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Tovares v. Gallagher Bassett Services, Inc.

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

March 25, 2019

ANNIE TOVARES, Plaintiff,
v.
GALLAGHER BASSETT SERVICES, INC., AND PRAETORIAN INSURANCE COMPANY, Defendants.

          ORDER

          JEFFREY L. VIKEN, CHIEF JUDGE

         INTRODUCTION

         Plaintiff Annie Tovares filed an action against the defendants Gallagher Bassett Services, Inc., and Praetorian Insurance Company alleging bad faith and misrepresentation in violation of South Dakota law. (Docket 1). The complaint also seeks attorney's fees and punitive damages. Id. On October 3, 2017, defendants filed their answers to plaintiff's complaint. (Dockets 37 & 39). On July 6, 2018, defendants filed a joint motion seeking leave to file amended answers, together with a supporting brief.[1] (Dockets 60 & 61). Plaintiff resists defendants' motion. (Docket 69). For the reasons stated below, defendants' motion is granted.

         SUMMARY OF FACTS

         The following summary of facts is taken from the court's order of September 12, 2017, to provide background for defendants' motion for leave to file amended answers.[2] Praetorian issued a worker's compensation insurance policy to Ms. Tovares' employer, Menard, Inc. (“Menards”). (Docket 34 at p. 6). Praetorian delegated its claim administration services to Gallagher. Both defendants understood that Praetorian would act as the principal and Gallagher would act as Praetorian's agent in performing claim administration duties. Those duties included good faith and fair dealing, processing paperwork relating to claims, investigating claims, obtaining medical reports, monitoring treatment, verifying coverage, adjusting, settling and defending claims and issuing checks for payment of benefits.

         On March 19, 2014, while working at Menards in Rapid City, South Dakota, Ms. Tavares fell sideways and landed hard on a concrete floor, bruising her left hip and arm. Menards received actual notice of her fall and the incident was recorded on one of its security cameras.

         Over the next week, Ms. Tovares began experiencing intermittent ringing in her ears, blurry vision, light-headedness and headaches. On March 26, 2014, she went to the Rapid City Regional Hospital emergency room. After obtaining her history of the work-related fall, the attending physician prescribed a CT scan of Ms. Tovares' head to rule out the presence of internal bleeding or other brain injuries. The CT scan was negative for internal bleeding. Her attending physician noted the “most likely cause of her symptoms is . . . [her] head injury.” Ms. Torvares was referred to an eye doctor to address her blurry vision. The eye examination disclosed no optical injuries. The bills for the emergency room and the eye doctor totaled approximately $2, 900 and were submitted to Gallagher, as Praetorian's agent.

         On April 30, 2014, Gallagher wrote to Ms. Tovares stating “we are in receipt of your claim for Worker's Compensation benefits due to an alleged injury from an alleged accident on or around 3/19/2014. We have investigated this claim and found no evidence to support your claim for benefits under South Dakota Worker's Compensation provisions.”[3] As the result of Gallagher's failure to pay the medical bills, Ms. Tovares was forced to take out a loan to pay these expenses.

         On May 16, 2014, Ms. Tovares' attorney wrote Gallagher requesting a copy of the video documenting her fall at Menards. Gallagher refused the request stating that a subpoena would be required as the video belonged to Menards. On October 9, 2014, counsel wrote Gallagher a second time requesting a copy of the video and stating “[b]y withholding important evidence, you force Ms. Tovares to take legal action, which makes it very difficult for her (and other people like her) to simply get the evidence needed to determine whether their claim is valid.” Counsel advised Gallagher that if a positive response was not received by October 16, 2014, a petition for hearing would be filed with the South Dakota Department of Labor. On October 20, 2014, having heard nothing from Gallagher, Ms. Tovares filed a petition for hearing with the Department of Labor.

         Praetorian admitted in its answer to the petition that Ms. Tovares had fallen on March 19, 2014, and that she sought medical attention on March 26, 2014. The answer denied any health care provider indicated the March 19 injury was a major contributing cause of any medical condition or need for treatment. The answer concluded with a declaration that “discovery [must be] conducted and expert opinions . . . obtained to determine the exact nature of [Ms. Tovares'] alleged injuries, [her] current medical condition, and whether [her] medical treatment was related to the incident . . . .”

         On February 6, 2015, the defendants offered $3, 000, with a denial of compensability, to settle Ms. Tovares' claim. Ms. Tovares rejected the offer, stating she was owed $3, 225.12, together with interest, to fully satisfy the medical bills. On March 19, 2015, a check was tendered from “Gallagher Bassett Services, Inc., for Praetorian Ins. Co.” for $3, 225.12. Ms. Tovares dismissed her petition with the Department of Labor.

         DEFENDANTS' PROPOSED ANSWER

         Defendants' proposed answer seeks to add the following affirmative defenses:

1. Defendant[s] specifically assert . . . the affirmative defense of failure to exhaust administrative remedies. Plaintiff failed to obtain an administrative ruling that any workers' compensation claim was compensable or that any benefits were due and owing pursuant to the South Dakota workers' compensation laws. Plaintiff did not obtain a finding the medical bills subject ...

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