My posts over the last few weeks focused on how an insurer’s breach of its duty to its insured can result in the insurer’s liability for bad faith. This week, I would like to write about how someone hired by the insurer in connection with the investigation of your client’s claim can also have obligations to your client. Specifically, a medical provider hired to conduct an Independent Medical Examination (“IME”) can be liable to an injured insured for breach of a duty.
In Ritchie v. Krasner, M.D., et al., 211 P.3d 1272 (Ariz. Ct. App. 2009), the Plaintiff, Jeremy Ritchie, injured his back at work. He suffered from a bruised spinal cord that caused swelling and compression of the cervical spinal cord. The chiropractors at the emergency clinic suggested that Ritchie contact Paula Insurance (“Paula”), Ritchie’s workers’ compensation carrier. Ritchie did so and Paula retained Dr. Krasner to conduct an IME. Before the examination, Dr. Krasner had Ritchie sign a document including the following statement:
It is very important that you realize that no Doctor/Patient relationship exists between you and Dr. Krasner…This is done to insure that all findings will be neutral, and that the evaluators are completely independent and not involved in your disability claim or source.
After the examination, Dr. Krasner reported to Paula that Ritchie’s injury was stationary, that there was no indication for supportive care and that there was no need for any work restrictions. Paula relied upon Dr. Krasner’s evaluation and terminated Ritchie’s benefits. In an affidavit, Ritchie testified that he was advised that his condition was stable, that he did not need further medical treatment and that he could go back to work without restrictions. Ritchie relied upon those representations and went back to work. He did not seek treatment for several months.
Ritchie’s condition, however, progressively deteriorated and he saw Dr. Solomon, a neurologist. Dr. Solomon diagnosed Ritchie with a cervical spinal cord compression and ordered immediate spinal cord surgery. The surgery halted further deterioration of Ritchie’s spinal cord, but, by then, further damage already occurred. Part of Ritchie’s spinal cord had died during the eight months before the surgery, during which the undiagnosed spinal cord compression progressed. After the surgery, Ritchie developed central pain syndrome, which caused constant pain and discomfort. Dr. Solomon prescribed the narcotics Oxycontin and Oxycodone, as well as sleep medication and something to reduce muscle spasms. Ritchie died of an accidental overdose.
Before his death, Ritchie had filed a medical malpractice lawsuit against several of the treating chiropractors, including Dr. Krasner. After his death, Ritchie’s parents and son amended the complaint to include a claim for wrongful death.
The Court began its analysis with an evaluation of an IME Doctor’s Duty:
Even absent a formal doctor-patient relationship, a doctor conducting an Independent Medical Examination (‘IME’) owes a duty of reasonable care to his or her patient….It can arise from a relationship between the parties, a contractual relationship, or any number of other types of contracts…A special or direct relationship, however, is not essential in order for there to be a duty of care.
It then discussed the factors established in Stanley v. McCarver, 92 P.3d 849 (Ariz. 2004), to determine determining the existence of a duty:
[W]hether the doctor was in a unique position to prevent harm, the burden of preventing harm, whether the plaintiff relied upon the doctor’s diagnosis or interpretation, the closeness of the connection between the defendant’s conduct and the injury suffered, the degree of certainty that the plaintiff has suffered or will suffer harm, the skill or special reputation of the actors, and public policy…When a patient places oneself in the hands of a medical professional, even at the request of one’s employer or insurer, one may have a reasonable expectation that the expert will warn of any incidental dangers of which he is cognizant due to his peculiar knowledge of his specialization’.
When applying the foregoing principles to the facts of the Ritchie case, the Court noted that Paula hired and paid Dr. Krasner for the following reasons: (1) to conduct an IME in order to determine whether Ritchie was injured on the job; (2) to assess his current condition; (3) to evaluate treatment options; and (3) to assist in determining whether Ritchie was entitled to compensation and treatment. The Court agreed with Dr. Krasner that he did not have a duty to perform a thorough enough examination to discover every condition that could be harmful to Ritchie when the condition that posed a risk to Ritchie’s health was not discovered during the IME. However, ethical standards govern physicians and other medical providers. As such, when Dr. Krasner agreed to conduct the IME, he still assumed a duty to conform to the legal standard of reasonable conduct in light of the apparent risk. It is important to consider that Ritchie testified during his deposition that he relied upon Dr. Krasner’s finding and, based on that reliance, he did not seek additional medical care until several months later when he continued to suffer.
…[W]e can envision no public benefit in encouraging a doctor who has specific individualized knowledge of an examinee’s serious abnormalities to not disclose such information…and to not investigate the symptoms of a cervical spine injury.
As such, the Court explained that the notice Ritchie signed with regard to the lack of a doctor/patient relationship with Dr. Krasner did not absolve Dr. Krasner of his duty of care. When applying the foregoing principles to the facts of the case along with analyses of a few other issues presented, the court found Dr. Krasner and a few others liable for medical malpractice and for the wrongful death of Ritchie.
Though Ritchie addresses a case where a medical provider’s duty to the insured’s was evaluated, it is important to consider that a similar analysis can be applied in the arena of property insurance. Insurers hire engineers, appraisers, accountants and experts/consultants who specialize in various other fields to assist the carrier with the investigation of property damage claims. These individuals or entities are asked to render an opinion or provide an evaluation of the damages at issue. Typically, the carrier relies upon those determinations, reports or results when making a coverage decision and/or deciding how much to pay on a claim. Those consultants/experts are usually governed by the ethical and/or regulatory standards that apply to their profession. As a result, it is likely that consultants, other than just those in the medical field, also have a duty to an insured and can be subject to similar scrutiny.
Thank you for checking out our Property Insurance Blog this week and I hope you check back next week.