Cornelison v. TIG Insurance
376 P.3d 1255
| Alaska | 2016Background
- Floyd Cornelison was found permanently and totally disabled (PTD) by the Alaska Workers' Compensation Board; TIG Insurance (insurer) later investigated and commissioned covert surveillance by Northern Investigative Associates (Dennis Johnson), which produced edited videos and reports.
- TIG provided the edited videos to Dr. Joel Seres, who performed employer medical evaluations (EMEs) in 2008–2009 and issued reports concluding Cornelison exaggerated his limitations and suggesting possible Social Security fraud and drug diversion.
- TIG filed a petition to terminate benefits relying on the surveillance and Dr. Seres’s reports; the Board later denied termination, found the edited videos flawed, discounted Dr. Seres’s opinions, and awarded fees to the Cornelisons.
- Floyd and Judy Cornelison sued TIG, the investigator (Johnson/Northern/Denara), Griffin & Smith (insurer’s counsel), and Dr. Seres for claims including abuse of process, fraud (common law and statutory under AS 23.30.250(a)), defamation, IIED, NIED, professional negligence, UTPA violations, and tortious interference.
- The superior court dismissed or granted summary judgment on all claims; the Alaska Supreme Court affirmed in part, reversed in part, and remanded for further proceedings on several claims (IIED, certain NIED claims, statutory fraud claim, and defamation/NIED claims against some defendants).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Abuse of process | Defendants used Board process to wrongfully pressure termination via false/edited evidence | Actions were proper use of Board process; no separate ulterior purpose alleged | Dismissed — no independent ulterior purpose pleaded |
| UTPA applicability | Defendants’ conduct was unfair/deceptive trade practice | Insurer activity falls under insurance-exemption to UTPA | Dismissed — UTPA exemption applies |
| Tortious interference with contract | PTD benefits are plaintiffs’ economic right; defendants interfered by prosecuting termination | No breach occurred; benefits continued, so no interference | Dismissed — no prima facie interference (no breach) |
| Common-law fraud | Defendants knowingly made false representations to induce reliance | Plaintiffs knew representations were false and thus could not justifiably rely | Dismissed — lack of justifiable reliance; no pleaded loss from reliance |
| Professional negligence | Investigators, physician, and counsel failed to meet professional standards toward Cornelisons | No doctor‑patient or attorney‑client relationship; no duty to Cornelisons; statutory bars | Dismissed — no cognizable duty or statutory bar applies to some defendants; dismissal affirmed for most professional claims |
| Negligent infliction of emotional distress (NIED) | Plaintiffs allege severe physical and emotional harm from defendants’ conduct (including physical symptoms) | AWCA exclusive remedy bars claims against employer/insurer; others argue no physical injury alleged | Reversed in part — NIED claims against Johnson and Griffin & Smith survive pleadings; NIED vs TIG remains barred by AWCA |
| Intentional infliction of emotional distress (IIED) | Edited surveillance and false reports caused severe emotional distress; conduct was outrageous | Defendants acted within rights to investigate and litigate; not outrageous | Reversed — IIED claims against all defendants require factfinder review; summary judgment improper |
| Statutory fraud (AS 23.30.250(a)) | Defendants knowingly made false/misleading submissions related to benefits; civil remedy authorized | Defendants argue statute applies only to employee fraud or issue was not raised below | Remanded — superior court did not address this statute; claim survives for further proceedings |
| Defamation (privilege & statute of limitations) | Statements in Dr. Seres’s reports (fraud/drug diversion) were defamatory and caused harm | Defendants claim absolute litigation privilege and (for Dr. Seres) statute of limitations and IME immunity | Waived as to some defendants on appeal; defamation vs Dr. Seres reversed and remanded for factual accrual determination; absolute privilege not dispositive on statutory-fraud overlap |
Key Cases Cited
- Meek v. Unocal Corp., 914 P.2d 1276 (Alaska 1996) (discussing odd‑lot doctrine and PTD standard)
- Prentzel v. State, Dep't of Pub. Safety, 53 P.3d 587 (Alaska 2002) (elements of abuse of process)
- Chizmar v. Mackie, 896 P.2d 196 (Alaska 1995) (IIED threshold and outrageous conduct analysis)
- Hancock v. Northcutt, 808 P.2d 251 (Alaska 1991) (physical‑injury requirement for negligent infliction of emotional distress)
- Industrial Power & Lighting Corp. v. Western Modular Corp., 623 P.2d 291 (Alaska 1981) (litigation privilege in defamation context)