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Horn v. Firstcomp Insurance Co.

United States District Court, D. South Dakota, Western Division

March 29, 2018





         Defendant FirstComp Insurance Company filed a motion to dismiss plaintiff Harold Hollow Horn's complaint pursuant to Fed.R.Civ.P. 12(c). (Docket 13). Plaintiff opposes defendant's motion. (Docket 19). For the reasons stated below, defendant's motion is denied.


         Rule 12(c) provides that “[a]fter the pleadings are closed--but early enough not to delay trial--a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). To analyze the motion to dismiss, plaintiff's factual allegations must be taken as true. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009); Ashcroft v. Iqbal, 556 U.S. 662, 678(2009). A court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 555 (2007).[1]See also Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir. 2009) (the court must review a “motion to dismiss for failure to state a claim, accepting the facts alleged in the complaint as true and granting all reasonable inferences in favor of [the plaintiff], the nonmoving party.”). “Factual allegations must be enough to raise a right to relief above the speculative level . . . .” Twombly, 550 U.S. at 555. “The pleadings must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action, on the ASSUMPTION THAT ALL THE allegations in the complaint are true (even if doubtful in fact) . . . .” Id. (emphasis in original). “[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” Id. at 556.

         “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at 679.

In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide a framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.


         “The plausibility standard requires a plaintiff to show at the pleading stage that success on the merits is more than a ‘sheer possibility.' It is not however, a ‘probability requirement.' ” Braden, 588 F.3d at 594 (citing Iqbal, 556 U.S. at 679) (citing Twombly, 550 U.S. at 570). “A complaint states a plausible claim for relief if its factual content . . . allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “[T]he complaint should be read as a whole, not parsed piece by piece to determine whether each allegation, in isolation, is plausible.” Id.

Plausibility . . . does not imply that the district court should decide whose version to believe, or which version is more likely than not. Indeed, the Court expressly distanced itself from the latter approach in Iqbal, “the plausibility standard is not akin to a probability requirement.” 129 S.Ct. at 1949 (quotation marks omitted). As we understand it, the Court is saying instead that the plaintiff must give enough details . . . to present a story that holds together. . . . [C]ould these things have happened, not did they happen.

Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) (emphasis in original). “In assessing a motion [to dismiss] . . . a court should . . . not dismiss [a] complaint ‘unless it appears beyond doubt that the [plaintiff] can prove no set of facts in support of [his] claim which would entitle [him] to relief.' ” Holloway v. Lockhart, 792 F.2d 760, 761 (8th Cir. 1986) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).


         Plaintiff filed an 18-page complaint detailing his accusation against the defendant. (Docket 1). The complaint asserts four separate causes of action against the defendant. Those causes of action are: count I, bad faith; count II, barratry; count III, abuse of process; and count IV, punitive damages. (Docket 1 at pp. 15-18). Attached as exhibits to the complaint are the findings of fact and conclusions of law dated November 4, 2015, of an administrative law judge (“ALJ”) of the Division of Labor and Management of the South Dakota Department of Labor (“Division of Labor and Management Decision”) and the memorandum decision dated June 15, 2016, of Circuit Court Judge Mark Barnett of the Sixth Judicial Circuit of the State of South Dakota (“Circuit Court Decision”). (Dockets 1-1 and 1-2).

         Because the complaint's factual allegations must be taken as true, the court incorporates the facts alleged in the complaint, together with the Division of Labor and Management Decision and the Circuit Court Decision into this order. Iqbal, 556 U.S. at 678; Braden, 588 F.3d at 594. Further recitation of salient facts from the complaint and its attachments will be discussed in this order.

         Except for the three-year period of 1999 to 2001, Mr. Hollow Horn was a full-time bus driver for the Porcupine School from 1992 until his resignation in mid-September 2011. (Docket 1 ¶¶ 9, 10 & 35).[2] In 2008, Mr. Hollow Horn suffered a work related back injury. Id. ¶ 12-15. Dr. deGrange of Black Hills Orthopedics in Rapid City, South Dakota, determined Mr. Hollow Horn suffered an 8 percent whole person impairment and attributed 50 percent of his disability to his work injuries. Id. ¶¶ 14-15 & 25. On March 1, 2009, FirstComp Insurance (“FirstComp”) stipulated Mr. Hollow Horn's injuries were compensable under the South Dakota workers' compensation statutes and paid him a permanent partial disability benefit based on the 8 percent whole person impairment. Id. ¶ 16.

         In May 2011, while driving his school bus, Mr. Hollow Horn experienced a re-injury of his back. Id. ¶ 22. Dr. Rand Schleusener of Black Hills Orthopedics became Mr. Hollow Horn's treating physician. Id. ¶ 24. A 2011 MRI found the same general condition as indicated in a 2008 MRI, that is, Mr. Hollow Horn had “mild left lumbar scoliosis with multilevel degenerative disc disease and disc displacement.” Id. ¶ 44. Dr. Schleusener charted the 2011 injury as an aggravation of the 2008 injury. Id. ¶ 26. He gave Mr. Hollow Horn work restrictions of no bending or twisting and no lifting over 25 pounds. Id. ¶ 27. On August 30, 2011, Mr. Hollow Horn was released by Dr. Schleusener to drive bus again. Id. ¶ 28.

