NC Worker’s Tort Claim Against Insurer for Malicious Prosecution May Move Forward

While a workers’ compensation insurer generally enjoys the same sort of immunity from tort liability afforded the employer [see Larson’s Workers’ Compensation Law, § 100.01], there are limits to that immunity. A decision issued Tuesday illustrates those limits. There, the Court of Appeals of North Carolina agreed that a plaintiff had stated a cause of action for malicious prosecution, abuse of process, Unfair and Deceptive Trade Practices, and punitive damages against an insurer that allegedly provided false information to local police, who subsequently charged the plaintiff/injured worker with insurance fraud, resulting in his arrest, temporary incarceration, and indictment on felony charges [Seguro-Suaraez v. Key Risk Inc. Co., 2018 N.C. App. LEXIS 888 (Sept. 4, 2018)].

Background

The Court noted that the record consisted primarily of the allegations in the plaintiff’s complaint. Plaintiff, while working for his employer in 2003, sustained serious injuries when he fell from a height of approximately 18 feet onto concrete, striking his head. As a result of the fall, the plaintiff suffered broken bones and severe traumatic brain injury. He was rendered comatose, required intubation and ventilation support to breathe, and underwent emergency neurosurgery to relieve pressure on his brain. According to the complaint, the plaintiff eventually emerged from his coma but the brain injury changed his personality, required physical, speech, and occupational therapy, and the plaintiff continued to suffer from significant behavioral and memory deficits, including deficits in executive functioning, problem solving, planning, and balance.

The plaintiff further alleged that while he was still being cared for on an inpatient basis, the employer’s workers’ compensation insurer was informed that the plaintiff would require 24-hour care upon discharge, that instead of providing such care, the insurer arranged for relatives to care for the plaintiff, albeit without compensation.

In 2011, the Full Commission entered an opinion and award requiring the insurer to pay continued compensation for the plaintiff’s medical care. According to the plaintiff, the Commission also determined as a matter of law that the insurer and employer had defended the claim without reasonable grounds. Indeed, the Commission found that the employer’s and insurer’s actions were “unreasonable and . . . constituted stubborn, unfounded litigiousness” [Opinion, p. 5.].

The insurer filed an untimely appeal of the Full Commission’s decision to the Court of Appeals, which dismissed the appeal by order.

Insurer Hires Private Investigator After Losing its Appeal

The plaintiff alleged that subsequently, in spite of an opinion provided by its own forensic psychiatrist that the plaintiff’s symptoms appeared to be completely valid, the insurer nevertheless hired a private investigator to surveil and record the plaintiff’s activities for several weeks, that the investigator, with the aid of an extensively edited videotape, convinced local police to bring criminal charges against the plaintiff under the theory that the plaintiff had obtained workers’ compensation benefits by false pretenses, and that the plaintiff was ultimately arrested and jailed and subsequently indicted on 25 counts of obtaining property by false pretenses and one count of insurance fraud.

State Hospital Finds the Plaintiff Incompetent to Stand Trial

After his first appearance in criminal court, the plaintiff was ordered to undergo a psychological examination at a state facility to determine his competency for trial. According to the complaint, the examining psychologist noted that the plaintiff exhibited cognitive deficit consistent with his documented history, including memory impairment, and concluded that the plaintiff was mentally incapable of both proceeding to trial and effectively assisting counsel.

The State ultimately dismissed all charges against the plaintiff after a hearing in which the trial judge expressed real concerns that a person drawing workers’ compensation benefits pursuant to a proper order could subsequently face criminal charges because the losing party disagreed with the Industrial Commission’s ruling.

Plaintiff’s Claim Only Tangentially Associated with Ongoing Workers’ Comp Payments

The Court of Appeals observed that the plaintiff’s tort claims, though tangentially associated with his ongoing workers’ compensation payments, concerned the initiation and continued pursuit of a criminal prosecution, not a workers’ compensation claim. Citing, among other authority, Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991), the Court stressed that an employer and/or an insurer could be liable for intentional torts. Moreover, because the acts complained of in the complaint did not arise from an employer’s or insurer’s processing and handling of a workers’ compensation claim, the Court rejected the insurer’s argument that motivational considerations, rather than the factual and legal underpinnings of this case, would somehow bring this action within the exclusive jurisdiction of the Commission. The plaintiff had sufficiently alleged claims for malicious prosecution, abuse of process, Unfair and Deceptive Trade Practices, and punitive damages.

This entry was posted in Case comment and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *