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Williamson v. Metropolitan Property And Casualty Insurance Co.

United States District Court, D. New Mexico

June 14, 2017

TERESA WILLIAMSON, Plaintiff
v.
METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

         This matter comes before the Court on the following motions: (i) Plaintiff's First Motion for Partial Summary Judgment (Count II-Breach of Fiduciary Duty) (ECF No. 9); (ii) Plaintiff's Second Motion for Partial Summary Judgment (Count V-Violation of Unfair Practices Act) (ECF No. 12); (iii) Defendant's Motion for Summary Judgment on the Grounds of Plaintiff's Breach of Insurance Policy by Fraud (ECF No. 102); (iv) Plaintiff's Motion to Certify Questions to the New Mexico Supreme Court (ECF No. 131); and (v) Plaintiff's “Motion to Allow Filing of ‘Plaintiff's Motion to Certify Questions to the New Mexico Supreme Court' [Doc. 131]” (ECF No. 133). The Court, having considered the motions, briefs, evidence, and relevant law, will grant the motion to allow the filing of the motion to certify out of time, but will deny the motion to certify on the merits, and will deny the parties' motions for summary judgment.

         I. FACTUAL BACKGROUND

         A. Car Accident and Uninsured/Underinsured Policy

         Ms. Williamson was involved in a car collision on April 27, 2012, in which she was rear-ended. See Independent Medical Evaluation (“IME”) Report 2, ECF No. 9-1; Aff. of Horace Williamson ll. 9-11, ECF No. 9-1; Pl.'s Third Mot. for Summ. J., Undisputed Fact (“UF”) ¶ 1, ECF No. 95. The at-fault driver's insurance company was American National Property and Casualty Company (“ANPAC”). See Letter dated July 14, 2015, ECF No. 9-1 at 14 of 18; Def.'s Resp. to Pl.'s Third Mot. for Summ. J. 1, ECF No. 96. On May 1, 2012, Ms. Williamson had a recorded telephone conversation with Mara Bell, Claims Adjuster for ANPAC, in which she informed Ms. Bell she was experiencing spasms in her right arm and shoulder, through her shoulder and neck. See May 1, 2012 Tr., ECF No. 53-1 at 1-2 of 33. When asked if she had ever before had any previous injuries to the areas she mentioned, Ms. Williamson replied, “Not on my shoulder and neck. On my leg, on the right leg I had a knee surgery a year ago.” Id. at 3 of 33.

         At the time of the collision, Ms. Williamson was insured by Metropolitan Property and Casualty Company (“Metropolitan”), which provided uninsured/underinsured motorist coverage. Compl. ¶ 7, ECF No. 1-2; Answer ¶ 7, ECF No. 7. The policy with Metropolitan provided $10, 000 in MedPay coverage and $250, 000 in underinsured motorist coverage (“UIM”). Pl.'s First Mot. for Summ. J., UF ¶ 3, ECF No. 9. The UIM component of the Policy, however, did not provide coverage for bodily injury “due to or resulting from an accident which occurred before the effective date of this coverage.” Endorsement NM400B ¶ H, ECF No. 102-2 at 2 of 2.

         Plaintiff's insurance policy with Metropolitan has a “Fraud and Misrepresentation” provision that states:

All coverages under this policy are void if, whether before or after a loss, you or any person seeking coverage has:
a. concealed or misrepresented any material fact or made any fraudulent statements; or
b. in the case of any fraud or attempted fraud, affected any matter regarding this policy or any loss for which coverage is sought.

Policy ¶ 3, ECF No. 102-2 at 1 of 2 (bold in original).

