Opinion
No. C99-91 MJM.
April 23, 2001
OPINION and ORDER
Plaintiff Russell Janssen alleges the above captioned Defendants were parties to a conspiracy to defraud him into settling his worker's compensation claim. (Doc. no. 1) Presently before this Court are the Defendants' motions for summary judgment. (Doc. nos. 25, 28, 45 49). For the reasons stated below the Defendants' motions are granted.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate if there are no disputed issues of material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). A court considering a motion for summary judgment must view all evidence in the light most favorable to the non-moving party, and draw all reasonable inferences from those facts in the non-moving party's favor. See Anderson v. Liberty Lobby, Inc., 477, U.S. 242, 250 (1986). The non-moving party, however, may not rest upon mere denials or allegations in the pleadings, but must set forth specific facts sufficient to raise a genuine issue for trial. Celotex Corp v. Catrett, 477 U.S. 317, 324 (1986).
FACTS
The facts of the present dispute have gone largely undisputed. Defendant United Suppliers Inc. ("United Suppliers") is an agricultural company whose controller and secretary is and was at all material times, Defendant Roger Krull ("Krull"). United Suppliers purchased insurance from Defendant LaMair-Mullock-Condon Co. ("LaMair"), of which Defendant Fortis Benefits Insurance Company ("Fortis") was the underwriter for the long-term disability coverage.
Plaintiff Russell Janssen ("Janssen") was an at-will employee of Greenbelt Elevator Company, a wholly-owned subsidiary of United Suppliers, on December 12, 1995 when he suffered a severe work-related injury. Janssen was entitled to worker's compensation due to his injury and accordingly his claim was referred to United Suppliers worker's compensation carrier, Defendant Tri-State Insurance Company ("Tri-State") on December 13, 1995. Beginning on December 13, 1995, Jan Brandenburg ("Brandenburg") of Tri-State began a claim activity log, a log to chart medical payments, and established internal loss memoranda in which reserves were set up to pay the medical and compensation claims for Janssen.
Tri-State paid all of the medical benefits related to Janssen's injury and it paid temporary total disability benefits from the date of the accident through May 14, 1996. In June of 1996, Janssen's treating physician, Dr. Roswell Johnston, concluded that Janssen had suffered a 70% impairment to the lower left extremity and a 12% impairment to the lower right extremity. Based upon Dr. Johnston's disability rating, Brandenburg calculated that Janssen's benefits pursuant to Iowa Workers Compensation law entitled him to 180.4 weeks of permanency benefits, or $51,598.000 when converted to a lump sum. In a letter dated July 16, 1996, Brandenburg communicated this information to Janssen and directed Janssen to decide whether he wanted a lump sum commutation which would close his file, or whether he wanted to be paid weekly benefits over the period of 180.4 weeks. Brandenburg also informed him that he was entitled to one final prosthesis. Brandenburg closed the letter by inviting Janssen to contact her at Tri-State with any questions about his claim. Just prior to sending Janssen this letter, Stephanie Brace of Fortis contacted Brandenburg requesting information on the types of worker's compensation benefits received by Janssen from Tri-State.
On July 29, 1996, Brandenburg again contacted Dr. Johnston, this time in regards to Janssen's continuing work restrictions. In a letter dated August 6, 1996, Dr. Johnston explained that:
Mr. Janssen is anticipated to be unlimited in terms of an eight-hour workday with regard to the number of hours of sitting or driving for a regular workday of eight hours. This may have to be modified depending on the degree of swelling or discomfort that may occur in his stump after prolonged sitting.
His ability to stand or walk is limited to brief periods of time. He is unable to bend, stoop, climb, kneel, balance, squat, crawl, or crouch. I would see no reason to limit him with reaching or pushing or pulling. He can lift up to 20 pounds on a regular basis but only occasionally lift upwards of 50 pounds and no lifting greater than 50 pounds. He can carry up to 10 pounds on a regular basis but it is not anticipated that he will be carrying any heavier weights than this.
He, of course, is unable to use his left foot for any repetitive movements such as operating foot controls though he can use the right foot. His grasping with regards to his hands has not been affected. He is unable to work at heights or to operate heavy machinery.
