pedersen v. ace american insurance co., et al complaint

8/3/2019 PEDERSEN v. ACE AMERICAN INSURANCE CO., et al Complaint

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Case 9:11 -cv-00139-DWM Document 1 Filed 10/17/11 Page 1 of 10

Sydney E. McK enna, [email protected] Starin, [email protected] MCKENNA & STARIN, PLLC815 E. Front Street, Suite 4AP.O. Box 7009Missoula, MT 59807-7009Tel. (406) 327-0800Fax (406) 327-8706Leslae Dalpiaz, [email protected] LESLAE J. E. DALPIAZ, PCP.O. Box 8291Missoula, MT 59807-8291Tel. (406)-549-9200Fax (406) 728-0790Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF M ONTANAMISSOULA DIVISIONELISA PEDERSEN

vs. Plaintiff,ACE AMERICAN INSURANCE CO., DBAACE USA, ACE COMMERCIAL RISKSERVICES, OR ESIS, INC.; SPECIALTYRISK SERV ICES, LLC; HILTONWORLDWIDE, INC., FKA HILTONHOTELS CORPORATION; AND JOHNDOES 1-5 Defendants.

Cause No.

COMPLAINT

PartiesTjl The Plaintiff Elisa Pedersen ("Elisa") submits this com plaint against ACE AmericanInsurance Co., dba ACE U SA, AC E Com mercial Risk Services, or ESIS, rNC. ("ACE");
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Specialty R isk Services, LLC ("SR S"); Hilton W orldwide, Inc., formerly known as Hilton HotelsCorporation ("Hilton"); and John Does 1-5.

JurisdictionTf2 Elisa is a citizen of Montana and at all times pertinent to this action resided in MissoulaCounty, Montana.P ACE is a corporation incorporated und er the laws of a state other than M ontana and hasits principal place of business in a state other than Montana.]}4 Defendant SRS is a corporation incorporated un der the laws of a state other than M ontana

and has its principal place of business in a state other than Montana.]}5 Defendant Hilton is a corporation incorporated un der the laws of a state other thanMontana and has its principal place of business in a state other than Montana.]}6 John Does 1-5 are persons or entities, identities presently unknown, who contributed to,caused, or participated in the acts and omissions complained of below and are believed to becitizens of a different state other than Montana.f7 Jurisdiction is founded on diversity of citizenship pursuan t to 28 U.S.C. 1332. Plaintiffand Defendants are citizens of different states. The amount in controversy for the Plaintiffsindividual claims exceeds $75,000, exclusive of costs, interest and attorneys' fees.

Allegation Common to All CountsTf8 Elisa is currently 32 years old, single, and the mother of two financially dependentchildren.Tf9 Elisa worked as a banquet hostess at the Hilton Hotel and Restaurant, which, at all timespertinent to this case, was doing business as the Doubletree Hotel located in Missoula.


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]}10 On November 27, 2009, while performing her duties for the Hilton, Elisa injured her leftshoulder dragging a garbage can from the dining room to the inside trash area.Ifl 1 ACE p rovided work ers' compensation insurance to the Hilton on the day of the accident,Nov ember 27 , 2009, under Plan II of the Montana W orkers' Comp ensation Act (the "Ac t").Tfl2 Elisa timely and properly reported her injury and filed a claim for benefits under the Act.Tfl3 The Act provides, without regard to fault, a wage supplement and medical benefits toworkers who suffer work related injury. It provides four distinct types of disability benefits.Three types are relevant to El isa 's claim: temporary total disability ("TTD"), temporary partial

disability ("TPD ") and perman ent partial disability ("PPD"). It provides med ical, hospital, andrelated services ("medical ben efits"). It also provides for an impairmen t award if there is apermanent ratable impairm ent. It also provides for rehabilitation serv ices and benefits.Tfl4 ACE accepted liability for Elisa's claim and directed SRS, a third party administrator andACE's agent, to adjust the claim.Ifl 5 The work related injury was temporarily disabling and Elisa was restricted from work byEric Ravitz, M D.Tfl6 Elisa was subsequently referred to Valerie Benzschawel, FNP, w ho assumed the role oftreating physician.Tfl7 Elisa's claim was handled by several different adjusters and at one point was transferred

to an out of state adjuster.Tfl8 The Hilton 's human resource director requested the name of Elisa 's treating physician sohe could contact Elisa 's physician regarding her return to work. The human resource directoralso directed Elisa to turn over her medical records to the Hilton.


