United States District Court, D. Arizona
ORDER
Honorable Susan M. Brnovich United States District Judge
Pending
before the Court is Defendant American Liberty Insurance
Company's (hereinafter “American Liberty”)
Motion for Summary Judgement. (Doc. 95, “Mot.”).
Plaintiff Jeanette Centeno (“Centeno”) filed a
Response. (Doc. 104, “Resp.”). American Liberty
filed a Reply. (Doc. 108, “Reply”). American
Liberty filed a Separate Statement of Facts in Support of his
Motion. (Doc. 96, “DSOF”). Centeno also filed an
Additional Statement of Facts in Support of her Response,
(Doc. 105, “PSOF”), and included a controverting
statement of facts as required by LRCIV 56.1(b). Oral
argument was held on September 13, 2019. The Court has read
and considered the Motion, Response, and Reply and enters the
following Order.
I.
BACKGROUND
Centeno
worked as a traveling nurse for Beech Home Care
(“Beech”), providing medical care and treatment
to patients in their homes. (PSOF at 2). On Friday, August 5,
2016, while retrieving medical supplies from her vehicle to
continue treatment of a patient, Centeno allegedly fell and
injured her back. (Id.). The injury was not
witnessed.
Immediately
following her accident, Centeno returned to the patient's
home and continued treatment with fellow nurse, Roxanne
Jeuckstock. (PSOF at 2). The two nurses left separately but
reconvened shortly thereafter to treat the last patient of
the day. (Id.). Centeno first reported her alleged
injury to Beech the following Monday, August 8, 2016 and
first sought medical care later that day at Chandler Regional
Medical Center. (DSOF ¶ 6). The reports of Centeno's
attending physician and radiologist who both administered
treatment that day differ as to whether the injury occurred
during or after work. (DSOF Exh. 10 at 1 (Physician's
Report); DSOF Exh. 10 at 110-111 (Radiologist's Report)).
Three weeks passed before Centeno next sought medical
treatment by visiting her personal physician on August 25,
2016. (DSOF ¶ 9). After complaining of continued back
and neck pain to supervisors, Centeno visited a Workers
Compensation clinic with Beech's leave on August 29,
2016, after which she was recommended for light duty. (DSOF
¶ 10). On September 1, 2016, nearly a month after her
accident, Centeno's injury was reported to Defendant,
American Liberty Insurance Company (“American
Liberty”) for the first time. (Id.).
American
Liberty immediately assigned the claim to adjuster Randi
Kerner (“Kerner”) of S&C Claim Services
(“S&C”). (DSOF ¶ 11). Kerner initiated
an investigation, contacted Centeno, Beech, and Centeno's
medical providers, and determined the claim was initially
compensable on September 13, 2019. (Id.). Centeno
was then assigned a nurse case manager to coordinate further
medical evaluation with a supervising physician. (DSOF ¶
17). Shortly thereafter, the initial approval of
Centeno's claim was thrown into doubt by two
co-workers' independent reports indicating that
Centeno's injury was not job-related.[1] (DSOF
¶¶ 18-22). On September 19, 2016, Beech disclosed
to Kerner that Centeno had told a fellow employee, Karen
Katsaros, that the injury was caused by a fall in
Centeno's home on Sunday, August 7, 2019. (DSOF ¶
18). Consistent with this report, on September 30, 2016,
Beech provided Kerner with the written statement of Roxanne
Jueckstock, the nurse being trained by Centeno on the day of
the alleged accident. (DSOF ¶¶ 20, 22). Among other
things, Jueckstock insisted that Centeno did not exhibit any
signs or symptoms or injury, nor complain of an injury either
before or after the time of alleged accident. (DSOF ¶
21). Of note to Kerner, the two nurses had treated every
patient together that day, including one patient immediately
after Centeno's accident. (PSOF at 2). Also on September
30, 2016, S&C asked a third-party adjuster, Dan Boozer
Adjustment (“DBA”), to investigate these adverse
reports while continuing to approve Centeno's medical
treatment for what was diagnosed as pre-existing spinal
stenosis aggravated by the accident. (DSOF ¶ 23).
S&C continued to authorize Centeno's medical
treatment to include the scheduling of physical therapy
sessions, pre-operative surgical appointments, and the
setting of a tentative surgery date of October 20, 2016.
(DSOF ¶ 24).