         On April 15, 2013, Mary Sadousky, a Claims Investigator with Metropolitan, interviewed Ms. Williamson. See April 15, 2013 Tr., ECF No. 53-1 at 4-6 of 33. Ms. Williamson reported she developed pain “all in [her] back” about five days after the accident. April 15, 2013 Tr., ECF No. 102-4 at 1-2 of 6. Ms. Williamson reported that Dr. Roche, her primary care physician, treated her after the accident, addressing the pain she was experiencing all the way down to her tailbone. See April 15, 2013 Tr., ECF No. 102-4 at 2-3 of 6. Ms. Sadousky asked if anything outside of the accident could have injured her tailbone, to which Ms. Williamson responded that Dr. Roche did an x-ray, said her tailbone was not broken, and believed the muscles around that area were really tender. Id. Ms. Sadousky then inquired, “And, and he wasn't thinking that you had, uh, a disk problem, or did he?” Id. Ms. Williamson said, “No.” Id. Ms. Sadousky later asked Ms. Williamson if she had ever been injured at work, like slipping or falling, to which Ms. Williamson responded that she fell on her back 20 years ago, was treated by a doctor, but she got to a point where that pain was gone. See Id. at 4 of 6. Ms. Sadousky then asked Ms. Williamson if in the last five years she had seen a chiropractor before, to which Ms. Williamson replied, “Never.” Id. at 5 of 6. Ms. Sadousky asked if Dr. Roche had ever treated her because she was having problems with her back or neck. See Id. Ms. Williamson responded, “Um, I, I was, but not even treated, but I was, uh, one, I had a sciatic pain sometimes…. And I don't know if he ever treat for that, uh, maybe not. I get the massage, a massage sometimes where it happen ‘cuz…” Id. When asked if there was anything about the accident, her injury, and her condition that she would like Metropolitan to know, Ms. Williamson responded, “No, no, you have been very thorough.” April 15, 2013 Tr., ECF No. 102-4 at 6 of 6.

         B. Plaintiff's Underinsured Motorist Claim

         Plaintiff made a claim with Metropolitan for medical payments coverage (“MedPay”) after the accident. See Aff. of Horace Williamson ll. 9-13, ECF No. 9-1; Answer ¶ 12, ECF No. 7. On January 30, 2013, Metropolitan received signed medical authorizations from Ms. Williamson. Pl.'s Ex. B, ECF No. 106-2. As part of the claims process, Metropolitan required Plaintiff to undergo an Independent Medical Examination (“IME”). See Compl. ¶ 12, ECF No. 1-2; Answer ¶ 12, ECF No. 7.

         Plaintiff contends that Metropolitan required she undergo the IME as a prerequisite to paying her MedPay benefits. See Aff. of Horace Williamson ll. 12-13, ECF No. 12-1. Defendant disputes this latter contention, arguing that the MedPay benefits were temporarily delayed to allow it time to obtain medical records and an IME to determine if the treatment was related to the accident, reasonable, and necessary. See Def.'s Resp. to Pl.'s Second Mot. for Summ. J. 4, ECF No. 26.

         Metropolitan's MedPay adjuster selected and hired the Medical Examiner, an Orthopedic Surgeon, Dr. Douglas Slaughter, to examine Ms. Williamson. Pl.'s First Mot. for Summ. J., UF ¶¶ 5-6, ECF No. 9. The medical examination took place on October 18, 2013. Id. UF ¶ 7; IME Report, ECF No. 9-1 at 4 of 18. Ms. Williamson reported to Dr. Slaughter that the day after the car collision she began experiencing neck and low back pains and listed her medical care following the collision, including medical providers Dr. Roche, Physical Therapist Kern, and Dr. Emil Cheng. See IME Report 2-5, ECF No. 9-1 at 5-6 of 18. She complained to Dr. Slaughter of “neck pain, neck spasm, and low back pain.” Id. at 3. During the IME, Plaintiff informed Dr. Slaughter that she had no back and neck pain symptoms prior to the April 2012 collision. Dep. of Teresa Williamson 103:5-17, ECF No. 53-1; Aff. of Dr. Slaughter ¶ 5, ECF No. 46-1.