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Tfl9 Defendant SRS failed to pay Elisa's TTD benefits that were initially owed for at leastthree weeks and then failed to pay them in a timely m anner throughout the course of the claim.1}20 Defendant SRS failed to authorize recommended treatment by the treating physician,including, but not limited to, physical therapy for up to four months, extending Elisa'sincapacity, and pain and suffering.]}21 Defendant SRS failed to authorize massage therapy recomm ended by the treatingphysician to assist Elisa in healing from her injury and managing her pain during her attempts toreturn to work.]}22 Defendant SRS failed to timely process prescriptions, which created numerousdifficulties for Elisa in obtaining prescription refills due to mismanagement of her claim.]}23 On March 32, 2010, Elisa was evaluated by John Schumpert, M D as part of the insu rer'smedical evaluation. Dr. Schum pert concurred with the treating phys ician 's diagnosis of leftshoulder trapezius muscle strain, noted Elisa was not yet at maximum medical improvement, andrecommended a gym m embership and pool therapy. Dr. Schumpert also indicated that Elisa wasunable to return to work.]}24 In early June 2010, Elisa was approved to return to modified duty work by her treatingphysician for a very limited num ber of hours per week. How ever, even this caused her increasedpain and a flare up of her shoulder condition. During this attempt to return to work, the Hiltonharassed Elisa, threatening to terminate her if she was even one minute late from the doctorordered five minute breaks.1}25 To alleviate the harassment, Elisa's counsel requested that the insurer assign a vocationalconsultant to her claim to assist Elisa in a safe return to work. The insurer denied the reque st.


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]}26 Elisa was in considerable pain during the attempt to return to work, and yet the gymmemb ership and pool therapy recomm ended by Dr. Schumpert, the insurer's doctor, and themassage therapy that was prescribed w ere also delayed, disregarded, or denied by A CE.1}27 Due to her increasing physical complaints and substantial emotional stress, Elisa wasrestricted from work by her treating physician on July 7, 2010.]}28 Elisa 's temporary total disability benefits were converted to wag e loss or temporarypartial disability benefits on May 22, 2010, the day she returned to part-time work at the Hilton.ACE did not pay her these benefits at that time.]}29 On July 7, 2010, Elisa's wage loss or temporary partial disability benefits should havebeen converted back to temporary total disability benefits, as she had been restricted from workby her physician. Howev er, ACE failed to do this.]}30 From M ay 22, 2010 to Augu st 9, 2010, a period of approximately 12 weeks, Elisa did notreceive any type of disability benefits from the insurer, despite being entitled to the same. Thisresulted in extreme financial and emotional stress.P 1 At one point in time, Elisa learned that the out-of-state adjuster assigned to supervise theclaim did not authorize the in-state adjuster to process Elisa's disability benefits and, because theout of state adjuster was on vacation, Elisa's benefits were not processed.]}32 By the end of the summ er in 2010 , Eli sa's cell phone had been cut off, she had receivedan eviction notice, and had other financial problem s due to her weak financial condition. Elisawas relying on her mother for diapers for her two-year-old child and food for herself and herchildren.]}33 Due to the erratic and delayed payments of disability benefits, Elisa and her family wereeventually forced to move and began look ing to public welfare for help. Elisa required a


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paym ent history from the insurer so she could apply for food stamps. The Montan a adjuster atthe time advised that he w as off the file and that Elisa would need to contact an out-of-stateadjuster, Lau rie Toper, from A urora, Illinois. Desp ite the urgency of the request, it took wellover a week to get this information.]}34 At the request of the insurer, Elisa participated in a second independent medicalexamination on August 17, 2010 with C atherine Capp s, MD and Robert Vincent, MD. Theexam iners diagnosed a labreal tear and bursitis. They suggested that she see a psychologistregarding her mental state, referred her to an orthopedic specialist for an injection, and indicated

that she was not at maximum medical imp rovement.]}35 The authorization for the recommended orthopedic evaluation took approximately threemonths and it took over 60 days for the psychological counseling to be approved.]}36 In December 2010, Elisa attempted a second part-time return to work. For reasons yetunknown , Elisa worked for six weeks without any wages from the Hilton. Despite incurringtravel and childcare expenses, Elisa was afraid that if she did not show up, despite not gettingpaid, she would be terminated.]}37 Elisa's return to work also resulted in a demeaning situation where she was required to sitin the corner in the lobby of the hotel and do absolutely nothing.]}38 The purpose of the Act is to provide injured workers with wage supplement and medicalbenefits without regard to fault.]}39 For over a period of 18 months and in complete disregard of the purpose of the Act, ACEchose not to provide Elisa with timely indemnity benefits, medical benefits, and vocationalrehabilitation benefits, although she was clearly eligible for them.


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1}40 On July 19, 2011 Elisa entered into a settlement agreement w ith ACE AmericanInsurance to settle her entitlement to indemnity and rehabilitation benefits related to her workers'compensation claim. Me dical benefits related to her claim remain open. The settlementagreement was approved by the Department of Labor with the State of Mo ntana on Au gust 3,2011.]}41 Pursuant to MC A 39-71-107(3)(b), an insurer shall pay settlements within 30 days ofthe date the Department issues an order approving the settlement.]}42 The settlement check was received on September 7, 2011, 37 days after the settlement

was approved by the Department of Labor. The last biweekly benefit that Elisa received was onAugust 1, 2011, meaning that once again she had gone over five weeks w ithout receiving anytype of work ers' com pensation benefits.

