Summary: Spencer, a truck driver employed by Annett Holdings, was injured on the job. He filed suit against Annett making several bad faith claims, including failure to pay medical bills, delaying necessary medical care, and delaying healing period benefits. The district court dismissed the action for failing to present a submissible case, which the 8th Circuit affirmed.
In January of 2007, Spencer reported to his employer, Annett, that he had injured his knee when he fell off his trailer. This was a work injury compensable under Iowa’s workers’ compensation laws, so Annett was obligated to furnish reasonable treatment. Annett allowed Spencer to see two different doctors, and the company furnished reasonable work accommodations in accordance with the doctors’ orders. Without Annett’s approval, however, Spencer visited his own doctor as well as an orthopedic surgeon. The surgeon recommended Spencer undergo surgery for his knee. Annett resisted this recommendation, requiring Spencer to go back to its chosen doctor. Annett, ultimately, reached an agreement with Spencer allowing him to undergo the surgery. Following the surgery, Spencer requested healing-period benefits for the period of time before the surgery. Annett resisted paying these benefits until Spencer was examined by the doctor it selected.
Spencer filed this diversity jurisdiction action in federal court claiming Annett acted in bad faith in refusing to authorize surgery for several months and also for refusing to pay healing-period benefits. The district court, however, dismissed the bad faith claim stemming from the denial of surgery. It concluded the suit was in reality just a “dissatisfaction with care” claim. The remedy for such a claim in Iowa is to petition the industrial commissioner for relief. Since Spencer had not exhausted his administrative remedies, that claim was properly dismissed.
To prevail on the bad faith claim for refusing to pay healing-period benefits, Spencer had to show that Annett had no reasonable excuse for delaying or denying benefits. As long as it was debatable whether Annett acted properly in delaying payment, bad faith was not established. Under Iowa law, an employer may suspend benefits to an employee if he refuses to comply with a reasonable request for an examination. Annett had delayed payment until Spencer was evaluated by its doctor in Des Moines, Iowa, even though Spencer, living in Tennessee, was over 700 miles from Des Moines. While potentially burdensome to Spencer, Iowa law puts limits on travel distances related to an evaluation only when a long trip would be hazardous to the employee’s health. Spencer’s refusal to be evaluated, therefore, provided Annett with a reasonable basis for delaying payment of healing-period benefits.
This case demonstrates the procedural and evidentiary hurdles one must overcome to successfully prosecute a bad faith workers’ compensation claim in Iowa. Many administrative procedures have been created to resolve potential disputes between employers, their insurers, and employees which must be satisfied before turning to the courts for relief. Even if those administrative remedies are exhausted, the employee must still show that the “wrongdoing” is clear-cut and beyond debate.
By Anthony L. Martin & Cody Hagan
