Kirk White v. State Fund
371 Mont. 1
Mont.2013Background
- Kirk White, injured at work, received temporary total disability (TTD) benefits from Montana State Fund (State Fund) while undergoing shoulder surgeries and bi-weekly payments.
- State Fund received anonymous tips that White was building/selling furniture; it engaged private investigators who posed as a buyer and purchased a cedar chest from White.
- State Fund referred the matter to Montana DOJ/Division of Criminal Investigation; agents executed a search warrant and seized receipts showing multiple transactions while White received TTD benefits.
- Criminal charges for theft were filed; White was acquitted by a jury. State Fund had terminated his benefits and later settled the workers’ compensation claim for a lump sum.
- White sued State Fund under eight Insurance Code provisions and common-law claims (bad faith, malicious prosecution, negligent and intentional infliction of emotional distress); district court dismissed Insurance Code counts and granted summary judgment for State Fund on remaining common-law claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Montana Insurance Code (§33-18-201) | White: legislative history shows Legislature did not intend to exempt State Fund from Title 33; State Fund still owed standards in §33-18-201 | State Fund: Title 33 explicitly excludes State Fund and workers’ compensation programs (§33-1-102(5)) | Court: Affirmed dismissal — statutory text and Heisler bar applying Title 33 to State Fund; no facts could state a claim under §33-18-201 |
| Common-law bad faith (termination and investigative conduct) | White: State Fund’s surveillance, deception, and entrapment constitute tortious bad faith separate from termination; reasonableness is for a jury | State Fund: Termination was based on statutory law (receipt of wages while on TTD) and undisputed evidence of remuneration, giving a reasonable basis to deny/terminate benefits | Court: Affirmed summary judgment — as a matter of law State Fund had a reasonable basis to terminate benefits; undisputed facts fatal to bad faith claim |
| Malicious prosecution (referral and prosecution) | White: State Fund instigated prosecution by building the case and using investigators to bait him | State Fund: Acted pursuant to statutory duty to detect/refer suspected fraud; providing information is not instigating prosecution | Court: Affirmed summary judgment — DOJ independently pursued charges; State Fund’s referral was statutory and supported by probable cause |
| Emotional distress (independent and parasitic) | White: Suffered severe distress from being prosecuted and humiliated; also seeks parasitic distress from torts | State Fund: No evidence of severe emotional distress to support standalone claims | Court: Affirmed summary judgment on standalone distress claims (Sacco severe/serious standard); parasitic distress tied to underlying torts would be for jury only (Concurrence) |
Key Cases Cited
- Heisler v. Hines Motor Co., 282 Mont. 270, 937 P.2d 45 (1997) (Title 33 does not apply to State Fund workers’ compensation coverage)
- Birkenbuel v. Mont. St. Compen. Ins. Fund, 212 Mont. 139, 687 P.2d 700 (1984) (State Fund can be subject to common-law bad faith for tortious conduct during claim processing)
- Palmer by Diacon v. Farmers Ins. Exch., 261 Mont. 91, 861 P.2d 895 (1993) (insurer not liable for bad faith if it had a reasonable basis to contest a claim)
- Sacco v. High Country Indep. Press, 271 Mont. 209, 896 P.2d 411 (1995) (standard for independent negligent/intentional infliction of emotional distress requires serious/severe distress)
- Dean v. Austin Mut. Ins. Co., 263 Mont. 386, 869 P.2d 256 (1994) (reasonableness typically a fact question for jury, but may be decided as law in some circumstances)