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Paulino v. Chartis Claims, Inc.

United States Court of Appeals, Eighth Circuit

December 19, 2014

Modesto Paulino, Plaintiff - Appellant
v.
Chartis Claims, Inc., formerly doing business as AIG Claims Services, Inc., Defendant - Appellee

Submitted September 11, 2014

Appeal from United States District Court for the Southern District of Iowa - Davenport.

For Modesto Paulino, Plaintiff - Appellant: Andrew W. Bribriesco, Anthony J. Bribriesco, William John Bribriesco, WILLIAM J. BRIBRIESCO & ASSOCIATES, Bettendorf, IA.

For Chartis Claims, Inc., Formerly doing business as AIG Claims Services, Inc., Defendant - Appellee: Stephanie Lynn Marett, Coreen Kay Sweeney, NYEMASTER & GOODE, Des Moines, IA.

Before BYE, COLLOTON, and GRUENDER, Circuit Judges.

OPINION

Page 1162

GRUENDER, Circuit Judge.

Modesto Paulino sued Chartis Claims, Inc. (" Chartis" ) alleging bad-faith denial of insurance benefits. The district court[1] granted Chartis's motion for summary judgment. Paulino now appeals. We affirm.

I.

Paulino, while employed by C-Tec, Inc., suffered a spinal-cord injury in a work-related accident that left him permanently paraplegic. Chartis insured C-Tec, Inc. for workers' compensation claims and paid the costs of Paulino's medical treatment and rehabilitation services. Following months of medical treatment and intensive rehabilitation, Paulino moved into the Center for Comprehensive Services (" CCS" ) for post-acute rehabilitation and preparation for discharge to a permanent, independent living arrangement. In March 2006, after Paulino was capable of basic self-care, community access, and independent meal preparation, CCS set an anticipated discharge date of April 30, 2006. Paulino had an income of less than four hundred dollars per week from workers' compensation and was ineligible for state and federal assistance programs due to his status as an undocumented Mexican national. Because he was permanently paraplegic, Paulino required wheelchair-accessible housing equipped with an electric hospital bed, access to public transportation, and other accommodations.

Paulino's Chartis case manager was unable to locate suitable, affordable housing acceptable to Paulino. Though the discharge date passed, CCS refused to discharge Paulino to a temporary residence that was not adequately adapted to Paulino's needs. Chartis continued to pay for Paulino's medical bills and was prepared to pay for modifications to a permanent home; however, Chartis notified Paulino that it would not pay for his living expenses at CCS, which included his rent, utilities, groceries, and cable television, after April 30, 2006 because his stay was no longer medically necessary. On May 6, 2006, Chartis withdrew payment authorization for such expenses. Paulino nevertheless continued to reside at CCS. Paulino filed a petition with the Iowa Workers' Compensation Commissioner seeking payment from Chartis for his living expenses under Iowa Code § 85.27. After an arbitration hearing, the Deputy

Page 1163

Commissioner issued an arbitration decision denying Paulino's claim. The Deputy Commissioner found that Paulino had failed to establish that the disputed costs were reasonable or compensable under Iowa law. Paulino appealed, and the Commissioner reversed, noting that the special circumstances of Paulino's case made his continued stay at CCS both appropriate and compensable. The Commissioner required Chartis to pay for Paulino's living expenses at CCS until suitable housing could be found. Chartis filed a petition for review in state court pursuant to Iowa Code § 17A.19. The court affirmed the Commissioner's decision.

On April 26, 2011, Paulino sued Chartis in Iowa state court alleging bad-faith denial of benefits as of May 6, 2006, seeking consequential and punitive damages. Chartis removed the matter to federal district court based on the diversity of the parties and moved for summary judgment. ...


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