COUNT I - VIOLATION OF MON TANA'S UNFAIR TRADE PRACTICES ACT]}43 All of the foregoing allegations are incorporated by reference in this Count as thoughfully set forth herein.]}44 Montana's Unfair Trade Practices Act ("UTPA") prohibits an insurer from engaging intrade practices that are unfair or deceptive. An insurer must promptly and fairly inv estigate,evaluate, and settle insurance claims. Defendan ts violated the UTPA when they failed to fairlyand promptly handle Elisa's claim for workers' compensation benefits.

COUNT II - COMMON LAW BAD FAITH]}45 All of the foregoing allegations are incorporated by reference in this Count as thoughfully set forth herein.]}46 Mo ntana comm on law prohibits an insurer from engaging in bad faith when handlinginsurance claims. An insurer must promptly and fairly investigate, evaluate, and settle insurance


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claims. Defendan ts violated Monta na comm on law when they failed to fairly and promptlyhandle Elisa's claim for work ers' compensation benefits.]}47 Throughout the course of the handling, adjustment and supervision of this claim, theDefendants allowed Elisa 's employer to be involved in the handling and direction of E lisa'swork ers' compensation claim, in violation of 39-71-2203 , MC A and Hernandez v. NationalUnion Fire Ins. Co. of Pittsburgh, 2003 MTWCC 5.]}48 Defendants had an obligation and duty to exclude the employer from Elis a's wo rkers'compensation claim and their failure to do so on multiple occasions amounts to negligence per se

and violates Mon tana's U nfair T rade Practices Act and Mon tana's common law of good faithand fair dealing.]}49 Defendants failed to have a resident adjuster with full settlement authority in Montanaand allowed an out-of-state adjuster to handle, direct and adjust Elisa's workers' compensationclaim, in violation of ARM 24.29.804.]}50 Defendants' violation of ARM 24.29.804 is evidence of negligence and is a violation ofthe UTPA and Mon tana's common law of good faith and fair dealing.

COUNT III - EMO TIONAL DISTRESS\51 All of the foregoing allegations are incorporated by reference in this Count as thoughfully set forth herein.1}52 A party suffering harm as a result of the negligen t or intentional infliction of serious orsevere emotional distress by another party is entitled to recover damages from that party for suchharm. When the Defendants failed to fairly and promptly hand le El isa 's claim, it was reasonab lyforeseeable she wou ld suffer severe emotional distress. When Defendant Hilton invaded E lisa 'sprivacy by insisting on seeing private confidential medical information and when it harassed her


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in her attempts to return to work and delayed paying her wages, it was reasonably foreseeablethat she would suffer severe emotional distress.1}53 As a result of the Defendants' actions, Elisa suffered severe or serious emotional distress.

COUNT V - PUNITIVE DAMAGES]}54 All of the foregoing allegations are incorporated by reference in this Count as thoughfully set forth herein.]}55 Mo ntana law provides for punitive damages when the defendant has com mitted actualfraud and actual malice as defined in 27-1-221, MCA. Defendants committed actual fraud or

actual malice when they failed to fairly and promptly adjust Elisa's claim for worke rs'compensation benefits.]}56 Defendants engaged in actual malice. Defendants knew that their claims handlingpractices created a high probability of injury to Elisa. Defendan ts deliberately proce eded to actin conscious or intentional disregard of the high probab ility of injury to Elisa. Defendantsdeliberately proceeded to act with indifference to the high probability of injury to Elisa.Defendants intentionally disregarded the fact that their failure to pay Elisa's workers'compensation benefits created a high probability of injury to Elisa. Defendants deliberatelyproceeded to act in conscious or intentional disregard of the high probability of injury to Elisa.Defendants deliberately proceeded to act with indifference to the high probability of injury toElisa. Defendants disregarded medical information.]}57 Defendan ts engaged in actual fraud. Defendan ts concealed material facts regardingElisa's work ers' compensation benefits w ith the purpose of depriving Elisa of her workers'compensation benefits or otherwise causing her injury. Defendan ts delayed or denied payingowed TTD, TPD, medical benefits and rehabilitation benefits. Defendan ts repeatedly delayed


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Case9:11-cv-00139-DWM Document 1 Filed 10/17/11 Page10of10

and denied medical benefits to Elisa, despite knowing that such delay and denial wasexacerbating he r pain, delaying her recovery and her return to work. Defendan ts failed toprocess owed disability benefits, although they knew Elisa was impov erished. As a result, thereis a long history of Defendants proceeding with indifference to Elisa's serious problems andclaim.

PRAYER]}58 Elisa prays for Judgment against the Defendants as follows:

a. For an amount sufficient to com pensate her for special and general dam ages,

including emotional distress;b. For punitive damages; andc. For other and further relief as the Court shall deem just and proper.

Dated this 17th day of October 2011.

/s/ Sydney E. McKennaSydney E. McKenn a AttorneyAttorney for Plaintiff

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pedersen v. ace american insurance co., et al complaint

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