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Powell v. Amguard Insurance Co.

Superior Court of Delaware, Kent

May 14, 2019

JASON C. POWELL, ESQ., As personal representative of the ESTATE OF MARK KRIEGER, Plaintiff,

          Submitted: April 26, 2019

         Upon Defendant's Motion for Reconsideration of a Commissioner's Order:

          DENIED John S. Spadaro, Esquire, John Sheehan Spadaro, LLC, Smyrna, Delaware, Attorney for Plaintiff.

          Thaddeus J. Weaver, Esquire, Dilworth Paxson, LLP, Wilmington, Delaware, Attorney for Defendant.


          Jeffrey J Clark, Judge.

         Defendant AmGUARD Insurance Company ("AmGUARD") moves for reconsideration of a commissioner's order that compelled it to produce forty-one defense medical examination (hereinafter "DME") reports involving unrelated claimants. In this bad faith insurance litigation, the commissioner's order compelling production of these reports was not clearly erroneous, contrary to law, or an abuse of discretion. Accordingly, AmGUARD's motion for reconsideration is DENIED.


         The relevant facts for this discovery motion include those alleged in the amended complaint and those facts of record identified by the parties in their original motion, response, and motion for reconsideration. As alleged, Mr. Krieger[1] suffered a May 20, 2017 work-related accident. AmGUARD insured Mr. Krieger's employer and provided workers' compensation coverage for his injury.

         Mr. Krieger alleged that AmGUARD unjustifiably delayed paying him benefits after his injury, thereby breaching its insurance contract in bad faith. For purposes of this motion, the Court accepts that Mr. Krieger promptly claimed benefits and that AmGUARD delayed paying them for approximately four months before it made its first payment on October 2, 2017.

         While Mr. Krieger awaited payment, AmGUARD sent him to Dr. Robert Smith on August 29, 2017 for a DME. Dr. Smith then issued a report opining that Mr. Krieger suffered a crush injury to his foot, and that the injury was directly related to the work incident. Dr. Smith's DME report also provided that Mr. Krieger's lost wages and medical expenses were reasonable, necessary, and related to the incident. Furthermore, he offered the opinion that Mr. Krieger had been fit to return to light duty work as of July 1, 2017. Finally, Dr. Smith opined that Mr. Krieger could return to full duty when confirmatory imaging demonstrated that his fracture and bone bruise had healed. Thirty-three days after Dr. Smith's examination and report, AmGUARD issued its first check and continued to pay him until it learned of his death in 2018.

         In November 2017, Mr. Krieger sued AmGUARD alleging two modes of wrongful conduct. First, Mr. Krieger alleged that AmGUARD failed to timely pay him wage replacement benefits as required by 19 Del. C. § 2324. Second, he alleged that it unjustifiably delayed paying his covered medical expenses within the thirty days required by 19 Del. C. § 2322F. He alleged that AmGUARD acted in bad faith as to both charges, and his amended complaint sought punitive damages.

         In the litigation to date, Mr. Krieger's estate has gathered and produced to AmGUARD eighty-two DME reports authored by Dr. Smith for other carriers involving other claimants. When producing the reports to AmGUARD, the estate proferred that Dr. Smith, in all but one of the reports, provided opinions supporting the insurance carriers' positions to the detriment of their insureds. The estate then requested AmGUARD to produce all Dr. Smith reports in its possession from the three years prior to Mr. Krieger's claim. AmGUARD objected and the estate filed a motion to compel.

         At the conclusion of a lengthy oral argument, the commissioner required AmGUARD to identify the number of reports Dr. Smith had provided to AmGUARD over the three years before Mr. Krieger's DME. AmGUARD then identified forty-one such reports while maintaining its objection to producing them.

         After considering the written submissions and oral argument, the commissioner issued a letter order (hereinafter "the order") requiring AmGUARD to produce the forty-one Dr. Smith reports. The commissioner also required AmGUARD to redact all dates of birth, social security numbers, and other personal identifying information from the reports before producing them pursuant to a confidentiality agreement.

         Thereafter, AmGUARD filed a timely motion for reconsideration of the commissioner's order. The Court reviewed the transcript of the oral argument, all written submissions, and held oral argument on the matter on April 26, 2019.


         First, AmGUARD argues that the commissioner applied the improper legal standard. It relies upon the order's lack of reference to Superior Court Civil Rule 26(b)(1)'s standard that requires discovery to be relevant to the subject matter involved and that it be "reasonably calculated to lead to the discovery of admissible evidence." In this regard, AmGUARD emphasizes the commissioner's recitation in the order that she felt "it unlikely that under the facts of this case that the reports would be relevant at trial [but that there] may possibly be something in the reports that may be relevant to proving the Plaintiff's case."[2]

         Second, AmGUARD argues that the amended complaint alleges only that the company delayed paying benefits. AmGUARD asserts that these delays, as alleged, were independent of Dr. Smith's DME opinion. Accordingly, it alleges that the order constituted an abuse of discretion because the DME reports are not relevant to the subject matter in the pending action. Because the estate alleges only unjustified delays in payment, AmGUARD argues that DME reports addressing different claimants are not relevant to this bad faith claim, and that a request for them is not reasonably calculated to lead to the discovery of admissible evidence.

         Mr. Krieger's estate counters that the reports are relevant to show Dr. Smith's bias. Furthermore, the estate argues that AmGUARD's other allegedly bad conduct (hiring a DME doctor who automatically recommends denying benefits) is separately relevant to demonstrate AmGUARD's state of mind regarding unfair dealing. The estate emphasizes that in this bad faith claim, it must show an "I don't care attitude." It argues that AmGUARD's choice to send Mr. Krieger to Dr. Smith is relevant to its overall state of mind, which the estate must prove at trial. Finally, the estate argues that these state of mind issues are separately relevant because a jury will be asked, when determining the amount of punitive damages, to determine how much AmGUARD "does not care."


         In either case-dispositive or non-case-dispositive matters, a "party may serve and file written objections to the Commissioner's order which set forth with particularity the basis for the objections."[3] In this case, AmGUARD's motion challenges the commissioner's decision regarding a non-case-dispositive matter. Pursuant to Superior Court Civil Rule 132(a)(3)(iv) the Court may reconsider a commissioner's decision regarding such a matter "only where it has been shown on the record that the Commissioner's order is based upon findings of fact that are clearly erroneous, . . . is contrary to law, or is an abuse of discretion." This deferential standard of review does not permit a reviewing judge to substitute his or her judgment for that of the commissioner, absent one of the three referenced infirmities.

         With regard to the standard applicable to discovery disputes, Delaware Superior Court Civil Rule 26(b)(1) (hereinafter the "Rule") addresses general scope and limits. Absent privilege, "[p]arties may obtain discovery regarding any matter . . . which is relevant to the subject matter involved in the pending action."[4]Furthermore, the Rule provides that "[i]t is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears to be reasonably calculated to lead to the discovery of admissible evidence."[5]


         AmGUARD's claim that the commissioner applied the incorrect legal standard is an issue of law that must be reviewed de novo.[6] Here, the commissioner issued ...

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