         Dr. Slaughter reviewed x-rays Plaintiff brought from Dr. Roche. See IME Report 2, 4, ECF No. 9-1. He also reviewed her medical records, the first of which was dated May 9, 2012. See Id. 4-5. Dr. Slaughter noted that he reviewed medical records that Plaintiff had provided from Plaintiff's visit to Dr. Cheng on April 30, 2013 at New Mexico Orthopaedics for neck, mid back, and low back pain. See Id. at 5; Def.'s Resp., Ex. 1, ECF No. 18-1 at 1 of 7; Aff. of Teresa Williamson, ECF No. 60-4. In Dr. Cheng's report, Dr. Cheng had noted that Plaintiff “reports having a history of right sciatica, ” she was involved in a motor vehicle accident in April 2012, she noticed pain in May 2012, and she “is not sure if her symptoms are related to the motor vehicle accident.” Def.'s Resp., Ex. 1, ECF No. 18-1 at 1 of 7.

         After completing the IME, Dr. Slaughter reported, as relevant here, the following in response to Metropolitan's questions:

2. Based on the records provided, what is the typical, necessary treatment, frequency, and duration of care for an injury of this type?
This is a soft tissue injury. In the past, it has been shown that cervical whiplash injuries can last up to two years with a minority lasting longer than that as far as symptoms are concerned. The claimant obviously by MRI does have some degeneration of the cervical and lumbar spine. This will be an ongoing issue as far as treatment and symptoms. In her physical therapy and chiropractic notes, she had what is typical for degenerative conditions which is waxing and waning of symptoms without any significant long term improvement.
3. Has the claimant's condition stabilized to a point where he/she has received maximum benefit from medical and/or chiropractic care?
The claimant has undergone a significant amount of chiropractic care and has ceased this on her own. She has also undergone massage therapy, as well as physical therapy. She can definitely have her own exercise program and does not need further physical therapy. Chiropractic treatment also does not need to be explored further. However, if the claimant has done relatively well from her single set of facet blocks, radiofrequency ablation may be beneficial to alleviate her pain for much longer periods of time. She has not undergone any cervical injections to see if this helps to alleviate her symptoms. She may be a good candidate for cervical facet blocks and radiofrequency ablation on a periodic basis as well.
4. Does the claimant currently require further medical and/or chiropractic treatment or diagnostic studies for the condition resulting from the accident(s)? If so, please specify type, frequency, and duration.
As stated above, the claimant has disc degeneration and facet arthropathy. The diagnosis related to the motor vehicle collision, including whiplash associated disorder at the cervical spine. In addition, the claimant does have or has an exacerbation of her degeneration in the lumbar spine. It is felt that this claimant could undergo further lumbar facet blocks and potential radiofrequency ablation to assist in the pain relief from her degeneration which reportedly she was asymptomatic from prior to the motor vehicle collision. This could also be a reasonable treatment in the cervical spine. However, Dr. Cheng has not been able to ascertain whether epidural injections or facet blacks are going to be most beneficial for her cervical pain. As far as the cervical pain is concerned, I would suggest that she have the appropriate injection approximately two to three times per year as needed for pain relief…. The injections in the lumbar spine would also be approximately two to three times per year based on symptom reduction.
5. Re: Causation, within a reasonable degree of medical certainty, when could have (or can) the condition that relates to the accident in question be considered resolved, requiring no further care? Does the medical documentation support a causal relationship between the accident in question and the injuries sustained?
Regarding causation, the claimant definitely had a pre-existing degenerative condition in both the cervical and lumbar spine. It is felt by this examiner that she has had an exacerbation or a permanent aggravation of her cervical degeneration and lumbar degeneration. No further injury has obviously been sustained in the motor vehicle collision. The injuries, unfortunately, can be persistent.
DIAGNOSES RELATED TO THE MOTOR VEHICLE COLLISION
1. Cervical spondylosis without myelopathy or facet joint degeneration, exacerbation/aggravation.
2. Cervical disc degeneration/aggravation/exacerbation.
3. Lumbar disc degeneration, aggravation/exacerbation.
4. Lumbar facet arthropathy/lumbar spondylosis without myelopathy, aggravation/exacerbation.

