The South Dakota Supreme Court in Mordhorst v. Dakota Truck Underwriters and Risk Administrative Services 886 N.W.2d 322 (S.D 2016) recently found that a rule 12-B6 motion to dismiss was not appropriate in a worker’s compensation bad faith case notwithstanding the insurer’s reliance upon an IME report finding that the injured employee was not injured.
In Mordhorst there was significant medical evidence that the insured worker had been injured in the course and scope of employment. When a sofa fell off the back of a delivery truck and struck the employee. The employee sought medical treatment the following day. Two physicians and multiple physical therapies documented the injury. An MRI revealed a herniated disk. In the worker’s compensation proceedings, the insurer had the employee see and IME doctor who conclude that the only injury the employee sustained was a “strain” which resolved shortly after the accident. The IME doctor found that the employee’s subjective complaints were not supported by objective findings. On the basis of the IME report the insurer terminated all worker’s compensation benefits. The employee challenged the insurers decisions and the South Dakota Department of Labor reinstated the medical benefits. The insurer did not appeal from the Departments decision.
In the ensuing bad faith action, the trial court dismissed the bad faith claim because the insurer had relied upon the IME, to support its denial. The trial court found that insurance companies were not required to second guess doctors who were qualified to offer their medical opinions.
According to the South Dakota Supreme Court, the trial court’s ruling represented a per se rule of reasonableness whenever an insurer relied on an IME report to deny workers compensation benefits. Noting that South Dakota juries routinely were called upon to evaluate the opinions of medial practitioners and to weigh those opinions against countervailing evidence, the court found that a per se rule of reasonableness regarding the reliance on IME’s should be rejected The High Court saw no reason to conclude that a worker’s compensation insurer, whose chosen business dealt with matters of injury and medical causation was incapable of evaluating the opinions of a medical doctor. Because the case was before the court on a motion to dismiss where in the Court was required to assume the allocating were true, and because the complaint alleged that the report of the IME doctor was biased, there was sufficient evidence to support the case going forward on the bad faith claim.