On September 11, 1996, a meeting was held at Cleves State Bank, attended by Janssen and his wife Eileen, Roger Krull and Pat McLauflin ("McLauflin") of United Suppliers, Defendant Ray Main ("Main") of LaMair, and Pat McDuff ("McDuff") also of LaMair. The events of this meeting are somewhat in dispute. The Defendants maintain that the purpose of this meeting was two-fold. First, to inform Janssen that United Suppliers currently did not have a position available for him which met his work restrictions. Second, to explain to Janssen his COBRA and health insurance options, and answer any questions he had regarding worker's compensation or long-term disability coverage.
Again, Fortis is the underwriter for long-term disability coverage for LaMair.
Specifically, the Defendants maintain that Main discussed with Janssen the long-term disability coverage provided by Fortis. Main contends he explained that Fortis would pay Janssen long-term benefits of $754.00 per month until age 66, as long as he met the definition of disability under Fortis' policy.
Likewise, Krull maintains that he explained the COBRA election information to Janssen. According to the Defendants, neither Krull nor any other United Supplier employee represented to Janssen that he was entitled to lifetime long-term disability benefits and lifetime employment. Janssen was not represented by an attorney at the time.
Janssen's recollection of this meeting is different. In his complaint and statement of disputed facts he alleges that he was told he would receive disability benefits until he was 66 years old, without regard to his ability to meet the definition of disability. He also alleges he was told that he would be given a life-long position with United Suppliers. However, Janssen concedes in his deposition that when he filed his claim for disability benefits with Fortis, he understood he was entitled to benefits so long as he met the definition of disabled in the policy. With regards to his claim to lifetime employment, he also concedes in his deposition that this promise was not made during the September 11th meeting but sometime later in a conversation with Pat McLaughlin. He cannot remember precisely what was said or when the conversation took place. He just remembers that after the conversation was over, he thought he understood he had a job for life.
Krull drafted a memorandum summarizing the substance of the September 11th meeting. In pertinent part Krull wrote:
Ray Main explained how the long term disability would work. By paying a minimum of $100 per month benefit until the scheduled weeks would run out on work comp benefits which is approx 180 weeks or 145 weeks. After that time the monthly LTD benefit would be $754 per week until age 66. Russell could be retrained and paid by the carrier. He could work part time and half the benefit be offset by one half of his earnings.
Pat Duff talked about the work comp benefit. The computations Jan made in the July 16 letter of 180 weeks could have been in error. Pat Duff said it maybe should be 130 weeks or Jan recalculated and came up with 145 weeks settlement at $286.02 per week. Pat was going to talk to Jan and find out what the number of weeks would be and notify Russell.
Roger Krull reviewed the health insurance and cobra election form information. Russ would stated [sic] he only wanted cobra for him self [sic]. The cobra would start on October 1, 1996.
We reviewed that with the doctor restrictions, we could not find a job that was available that would meet the restrictions.
In a letter dated September 19, 1996, Eileen Janssen requested that Tri-State send information about the precise settlement offer for Janssen's worker's compensation claim and whether or not lifetime medical benefits would be available for these injuries. Eileen Janssen explained she was requesting this information in writing at the behest of her attorney. Attorney John Walker ("Walker") then wrote Brandenburg explaining he had been retained to represent Janssen on his worker's compensation claim. In his letter Walker requested information about the incident for a potential third party law suit.
On October 1, 1996, Janssen indicated to Brandenburg that he would like four weekly checks of $286.02 and then he wanted the balance of his worker's compensation claim paid in a lump sum. Based upon this communication, Brandenburg contacted attorney Joseph Barron ("Barron") of the law firm of Peddicord, Wharton, Thune and Spencer to prepare settlement documents showing a commutation for approval by the Iowa Industrial Commissioner.
Also on October 1, 1996 Janssen returned to work at Greenbelt Elevator as a swine technician.
