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Centeno v. American Liberty Insurance Co.

United States District Court, D. Arizona

October 1, 2019

Jeanette Centeno, Plaintiff,
American Liberty Insurance Company, Defendant.


          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]


         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).


         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 ...

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