United States District Court, D. Arizona
Douglas L. Rayes United States District Judge
the Court is Defendant's Motion to Dismiss Supplemental
Complaint Re Lack of Jurisdiction. (Doc. 82.) The motion is
fully briefed. For the following reasons, the Court denies
January 13, 2016, Plaintiff filed a complaint alleging that
Defendant processed his workers' compensation claim in
bad faith. At the time of the complaint, Defendant was paying
disability benefits to Plaintiff. On April 4, 2016, Defendant
issued a Notice of Claim Status terminating Plaintiff's
benefits effective March 15, 2016. Plaintiff then filed a
supplemental complaint alleging additional acts of bad faith
occurring after the original filing.
Plaintiff alleges that, prior to issuing the Notice of Claims
Status, Defendant required him to undergo an independent
medical examination (IME) with Dr. Maric, who Plaintiff
claims Defendant had reason to know was not independent.
Plaintiff claims that Defendant chose Dr. Maric knowing that
Plaintiff had filed a complaint with the Arizona Medical
Board regarding Plaintiff's previous interaction with Dr.
Maric for an IME. Dr. Maric opined that Plaintiff was no
longer in need of active medical care and recommended a one
year supportive care award, care different from the
recommendations of Plaintiff's treating doctor.
further alleges that Defendant requested a Loss of Earning
Capacity Analysis on September 18, 2014 from Mayer Vocational
Rehabilitation Services. This report estimated
Plaintiff's monthly loss at approximately $2, 300. After
the April 2016 termination notice, Defendant requested
another Loss of Earning Capacity Analysis from VocMedEcon
(VME). The VME report allegedly indicated that a human
resource employee for Plaintiff's previous employer
reported that Plaintiff was offered an accommodated position
and that he was terminated due to “attitude issues and
absenteeism.” Plaintiff claims Defendant was shopping
for opinions from a vocational analyst that would best serve
its own interests and that Defendant knew or should have
known the statements were false.
allegations in Plaintiff's supplemental complaint
currently are being litigated before the Industrial
Commission of Arizona (ICA) in relation to Plaintiff's
claims for loss of earning capacity, ongoing medical care,
and ongoing compensatory benefits. Defendant has moved to
dismiss Plaintiff's supplemental complaint, arguing that
the Court does not have subject matter jurisdiction over
Plaintiff's claim until the ICA has made a compensability
determination. The Court disagrees.
court must dismiss a case over which it lacks subject matter
jurisdiction. Fed.R.Civ.P. 12(h)(3). “In a motion to
dismiss for lack of subject matter jurisdiction, the
plaintiff bears the burden of establishing the court's
subject matter jurisdiction.” Soghomonian v. United
States, 82 F.Supp.2d 1134, 1140 (E.D. Cal. 1999).
“A federal court is presumed to lack jurisdiction . . .
unless the contrary affirmatively appears.” Stock
W., Inc. v. Confederated Tribes of the Colville
Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989).
has exclusive jurisdiction to adjudicate workers'
compensation benefits, and a plaintiff generally cannot bring
an action for bad faith denial of benefits if he has not
first sought relief through the ICA. Merkens v. Fed. Ins.
Co., 349 P.3d 1111, 1115 (Ariz.Ct.App. 2015).
Arizona's Workers' Compensation Act, however,
“does not bar a common law tort action that is
independent of the workers' benefit claim process if the
conduct does not fall within the coverage of the Act.”
Id. at 1113 (internal quotation and citation
on Merkens, Defendant argues that the Court lacks
jurisdiction to decide the compensability issues alleged
because Plaintiff has not exhausted his administrative
remedies at the ICA. In Merkens, the plaintiff had
not sought a compensability determination from the ICA, and
instead sued to recover unpaid compensation and benefits post
termination. Id. at 1114. Thus, the plaintiff wanted
a jury to determine both her entitlement to benefits and the
amount to which she was entitled. Id. at 1115-16.
Notably, the plaintiff abandoned her bad faith handling
claims and “t[ied] all of her damages to the denial of
benefits.” Id. at 1114 n.5. On those facts,
the Arizona Court of Appeals held that the plaintiff was
required to pursue administrative remedies before pursing her
claim for bad faith because she asserted damages based solely
on the termination of benefits. Id. at 1115-16.
case, however, Plaintiff does not claim that his damages are
tied only to the termination of benefits. Rather, he alleges
that Defendant improperly handled his claim. Plaintiff
alleges, among other things, that Defendant abused the IME
process and participated in vendor shopping for a favorable
result. Plaintiff's allegations of bad faith in the
supplemental complaint are not based solely on the
termination of benefits. Indeed, Defendant itself
acknowledges that “Plaintiff might still pursue a claim
for bad faith if the ICA were to find in favor of the
Defendant on the issues of ongoing medical care, indemnity
and LEC benefits[.]” (Doc. 118 at 4.)
Court recognizes that some of Plaintiff s allegations, such
as loss of income and loss of ongoing medical care, might be
intertwined with the pending ICA determination. But even if
portions of Plaintiffs supplemental complaint properly are
construed as bad faith denial claims, Merkens held
only that “in a bad faith denial of benefits lawsuit,
the worker must first have at least sought a compensability
determination from the Industrial Commission.”
Id. at 1115. Plaintiff has done so here.
Importantly, Merkens also recognized that
“there can be simultaneous proceedings in both the
Industrial Commission and superior court, [but] the superior
court . . . should wait to resolve any dispositive motions .
. . until after the Industrial Commission has resolved the
challenges to the denial or termination of benefits.”
Id. at 1115 n.6. Thus, to the extent Plaintiffs
claims are in part tied to the denial of benefits, the Court
need not ...