In a letter dated October 8, 1996, Brandenburg wrote to Barron indicating Tri-State had agreed to pay four weeks permanent partial disability to Janssen while awaiting approval of the commutation by the Iowa Industrial Commissioner. The letter explained Tri-State's intention to pay the full amount of permanent partial disability with a credit of 20 weeks for previous partial permanent disability payments. Brandenburg requested that Barron expedite the matter for Janssen.
On October 16, 1996, Barron prepared an original notice, petition and order for commutation of all remaining benefits for his worker's compensation claim. He sent these documents along with a statement of need to Janssen. In this letter Barron stated as follows:
I am required to provide you with certain disclosures relative to this settlement. First, you have the right to retain an attorney at your own expense to advise you with regard to your entitlement to workers' compensation benefits. Second, you have the right to call the Industrial Commissioner's office regarding your right to compensation benefits or this settlement. The number for the Iowa Industrial Commissioner's Office is 515-281-5934. Third, upon approval of the commutation settlement, you will be entitled to no further benefits under the Iowa Worker's Compensation Act relative to this injury.
On November 11, 1996, the worker's compensation settlement papers were filed with the Industrial Commission and on November 14, 1996, Janssen signed the workers' compensation documents and returned the same to Barron. Barron did not have any contact with Janssen in person but did speak with him over the telephone. Further, Barron did not have any contact with any individuals at United Suppliers, LaMair or Fortis during the time he prepared the settlement documents.
At no time while Barron was preparing the settlement documents for Janssen's review and signature, and for presentation to the Worker's Compensation Commissioner was he informed by Brandenburg or by any other person that there was any condition or contingency that Janssen was to be awarded or receive long-term disability benefits as part of the settlement of his worker's compensation claim.
Janssen returned the signed settlement forms to Barron as prepared, with no comments or alterations. The signed forms were submitted to and approved by the Industrial Commissioner's office. On or about November 25, 1996, Barron sent the approved settlement documents to Janssen. On that same date, Barron sent a letter to Brandenburg enclosing the file-stamped documents of the settlement approved by the Iowa Industrial Commissioner. Barron instructed Brandenburg to forward the settlement check directly to the claimant.
Janssen's employment with Greenbelt Elevator continued until March 1998 at which time he was terminated due to the economics of the hog market.
Janssen's disability benefits under the Fortis policy were terminated effective December 12, 1998 because Janssen no longer met the definition of disability under their policy. Specifically the letter stated:
According to our policy, we consider a Person Insured as Totally Disabled if:
after the first 36 months of a period of total disability, he or she is unable to perform the material duties of any and every gainful occupation or employment for which he or she is or becomes reasonably fitted by education, training and experience.
You first became disabled on 12/12/95 and must meet the above definition of disability as of 12/12/98 for Long Term Disability benefits to continue. We consider gainful wages the equivalent of your Schedule Amount, $754 per month.
According to your physician, you are capable of working full-time in jobs with little standing or walking. You are restricted from bending, stooping, climbing, kneeling, squatting, crawling or crouching. Gainful is less than minimum wage and we believe you are capable of working an entry-level job such as a telemarketer or customer service representative.
According to the results of our review, as of 12/12/98 you will not satisfy the above definition of disability and no further benefits will be available under the policy.
Janssen did not exercise his right to appeal the termination of his disability benefits under ERISA. He makes no claim that his benefits were wrongfully terminated under Fortis' policy.
DISCUSSION
While Janssen's complaint specifies only one Count, the allegations supporting that single count appear to posit two separate claims: (1) conspiracy to commit fraud and (2) fraudulent misrepresentation. Accordingly, the Court will address each in turn.