         IME Report 7-9, ECF No. 9-1 (italics emphasis added).

         Metropolitan subsequently paid Plaintiff $10, 000 for medical payments pursuant to the MedPay benefits in the Policy. See Aff. of Horace Williamson ll. 17-19, ECF No. 9-1 at 1 of 18; Def.'s Resp. ¶ 14, ECF No. 18. On March 13, 2015, Plaintiff settled for $43, 000 her third-party claim against the at-fault driver, who had an insurance policy limit of $50, 000. See Pl.'s First Mot. for Summ. J., UF ¶ 15, ECF No. 9.

         On July 14, 2015, Thomas Mescall, counsel for Plaintiff, sent Metropolitan a letter notifying it of the settlement of her third-party claim and offering to settle her first party underinsured claim for $207, 000. Letter dated July 14, 2015, ECF No. 9-1 at 14 of 18. In the letter, counsel stated that the $43, 000 settlement barely covered Ms. Williamson's past medical expenses, and thus, failed to compensate her for past pain and suffering, future pain and suffering and future medical payments. Id. Counsel attached the IME Report and included copies of past medical bills, asserting that the total amount for past medical treatment was $37, 125. See Id. at 14-16 of 18. Mr. Mescall attached medical records and bills for post-accident treatment from Dr. Roche, Terry Kern Physical Therapy, Michelle Emberger, Soothing Hands Massage, and NM Orthopaedics. Id. at 16 of 18. The records included a print-out of medical treatment from New Mexico Orthopaedics, beginning in July 1, 2011, which listed treatments for “Lumbago” and treatment by Dr. Christopher Patton. Pl.'s Ex. G, ECF No. 106-7. In his letter, Mr. Mescall based his past medical treatment cost on treatment beginning on May 9, 2012, with the last listed date of treatment as December 29, 2014. Letter dated July 14, 2015, ECF No. 9-1 at 16 of 18.

         In explaining the reasons behind the settlement offer, Mr. Mescall asserted that Dr. Slaughter recommended future medical treatment of cervical facet blocks and lumbar facet blocks; Plaintiff had a cervical facet block at a cost of $3, 893 and lumbar facet blocks ranging in cost from $4, 132 to $9, 967; and calculating two to three of each block per year for her life expectancy of over 30 years, her future medical costs would exceed the UIM policy limits (giving, for example, the amount for three cervical facet blocks per year for 30 years as $342, 000 and $371, 880 for three lumbar facet blocks per year for 30 years, at the low end of the cost range). See Id. at 15-16 of 18.[1] Mr. Mescall concluded that Ms. Williamson was entitled to 100% of her damages because “the uncontradicted medical records and the uncontradicted testimony establish[] that Ms. Williamson was asymptomatic at the time of the 2012 car collision.” Id. at 17 of 18.

         Jacob Martinez, a Senior Claims Adjuster employed by Metropolitan, was assigned to Plaintiff's claim. Aff. of Jacob Martinez ¶¶ 2-4, ECF No. 18-1 at 5 of 7. Mr. Martinez reviewed Plaintiff's settlement demand letter, including the medical bills from May 9, 2012 through December 29, 2014. See Id. ¶¶ 6-8. Metropolitan did not receive any additional medical records or bills about treatments from Plaintiff or her counsel during 2015. See Id. Metropolitan asserts it evaluated Plaintiff's claim to be approximately $50, 000 to $56, 000, relying on the assumption that Plaintiff had ended medical treatment in December 2014 and, therefore, it did not consider any future medical costs in the evaluation. See Id. ¶¶ 8-9.

