Metropolitan News-Enterprise


Friday, July 25, 2003


Page 3


C.A. Revives Malicious Prosecution Suit by Man Charged With Insurance Fraud


By KENNETH OFGANG, Staff Writer/Appellate Courts


A workers’ compensation insurer which complains to prosecutors about possible fraud by its insured’s employee faces possible liability for malicious prosecution, the Fourth District Court of Appeal has ruled.

In a June 23 opinion, certified Wednesday for publication, the court’s Div. Three reinstated Freddie Curtis Mosby Jr.’s suit against Liberty Mutual Insurance Company. Mosby, who brought his action following a preliminary hearing that resulted in dismissal of charges on motion of the prosecutor, claims Liberty Mutual instigated the prosecution without probable cause.

Orange Superior Court Judge dismissed the suit, which also named Mosby’s employer, Best Buy Company, on the ground that any remedy had to come through the workers’ compensation system under the statutory exclusivity provisions. The Court of Appeal agreed with respect to Best Buy, but held that the protection did not extend to the insurer.

If the facts alleged in the complaint are true, Presiding Justice David K. Sills wrote, Liberty Mutual acted more like a “bad cop” than an insurer,. “That is, a malicious, false accusation of workers’ compensation fraud against a claimant is not part of the normal workers’ compensation claims process,” the jurist wrote.

Mosby alleged that he was injured when a box containing an air conditioning unit fell on him while he was using a forklift. He was eventually removed from work duties by the doctor to whom the company referred him, but he alleges he sought treatment from his own physician after he overheard what he interpreted to be a racist remark—Mosby is African American—during a conversation between the doctor and an employee.

He claims that Liberty Mutual initiated surveillance at Best Buy’s request; that an adjuster called his doctor’s office and told the receptionist he was a “liar”; that he was falsely accused of not keeping treatment appointments, even though sign-in sheets verified his attendance; and that Liberty Mutual intimidated an agreed medical examiner into changing an initial opinion that Mosby had a 55 percent permanent disability.

Despite medical evaluations that supported his claim of on-the-job injury, he alleged in his complaint, the company gave misleading information to the district attorney, and one of its agents gave misleading testimony at the preliminary hearing.

 He also claims that the agreed medical examiner said he was uncomfortable as a prosecution witness, and told him that “if it wasn’t for your color, then it wouldn’t have gone this far.”

In concluding that Mosby had a cause of action against Liberty Mutual, Sills distinguished Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 800.

That case applied the exclusivity rule to a suit by doctors against workers’ compensation insurers who were accused of mishandling payments. The high court said the doctors could not sue for abuse of process, which the insurers were alleged to have committed by filing frivolous objections and unnecessary subpoenas, among other things, although the doctors were allowed to sue for antitrust and racketeering violations.

Under Vacanti, Sills explained, if the suit arises out of a job-related injury, the court looks to whether the “alleged acts or motives that establish the elements of the cause of action fall outside the risks encompassed within the compensation bargain.”  Even if Mosby’s malicious prosecution claim is held to be “derivative” of the injury, the presiding justice reasoned, “the alleged acts or motives [of Liberty Mutual] can hardly be said to be encompassed within the risks of the compensation bargain.”

The Legislature, Sills added, “has made it pretty plain that there should be no civil immunity for workers’ compensation fraud reporting.”

The case is Mosby v. Liberty Mutual Insurance Company, 03 S.O.S. 3921.


Copyright 2003, Metropolitan News Company