         During the 2011-12 school year, Mr. Hollow Horn's job duties expanded to an eight-hour work day in which he was required to supervise students, and perform custodial duties, including cleaning, sweeping and mopping floors, hauling trash and performing other duties as assigned. Id. ¶ 29-31. Dr. Schleusener suggested Mr. Hollow Horn should try to perform these new job assignments. Id. ¶ 32. About a week later, Mr. Hollow Horn reported back to Dr. Schleusener, who changed the work restrictions and limited Mr. Hollow Horn to working two hours in the morning and two hours in the afternoon. Id. When the Porcupine School could not accommodate these work restrictions, it asked Mr. Hollow Horn to resign. Id. ¶ 35. Mr. Hollow Horn resigned shortly thereafter. Id. On September 30, 2011, FirstComp denied Mr. Hollow Horn's claims for further medical or wage replacement benefits under the South Dakota workers' compensation statutes. Id. ¶ 37.

         On March 28, 2012, Dr. Schleusener performed his last physical examination of Mr. Hollow Horn. Id.; see also Docket 1-1 ¶ 24. Dr. Schleusener recommended Mr. Hollow Horn remain on the work and lifting restrictions imposed earlier. Docket 1-1 ¶ 24. On April 3, 2012, Dr. Schleusener gave Mr. Hollow Horn a disability rating for Social Security benefits purposes, identified his work restrictions and detailed the work he was capable of performing, including a restriction that he was unable to drive a bus. (Docket 1 ¶¶ 38-39).

         On June 11, 2012, Mr. Hollow Horn filed a petition with the Division of Labor and Management seeking workers' compensation benefits for his 2011 injury. Id. ¶ 40. On April 25, 2013, at FirstComp's direction, Mr. Hollow Horn submitted to a medical examination by Dr. Nolan Segal. Id. ¶ 41. It was Dr. Segal's opinion Mr. Hollow Horn's back condition was the result of degenerative and hypertrophic disc disease and Scheuermann juvenile disc disease. Id. ¶ 42. Dr. Segal's opinion was that any work injuries were “at most . . . temporary aggravations of his preexisting degenerative condition.” Id. ¶ 43. Dr. Segal's causation opinion for workers' compensation purposes was that Mr. Hollow Horn's back condition, his disability rating and his need for treatment were never work related, but were directly caused by his degenerative disc disease. Id. ¶¶ 47-48.

         Dr. Segal's opinion contradicted FirstComp's stipulation with Mr. Hollow Horn in the earlier workers' compensation proceeding that his 2008 injury was compensable as an 8 percent whole person permanent partial disability.[3] Id. ¶ 49. Dr. Segal agreed with Dr. Schleusener's work restriction that Mr. Hollow Horn should not lift more than 25 pounds or engage in repetitive bending, twisting, lifting, crawling or any high impact type physical activities at work. Compare id. ¶¶ 27 & 68. Dr. Segal imposed an additional restriction that Mr. Hollow Horn could not drive on rural or pot-holed roads. Id. ¶ 76.

         The work restrictions imposed by both Dr. Schleusener and Dr. Segal made the work activities assigned to Mr. Hollow Horn at the beginning of the 2011-12 school year beyond his physical capabilities. Id. ¶ 69. Mr. Hollow Horn's vocational consultant, Richard Ostrander, found Mr. Hollow Horn “obviously unemployable” given his physical restrictions, location of residency, age and abilities. (Docket 1-1 at p. 8 ¶ 56).

         On August 12, 2013, FirstComp offered to settle Mr. Hollow Horn's workers' compensation claim for $2, 000. (Docket 1 ¶ 113). It made the same offer a second time on November 4, 2013. Id.

         FirstComp hired Thomas Karrow as its vocational consultant for Mr. Hollow Horn's claim. Id. ¶ 73. When speaking with potential employers, Mr. Karrow did not discuss the physical limitations imposed by Dr. Schleusener or Dr. Segal. Id. ¶¶ 76 & 79. When he identified a potential employer with an open bus driver position, Mr. Karrow did not discuss those restrictions as they would preclude Mr. Hollow Horn from qualifying for the position. Id. ¶ 77. FirstComp continued to assert in the 2012-15 workers' compensation proceedings that Mr. Hollow Horn could work as a bus driver, even though the requirements for that position were not supported by the opinions of Dr. Segal. Id. ¶ 70.

         The Division of Labor and Management held a workers' compensation hearing on September 19, 2014. Id. ¶ 87. On September 4, 2015, an ALJ entered a written decision rejecting FirstComp's expert witnesses and finding in favor of Mr. Hollow Horn. Id. ¶ 88. Findings of Fact and Conclusions of Law and an Order were entered on November 4, 2015. Id. ¶ 89 (referencing Docket 1-1). The ALJ found Mr. Hollow Horn was entitled to permanent total disability benefits from the time of his discharge from employment on September 15, 2011, together with medical benefits for his back pain condition.[4] (Docket 1-1 at p. 13 ¶¶ 14-14). The decision awarded Mr. Hollow Horn past due benefits as of October 1, 2015, of $90, 483.14, together with accrued interest of $21, 695.50. Id. ¶¶ 19 & 20. Future lifetime permanent total disability benefits were calculated and discounted to the date of the ALJ's decision as $360, 485.24. Id. at p. 14 ¶ 24.

         FirstComp appealed the ALJ's decision to the Sixth Judicial Circuit Court, Hughes County, Pierre, South Dakota. Id. ΒΆ 91 (referencing Docket 1-2). On June 15, 2016, Circuit Court Judge Mark Barnett issued a 19-page opinion denying FirstComp's appeal and ...

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