         By letter dated August 21, 2015, Mr. Martinez informed Mr. Mescall: “As discussed in our conversation of 08/21/2015, we offer a settlement of $1000 for your client's bodily injury claim.” Letter dated Aug. 21, 2015, ECF No. 96-1 at 3 of 6. Mr. Martinez gave no written explanation in the letter for the settlement offer amount. See Id. Metropolitan's offer occurred in the regular course of its insurance business. Pl.'s Second Mot. for Summ. J., UF ¶ 31, ECF No. 12. Metropolitan contends that it was a reasonable settlement, because it paid $10, 000 in MedPay to Plaintiff, and she received $43, 000 from the other driver. See Aff. of Jacob Martinez ¶¶ 10-12, ECF No. 18-1 at 6 of 7. Plaintiff disputes the reasonableness of the offer.

         D. Subrogation of MedPay [2]

         The UIM Policy contains a provision that reduces the amount paid to the insured by any amount paid under the Medical Expense sections of the Policy. See Endorsement NM400B, ECF No. 96-1 at 6 of 6. On October 16, 2014, Shannon Kelly, a Subrogation Adjuster for Metropolitan, wrote counsel for Plaintiff the following: “You were previously put on notice of our subrogation rights for the 1st party benefits paid on behalf of your client. Please provide a status of our subrogation claim.” Letter dated Oct. 16, 2014, ECF No. 100-1. On September 21, 2015, Mr. Mescall wrote Ms. Gauthier a letter asserting the reasons under New Mexico law why Metropolitan was not entitled to subrogation because Plaintiff had not been fully compensated when she settled her third-party claim against the at-fault driver. See Pl.'s Ex. C, ECF No. 34-2. According to a note in the claim file, on September 23, 2015, Margaret Gauthier, a Supervisor for Metropolitan, wrote “it looks like you have taken the offset of the 10K in amp subro in AUU evaluation along with the tort limits - please confirm you have used this in their eval and are waiving our subro - thanks!” Pl.'s Ex. B, ECF No. 34-3; Pl.'s Ex. D, ECF No. 34-3. The next note in the claim file is dated September 24, 2015 from Mr. Martinez to Ms. Gauthier, stating, “I discussed this matter with Management and we are not waiving subro. And please keep me updated if there is a payment or rejection from American National.” Pl.'s Ex. B, ECF No. 34-1. By letter dated October 6, 2015 from Ms. Gauthier, Metropolitan informed Plaintiff that it was agreeing to waive its MedPay subrogation. Pl.'s Ex. D, ECF No. 34-3.

         Plaintiff argues that Metropolitan unlawfully demanded subrogation for her MedPay benefits, and that the $1, 000 settlement offer was conditioned on having to repay Metropolitan's subrogation claim for $10, 000. Pl.'s Third Mot. ¶ 3, ECF No. 95 at 7 of 9. Defendant disputes this fact, arguing instead that the internal claim file note referred to waiving subrogation against ANPAC based on the $7, 000 remaining under ANPAC's policy. See Def.'s Resp. 3-4, ECF No. 96. Mr. Martinez avers that it “was never my intention to not waive subrogation with respect to the insured” and he never discussed subrogation issues with Mr. Mescall. Aff. of Jacob Martinez ¶¶ 7, 9, ECF No. 96-1.[3]

         E. Complaint and Interrogatories

         On September 22, 2015, Plaintiff filed suit against Metropolitan for breach of its insurance duties. Compl., ECF No. 1-2. In Count I, Plaintiff alleges Defendant breached its contractual duty to provide underinsured coverage by offering only $1, 000 for her past pain and suffering, future pain and suffering, and future medical payments. Plaintiff asserts in Count II and III that Defendant breached its fiduciary duty and breached the covenant of good faith and fair dealing, respectively, by requiring her to undergo an IME, then refusing to accept the medical examiner's findings that she would require future medical treatment that would exceed policy limits and offering her only $1, 000, thereby subjecting her to a needlessly intrusive medical examination. In Count IV, Plaintiff claims a violation of New Mexico's Unfair Insurance Practices Act by unreasonably subjecting her to an intrusive and irrelevant IME as an abusive tool to delay processing her claim and by offering her a frivolous and ...


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