On
October 13, 2016, noting the upcoming Industrial Commission
of Arizona (“ICA”) final claim determination
deadline of October 18, 2016, S&C denied Centeno's
claim, in part due to the conflicting accounts of co-workers
indicating the injury occurred outside of work and therefore
was non-compensable. (DSOF ¶ 44). S&C also cited the
minimal medical treatment sought in the three-week period
immediately following the accident and Centeno's delay in
reporting the claim to American Liberty as additional support
for claim denial. (DSOF ¶ 36). Despite denying
Centeno's claim, S&C continued to investigate the
conflicting co-workers reports.[2] DBA interviewed Katsaros on
October 13, and Jueckstock on October 20, considering both
their accounts credible.[3] S&C maintains that the timing of
the denial-five days before the ICA claim deadline-was
motivated by a desire to meet the ICA deadline and allow
Centeno to pursue other surgery options given her approaching
surgery date. (DSOF ¶ 46). Following denial of her
claim, Centeno postponed surgery. She contested her claim
denial on October 31, 2016. (DSOF ¶ 43).
On June
7, 2017, the ICA reversed and determined that Centeno's
claim was compensable. (DSOF ¶ 45).[4]
II.
LEGAL STANDARD
Summary
judgment on a claim or defense is appropriate “if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). In order to
prevail, a party moving for summary judgment must show the
absence of a genuine issue of material fact with respect to
an essential element of the non-moving party's claim, or
to a defense on which the non-moving party will bear the
burden of persuasion at trial. See Celotex Corp. v.
Catrett, 477 U.S. 242, 257 (1986). If the movant fails
to carry its initial burden, the nonmovant need not produce
anything. Nissan Fire & Marine Ins. Co. v. Fritz
Cos., 210 F.3d 1099, 1102- 03 (9th Cir. 2000).
However,
if the movant meets its initial responsibility, the burden
shifts to the nonmovant to establish the existence of a
genuine issue of material fact. Id. at 1103. The
nonmovant need not establish a genuine issue of fact
conclusively in its favor, but it “must do more than
simply show that there is some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). Bare
assertions, standing alone, are insufficient to create a
genuine issue of material fact and defeat a motion for
summary judgment. See Liberty Lobby, 477 U.S. at
247-48. “If the evidence is merely colorable, or is not
significantly probative, summary judgment may be
granted.” Id. at 249-50 (citations omitted).
In deciding a motion for summary judgment, the court draws
all reasonable inferences in favor of the non-movant and
recognizes that “[c]redibility determinations, the
weighing of evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge.” Id. at 255. However, conclusory and
speculative testimony does not raise genuine issues of fact
and is insufficient to defeat summary judgment. See
Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d
730, 738 (9th Cir. 1979).
III.
DISCUSSION
a.
Bad Faith Insurance Claims Under Arizona Law
Arizona recognizes the tort of insurance bad faith. See
Deese v. State Farm Mut. Auto. Ins. Co., 838 P.2d 1265,
1267 (Ariz. 1992). An insurance contract imposes an implied
legal duty on the insurance company to “act in good
faith in dealing with its insured on a claim.”
Noble v. Nat'l Am. Life Ins. Co., 624 P.2d 866,
868 (Ariz. 1981). Bad faith “arises when the insurer
‘intentionally denies, fails to process or pay a claim
without a reasonable basis.'” Zilisch v. State
Farm Mut. Auto. Ins. Co., 995 P.2d 276, 279 (Ariz. 2000)
(quoting Noble, 624 P.2d at 868). To establish bad
faith, “a plaintiff must show the absence of a
reasonable basis for denying benefits of the policy and the
defendant's knowledge or reckless disregard of the lack
of a reasonable basis for denying the claim.”
Deese, 838 P.2d at 1267-68 (quoting Noble,
624 P.2d at 868); see also Echanove v. Allstate Ins.
Co., 752 F.Supp.2d 1105, 1110 (D. Ariz. 2010)
(“[I]f an insurer's conduct is reasonable or fairly
debatable, there is no liability for bad faith”). Bad
faith thus has two elements: (1) that the insurer acted
unreasonably toward the insured; and (2) that the insurer
acted knowingly or with reckless disregard of the
unreasonableness of its actions. See Zilisch, 995
P.2d at 238. The first inquiry is an objective ...