Injured worker framed for insurance fraud gets split ruling on appeal
Gloria Gonzalez
September 5, 2018
The Court of Appeals of North Carolina has ruled that an injured worker whose insurer knowingly provided false information to police to frame him for insurance fraud, resulting in his arrest, incarceration and indictment on felony charges, can pursue malicious prosecution, abuse of process and unfair and deceptive trade practices claims, but not bad faith and civil conspiracy claims.
In 2003, Mario Seguro-Suarez was working for Southern Fiber when he fell from a height of approximately 18 feet onto concrete, striking his head and suffering several broken bones and severe traumatic brain injury, according to court documents in Seguro-Suarez Ex Rel. Connette v. Key Risk Insurance Co. He was rendered comatose and underwent emergency neurosurgery to relieve pressure on his brain. He eventually emerged from his coma, but the brain injury changed his personality, requiring physical, speech and occupational therapy. He currently suffers from significant behavioral and memory deficits, and his injuries rendered him dependent on others for dressing, feeding and other self-care activities. Southern Fiber and Key Risk, as Southern Fiber’s insurance carrier, admitted that his injuries were compensable, according to the ruling.
An authorized treating physician performed multiple tests to discern the nature and extent of his condition, with each test showing symptoms consistent with traumatic brain injury and requested an occupational home therapy evaluation, according to court documents. Key Risk denied the request and refused to provide the evaluation as well as a subsequent request for an evaluation by a neurologist and additional treatment by the treating physician. A neuropsychologist treated Mr. Seguro-Suarez and initially believed he was legitimately suffering from the stated conditions until Key Risk showed the neuropsychologist video footage that convinced him otherwise. The video, cut from nine hours of surveillance footage taken by Key Risk over a six-month period and edited down to 45 minutes, led the neuropsychologist to opine that he was willfully exaggerating his symptoms and that he needed no further treatment.
In 2008, a deputy commissioner of the North Carolina Industrial Commission ordered Key Risk to authorize further treatment by the treating physician. In 2010, after Key Risk argued that his benefits should be cut off for fraud and misrepresentation, a deputy commissioner entered an opinion and award requiring Key Risk to pay continued compensation for his care, with the full commission issuing an opinion in the injured worker’s favor in April 2011. Following its losses before the commission, and after exhausting its appeal efforts, Key Risk hired an investigator to surreptitiously surveil and record Mr. Seguro-Suarez for several weeks. Key Risk also arranged for an independent medical exam of in June 2013 to determine whether his symptoms were legitimate and if he required ongoing care. The forensic psychiatrist who examined the injured worker observed his “childlike” demeanor and concluded he was suffering from dementia, traumatic brain injury, chronic dizziness, and chronic headaches — all stemming from his workplace injury. Key Risk’s chosen examiner further opined that his “symptoms appeared to be valid. There was no apparent malingering, in [her] opinion.”
“The mounting medical evidence and full-throated rebuke from the commission left Key Risk undeterred in its efforts to undermine plaintiff’s medical diagnosis and continued care,” court documents state.
After the independent medical exam, Key Risk directed its investigator to convince the Lincolnton Police Department to bring criminal charges against the plaintiff under the theory that he was obtaining his workers compensation benefits by false pretenses and provide the department with extensively edited videotape that led to his arrest, jailing and indictment on 25 counts of obtaining property by false pretenses and one count of insurance fraud, all for accepting the checks ordered paid to him by the commission, according to court documents. The charges were dismissed after a psychological examination to determine his competency to stand trial noted conditions consistent with his documented medical history.
After his release from custody, Mr. Seguro-Suarez filed suit against Key Risk and the investigator asserting malicious prosecution, abuse of process, unfair and deceptive trade practices, bad faith, willful and wanton conduct, civil conspiracy and punitive damages. The trial court denied the defendants’ motion to dismiss. The appellate court upheld the trial court’s order, with the exception that the trial court erred in failing to dismiss the bad faith and civil conspiracy claims.
“When a North Carolina worker is hurt on the job, his injury is within the exclusive scope of the Workers’ Compensation Act and he can obtain relief only by pursuing a claim before the North Carolina Industrial Commission,” the court ruling stated. “But when, after the commission awards the injured worker benefits, an employer’s insurance company knowingly provides false information to police to frame him for insurance fraud, resulting in his arrest, incarceration, and indictment on felony charges, the worker’s claims for malicious prosecution, abuse of process, and unfair and deceptive trade practices exceed the scope of the Workers’ Compensation Act and are properly before the General Court of Justice.”
A Key Risk spokesperson said the company does not comment on pending litigation.