177 So. 3d 1156
Miss. Ct. App.2015Background
- Cindy Walls was injured at work in 1984; an administrative judge (AJ) ordered Wausau to pay medical treatment in 1992, and Wausau paid most claims but disputed costs for prescribed Nike Air shoes and a whirlpool bath.
- Walls sued Franklin and Wausau for bad faith in 1997; the trial court dismissed for failure to exhaust administrative remedies and the Mississippi Supreme Court (Walls I) affirmed, holding a final Commission determination that services were reasonable and necessary was required before filing a bad-faith suit.
- After the AJ (in April 2002) later ruled the shoes and whirlpool were reasonable and necessary, Walls refiled in July 2002; Wausau reimbursed her in February 2003 but Walls later amended (2008) to allege broader, decades-long bad-faith conduct and sought large damages.
- The trial court granted partial summary judgment dismissing all claims except those related to the shoes and whirlpool (AJ’s 2002 order), and granted a motion in limine excluding evidence of pre-April 2002 conduct, later clarifying that no pre-2002 acts could be treated as part of the tort.
- Trial focused solely on Wausau’s ten-month delay after the April 2002 AJ order; jury found for Wausau and the court directed a verdict for Franklin. Walls appealed the evidentiary exclusion of pre-2002 conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Walls I barred introduction of pre-exhaustion conduct as evidence of bad faith | Walls: Walls I only barred filing a bad-faith suit before exhaustion; pre-2002 conduct remains admissible to show carrier’s bad faith | Franklin/Wausau: Walls I meant no bad-faith could exist before the AJ’s April 2002 order, so pre-2002 conduct is irrelevant to the tort | Court: Reversed trial court — Walls I bars filing before exhaustion but does not preclude a carrier from acting in bad faith pre-exhaustion; pre-2002 conduct may be admissible |
| Whether the AJ’s order created versus merely confirmed carrier’s duty to pay | Walls: AJ’s order confirmed compensability but duty existed under contract/statute; carrier could act in bad faith before AJ order | Wausau: Duty to reimburse arose only after the AJ’s April 2002 order, so no pre-2002 bad-faith claim | Court: Duty arose under contract/statute and AJ’s order confirmed it; carrier could have acted in bad faith prior to April 2002 |
| Admissibility of time-barred or unexhausted claims as habit/evidence | Walls: Prior conduct shows routine practice/habit under Rule 406 and is probative of bad-faith pattern | Defendants: Allowing such evidence would backdoor procedurally barred claims and unfairly prejudice defendants | Court: Trial court abused discretion by excluding all pre-2002 evidence as tort elements; exclusion was prejudicial as to Wausau and reversal/remand required (but not as to Franklin, where plaintiff had no evidence) |
| Effect of statute-of-limitations/partial summary judgment ruling | Walls: Sought to pursue broader long-run claims | Defendants: Many claims were time-barred or unexhausted; only shoes/tub survive | Court: Affirmed partial summary judgment limiting claims to shoes/tub (not appealed); evidentiary exclusion, however, was too broad |
Key Cases Cited
- Walls v. Franklin Corp., 797 So. 2d 973 (Miss. 2001) (held plaintiff must exhaust Commission remedies before filing bad-faith suit over disputed medical benefits)
- McCain v. Nw. Nat'l Ins., 484 So. 2d 1001 (Miss. 1986) (adopted independent tort of bad-faith denial of insurance benefits and related punitive damages principles)
- Patrick v. Wal-Mart, Inc., 681 F.3d 614 (5th Cir. 2012) (interpreted Walls I as treating exhaustion as the last prerequisite before a bad-faith suit may be filed)
- Bullock v. AIU Ins., 995 So. 2d 717 (Miss. 2008) (applied Walls I to view exhaustion as the culmination point for actionable bad-faith claims)