a compensable occupational disease/injury but it did not identify the occupational disease or injury in its written decision. Zenith later disputed whether Aleman’s compensable injury extended to carpal tunnel syndrome.

Wrist Strain/Sprain and Tendonitis

To prove her bad faith cause of action related to the denial of her claim and benefits on August 15, 2006, Aleman was required to establish that Zenith denied the claim when it knew or should have known it was reasonably clear that the claim was covered. Zenith and Salerno sought to negate this element in the context of their traditional summary judgment motion. To meet their burden, Zenith and Salerno relied on summary judgment evidence establishing that Zenith made the decision to dispute compensability on August 15, 2006 because the diagnoses of a carpal tunnel syndrome. The foregoing evidence conclusively established that Zenith did not know nor should it have known it was reasonably clear that the claim was covered. The only remaining issue is whether Aleman carried her burden of presenting evidence which raised a genuine issue of material fact.

In her brief, Aleman relies on the statement in Giles as holding that a party can never seek summary judgment with respect to whether its liability has become reasonably clear.

Aleman also argues that Zenith’s liability was reasonably clear because all of the medical experts who examined Aleman opined that she had a work-related injury. Aleman faults Zenith for ignoring “the obvious information before it that Aleman had sustained a compensable repetitive trauma injury....” At the time Zenith filed the dispute, however, it had only received the reports by Dr. Refaeian and Dr. Marioni. Whether liability is reasonably clear must be judged by the facts before the insurer at the time it denied the claim. See Viles v. Security National Insurance *824 Company, 788 S.W.2d 566, 567 (Tex.1990)(holding that whether there is a reasonable basis for denial must be judged by the facts before the insurer at the time it denied the claim). Aleman’s argument ignores the other evidence Zenith considered when determining whether to contest compensability.

Aleman further maintains that Zenith and Salerno acted in bad faith because Zenith failed to conduct a “proper” investigation, including requesting a peer review report, before denying her claim prior to the statutory deadline. Under the Labor Code, Zenith had only sixty days from the date it received notice of the injury to contest compensability. id. Further, Gillespie testified that he decided to contest compensability before requesting the peer review because he did not believe they would receive the peer review prior to the expiration of the statutory deadline.

Aleman next contends that Zenith and Salerno acted in bad faith by failing to investigate the work site until six months after receiving notice of injury. The summary judgment evidence showed that Zenith and Salerno investigated the work site both before and after denying Aleman’s claim. Salerno had inspected the packaging department when she was assigned as a claims examiner for Autotronics. Prior to denying Aleman’s claim, Zenith and Salerno also interviewed Aleman and her supervisor regarding her workplace, working conditions, job duties, and production rate. Aleman does not identify and we fail to perceive a fact issue which would preclude summary judgment.

Failure to Provide Sufficient Explanation for the Denial

Aleman’s final issue addresses her claim that Zenith and Salerno acted in bad faith by failing to provide a reasonable and clear explanation for the denial of her claim. The notice sent to Aleman stated that benefits were not being paid because:

Zenith Insurance contests the compensability because there was no injury in the course and scope of employment. The medical literature does not support a causal relationship between the work activities and the diagnosed carpal tunnel syndrome. Carrier denies that the claimant sustained an accidental injury on 06/28/06 and denies that the work activities performed on 06/28/06 are a producing cause of the medical condition.

Citing Section 124.2(f) of the Texas Administrative Code, Aleman argues on appeal that the notice is insufficient because Zenith did not identify the medical literature or provide her with a copy. An insurance carrier is required to notify the claimant of a denial of a claim based on non-compensability or lack of coverage. Tex.Admin.Code § 124.2(d). Section 124.2(f) further provides that:

*825 Notification to the claimant as required by subsections (d) and (e) of this section requires the carrier to use plain language notices with language and content prescribed by the Commission. These notices shall provide a full and complete statement describing the carrier’s action and its reason(s) for such action. The statement must contain sufficient claim-specific substantive information to enable the employee/legal beneficiary to understand the carrier’s position or action taken on the claim. A generic statement that simply states the carrier’s position with phrases such as ‘employee returned to work,’ ‘adjusted for light duty,’ ‘liability is in question,’ ‘compensability in dispute,’ ‘under investigation,’ or other similar phrases with no further description of the factual basis for the action taken does not satisfy the requirements of this section.

TEX.ADMIN.CODE § 124.2(f).

The notice was stated in plain language and identified Zenith’s reasons for contesting compensability. Section 124.2(f) does not impose on Zenith any duty to identify the medical literature on which it relied or provide copies to her in connection with the notice. Aleman’s argument is without merit.

In the context of this same issue, Aleman also maintains that Salerno informed her that Zenith was disputing her claim because she had diabetes. Aleman then points to Dr. Diliberti’s opinion that there was no evidence a pre-existing condition was the source of Aleman’s complaints and injury. She concludes that this is some evidence Zenith wrongfully denied her claim. This argument is unrelated to Aleman’s complaint regarding the sufficiency of the notice. Further, it does not create a fact issue in connection with the other bad faith claims.

In conclusion, none of the evidence or arguments relied on by Aleman demonstrates the existence of a genuine issue of material fact which would preclude traditional summary judgment on her bad faith claims. Having found that Zenith and Salerno conclusively established their entitlement to summary judgment, we overrule Issues One through Four. It is therefore unnecessary that we address the arguments related to the no evidence summary judgment grounds. We affirm the judgment of the trial court.