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Walls v. Franklin Corp.

Court of Appeals of Mississippi

May 5, 2015

CINDY WALLS APPELLANT
v.
FRANKLIN CORPORATION AND EMPLOYERS INSURANCE OF WAUSAU APPELLEES

DATE OF JUDGMENT: 01/24/2013.

CHICKASAW COUNTY CIRCUIT COURT ROY O. PARKER JR. TRIAL JUDGE: HON. ANDREW K. HOWORTH.

ATTORNEY FOR APPELLANT: ROY O. PARKER JR.

ATTORNEYS FOR APPELLEES: CLIFFORD KAVANAUGH BAILEY III RUSSELL LATINO III.

BEFORE LEE, C.J., BARNES AND MAXWELL, JJ.

MAXWELL, J.

¶1. In an earlier appeal, the Mississippi Supreme Court held that Cindy Walls "could not maintain a bad faith action for refusal to pay for disputed medical services and supplies absent the [Mississippi Workers' Compensation] Commission's prior determination that those services and supplies were reasonable and necessary."[1] The circuit judge interpreted this to mean Walls's second bad-faith lawsuit-filed after she obtained the required determination by the Commission-must be strictly limited to only those actions the employer and carrier took after Walls had exhausted her administrative remedies in April 2002. But our review of Walls I and later decisions applying it shows this view was too restrictive.

¶2. Walls I does not say an employer or carrier cannot act in bad faith before an employee exhausts her administrative remedies at the Commission. Rather, it says an employee cannot "maintain, " that is, cannot file "a bad faith action" prior to exhausting her administrative remedies.[2] So while a final Commission order is a requirement for an employee to file a bad-faith lawsuit, it is not a prerequisite for a carrier to act in bad faith. Therefore, it was error to exclude all evidence of the employer's and insurance carrier's actions before April 2002.

¶3. This error was harmless as far as the employer, Franklin Corporation, is concerned. Walls concedes she has absolutely no evidence her employer acted in bad faith, even before April 2002. But this error was reversible as to the insurance carrier, Employers Insurance of Wausau, since Walls's bad-faith claim centered on Wausau's alleged bad-faith conduct prior to April 2002.

¶4. We affirm the judgment dismissing the bad-faith claim against Franklin. But we must reverse the judgment dismissing the bad-faith claim against Wausau and remand this claim for a new trial.

Background Facts and Procedural History

I. First Lawsuit: Walls I

¶5. To understand this case, one must go back three decades to 1984. That is when Walls injured her back while working for Franklin. She filed a workers' compensation claim. And in 1992, the administrative judge (AJ) ordered Franklin's insurance carrier, Wausau, to pay for Walls's injury-related medical treatment. For several years, Wausau did pay her. Walls would submit her medical costs to Wausau, and Wausau would reimburse her.

¶6. But there were two particular expenses Wausau refused to reimburse-(1) the cost of Nike Air shoes she claims she was prescribed, and (2) the cost of a whirlpool bath. She had the bath installed in her home after her doctor prescribed that she take whirlpool baths several times a week. Because these expenses were not paid, in 1997, Walls sued Franklin and Wausau in the Chickasaw County Circuit Court for bad-faith refusal to pay medical benefits. Walls v. Franklin Corp. (Walls I), 797 So.2d 973, 975 (¶8) (Miss. 2001).

¶7. While that action was pending, Franklin and Wausau filed a motion with the Mississippi Workers' Compensation Commission. They asked the Commission to decide if the two medical expenses were reasonable and necessary. But the Commission opted to hold off answering until the circuit-court matter was resolved. Id.

¶8. The circuit court, however, eyeing the unresolved question in the Commission about whether the expenses were reasonable and necessary, dismissed Walls's bad-faith action for failure to first exhaust her administrative remedies. Id. at (¶9). And the Mississippi Supreme Court affirmed the dismissal.

¶9. In doing so, the high court noted Walls's particular bad-faith claim hinged on whether the shoes and whirlpool bath were "reasonable and necessary medical services and supplies, " which Franklin and Wausau were required to pay, not only under the AJ's 1992 order, but also by statute. Id. at 976 (¶17) (citing Miss. Code Ann. § 71-3-15 (Rev. 2000)). The supreme court looked to section 71-3-15 of the Workers' Compensation Law, which "requires that disputes over what is reasonable and necessary should be resolved through the Commission's procedures." Walls I, 797 So.2d at 976 (¶18). It also considered section 71-3-53, which "adds that the Commission has continuing jurisdiction to 'review a compensation case, issue a new compensation order which may terminate, continue, reinstate, increase, or decrease such compensation, or award compensation.'" Walls I, 797 So.2d at 976 (¶18) (quoting Miss. Code Ann. § 71-3-53 (Rev. 2000)). Based on these two statutes, as well as the court's precedent, the supreme court ...


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