Conspiracy
Iowa law recognizes civil liability for conspiracy to commit a wrongful act. See Basic Chems., Inc. v. Benson, 251 N.W.2d 220, 232-33 (Iowa 1977). However, the Iowa Supreme Court has made clear "that `[c]ivil conspiracy is not in itself actionable; rather it is the acts causing injury undertaken in furtherance of the conspiracy which give rise to the action.'" Robert's River Rides, Inc. v. Steamboat Dev. Corp., 520 N.W.2d 294, 302 (Iowa 1994) ( quoting Basic Chems., 251 N.W.2d at 233). The Iowa Supreme Court defines civil conspiracy as "a combination of two or more persons through concerted action to accomplish an unlawful end, or to accomplish a lawful end by unlawful means." Countryman v. Mt. Pleasant Bank Trust Co., 357 N.W.2d 599, 602 (Iowa 1984). "The principal element of conspiracy is an agreement or understanding between two or more persons to effect a wrong against or injury upon another. It involves some mutual mental action coupled with an intent to commit the act which results in injury." Basic Chemicals, 251 N.W.2d at 223; accord Locksley v. Anesthesiologists of Cedar Rapids, P.C., 333 N.W.2d 451, 456 (Iowa 1983).
In the present action Janssen contends that the Defendants unlawfully conspired to cajole him into settling his worker's compensation claim. Janssen points to the September 11th meeting at Cleves Bank as evidence of his conspiracy claim.
The mere fact some of the Defendants convened does not, in and of itself, establish the existence of an agreement or conspiracy. See, e.g., Locksley, 333 N.W.2d at 456. In Locksley a group of anesthesiologists signed letters stating they would not provide the plaintiff with anesthesia services. See id. The Locksley court found the anesthesiologists concerted effort to craft this letter did not, in and of itself, give rise to a claim of conspiracy where there was no independent evidence that the anesthesiologist intended to injure the plaintiff, but instead proclaimed their concern was simply for the safety of the patient. See id.
The facts of the present case are significantly weaker than those presented to the court in Locksley. Here there is no evidence that the parties made a concerted effort to do anything apart from attend a meeting on September 11, 1996. No agreement was reached at this meeting and Janssen offers no evidence that the parties to the meeting expressed some common goal to injure Janssen. As in Locksley, the Defendants in the present case contend the meeting was simply an informational one to express to Janssen his economic options after his injury with respect to COBRA and health insurance, disability benefits and his worker's compensation claim. Janssen's contentions that the parties conspired to convince him to settle his worker's compensation claim are simply that, mere contentions, which are unsupported by the record evidence and insufficient to be put before a jury. See Celotex, 477 U.S. at 324 (finding non-moving party may not rest upon mere denials or allegations in the pleadings to stave off summary judgment); see also Herring v. Canada Life Ins. Co., 207 F.3d 1026, 1029 (8th Cir. 2000) (stating nonmoving party must do more than create "some metaphysical doubt as to the material facts").
Having thoroughly reviewed the record and the parties' briefs, the Court finds Janssen has simply failed to generate an issue of triable fact which would support a finding that the any of the Defendants formed an agreement of any kind, let alone one to accomplish an unlawful end, or to accomplish a lawful end by unlawful means. Accordingly, the Court grants summary judgment as to all the Defendants on Janssen's claim of conspiracy.
Fraudulent Misrepresentation.
Janssen also contends that the Defendants fraudulently misrepresented that he was entitled to long-term disability benefits until he was 66 years old and that he was guaranteed lifetime employment. To establish a claim of fraudulent misrepresentation, a plaintiff must prove: (1) defendant made a representation to the plaintiff; (2) the representation was false; (3) the representation was material; (4) the defendant knew the representation was false; (5) the defendant intended to deceive the plaintiff; (6) the plaintiff acted in reliance on the truth of the representation and was justified in relying on the representation; (7) the representation was a proximate cause of plaintiff's damages; and (8) the amount of damages. See Gibson v. ITT Hartford, 621 N.W.2d 388, 400 (Iowa 2001). "[E]ach of the seven elements must be established by a preponderance of clear, satisfactory, and convincing evidence." Magnusson Agency v. Public Entity Nationals Co. Midwest, 560 N.W.2d 20, 28 (Iowa 1997) ( citing McGough v. Gabus, 526 N.W.2d 328, 331 (Iowa 1995)).
