United States District Court, D. South Dakota, Western Division
JEFFREY L. VIKEN, CHIEF JUDGE
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. (Dockets 60 & 61). Plaintiff resists
defendants' motion. (Docket 69). For the reasons stated
below, defendants' motion is granted.
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. 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.
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.
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.
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.” 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.
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.
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 . . . .”
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.
proposed answer seeks to add the following affirmative
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 ...