Again, the first alleged misrepresentation is that Janssen was told he was entitled to long-term disability benefits until he was 66 years old without regard to whether he met the definition of disability under Fortis' policy. The whole of Janssen's evidence supporting this claim appears to be the memorandum created by Krull after the September 11th meeting. Presumably Janssen is relying on the portion of the memorandum which states that he was told his "LTD benefit would be $754 per week until age 66." As an initial matter, the accuracy of this statement is suspect given it clearly misstates the $754.00 payment would be paid weekly rather monthly. That said, were the Court to look at the Krull memorandum in isolation, it could arguably generate a question of fact as to whether Janssen was told his benefits would continue until he was 66. However, when examining the record as a whole the evidence simply could not support such a finding.
Janssen admits that he does not have an independent recollection of the events of the September 11th meeting other than what is set forth in the Krull memorandum. Krull and Main on the other hand, do recall the discussions in that meeting and have both testified that they explained to Janssen he was entitled to disability benefits provided he met the definition of the disability under the Fortis policy. Indeed Janssen testified that at the time he filed a claim for disability benefits he understood that he needed to meet the definition of disability in order to continue to receive benefits. The Court notes moreover, that it is unclear what incentive, financial or otherwise, Fortis might have in Janssen settling his worker's compensation claim to engage in fraudulent misrepresentation about his continued receipt of disability benefits. Janssen's failure to point to any independent evidence to support his contention he was promised lifelong disability benefits without regard to his meeting the definition of disability is fatal to this claim. See, cf, Morton v. Underwriters Adjusting, Co., 501 N.W.2d 72, 73-74 (Iowa App. 1993) (finding even assuming the adjuster should have explained more fully the difference between industrial disability and scheduled injury, plaintiff failed to prove by the preponderance of clear and convincing evidence that Defendant intended to deceive plaintiffs).
There is no evidence in the record to support the proposition that Main, an agent of LaMair which is underwritten by Fortis, had the authority to alter the terms of Fortis' benefits policy.
The Court notes that Janssen makes no claim that he is in fact entitled to long term disability benefits under Fortis' policy, nor did he appeal Fortis' termination of those benefits.
In regards to the second alleged misrepresentation — the promise of lifetime employment — Janssen points to a conversation between himself and Pat McLaughlin. However, Janssen's recollection of this conversation is hazy at best. Janssen cannot recall just when the conversation took place but believes that it was sometime after the September 11th meeting. He also cannot recall what words McLaughlin used, only that he "assumed [he] was offered a job for life" from the tenor of the conversation.
Even assuming such vague allegations were sufficient to generate a triable question fact, Janssen was an at-will employee and therefore "was subject to discharge at any time, for any reason, or for no reason at all." French v. Foods, Inc., 495 N.W.2d 768, 769 (Iowa 1993) ( citing Fogel v. Trustees of Iowa College, 446 N.W.2d 451, 455 (Iowa 1989); and Wolfe v. Graether, 389 N.W.2d 643, 652 (Iowa 1986)). "This is the general rule, firmly ingrained in Iowa law." French, 495 N.W.2d at 769. Janssen's argument that McLaughlin's assurances somehow modified that doctrine and created an employment contract are unfounded in law and fact. See French, 495 N.W.2d at 760 (stating "[t]here are two recognized exceptions to this general rule: (1) when the discharge is in clear violation of a "well-recognized and defined public policy of the State, and (2) when a contract created by an employer's handbook or policy manual guarantees an employee that discharge will occur only for cause or under certain conditions." (internal citations omitted)).
Accordingly, this Court finds Janssen's allegations of fraudulent misrepresentation are unsupported by the record and insufficient to generate a triable issue of fact for a jury. For this reason, the Defendants' motions for summary judgment on the claim of fraudulent misrepresentation is granted.
In coming to this conclusion the Court notes that Janssen was advised he was entitled to an attorney to represent him in his worker's compensation claim in order to fully understand his economic options in the face of his severe injury. Indeed, it appears at some juncture the Janssens did discuss his worker's compensation claim with an attorney and chose not to continue to seek his advice.
The Defendants have raised other arguments in support of their motions for summary judgment, such as Janssen's damages are preempted by Iowa Code § 85.20 and Janssen is barred from alleging fraud because he has not properly exhausted his administrative remedies as required by ERISA. The Court need not address these arguments given Janssen's claims fail on the merits.