Montesano v. Sedgwick, Inc.

Background

Kenneth Montesano sued Sedgwick, which the opinion describes as his former employer’s third-party administrator for workers’ compensation claims. Montesano alleged that he suffered workplace injuries while working holiday shifts at Federal Express Corporation in 1989 and later suffered additional back injuries. The opinion states that the Workers’ Compensation Appeals Board determined that his initial injury caused permanent disability and that a workers’ compensation judge later increased his temporary and permanent disability benefits and awarded medical treatment and reimbursements.

Montesano alleged that, beginning in 2019, Sedgwick made it more difficult for him to receive payment for acupuncture and massage treatments. He said that beginning in 2022 he had to appeal several times to obtain those treatments. He also alleged that, after the Centers for Medicare and Medicaid Services determined in September 2023 that he was entitled to $216,062 for future medical services, Sedgwick refused to provide coverage. He claimed that the denial caused additional pain, insomnia, reduced mobility, and negative effects on his family.

Montesano initially sued Genex Services, LLC, in California state court. After the case was removed to federal court, he amended his complaint to name Sedgwick as the only defendant. His amended complaint asserted six causes of action: fraud; disabled elder abuse; deception in the presence of evidence; deliberate indifference; medical insurance malpractice; and intentional and negligent infliction of emotional distress.

Motion and legal standard

Sedgwick moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not state a legally valid claim for relief. Sedgwick argued that the California Workers’ Compensation Act made the Workers’ Compensation Appeals Board the exclusive forum for Montesano’s claims.

The court explained that California law generally prevents an injured worker from bringing a private lawsuit against an independent claims administrator for delaying or refusing to pay workers’ compensation benefits. A private lawsuit may proceed only when the administrator commits tortious conduct independent of its role in providing workers’ compensation benefits and the conduct is extreme and outrageous enough to take the administrator outside that role.

Court’s analysis

The court concluded that Montesano had not alleged conduct independent of Sedgwick’s role as the claims administrator. His fraud and emotional-distress claims, as well as his medical insurance malpractice claim, were based on the alleged delay or refusal to pay benefits. The court likewise determined that the disabled elder abuse, deception in the presence of evidence, and deliberate indifference claims stemmed from the discontinuation of benefit payments.

The court acknowledged that Montesano described serious injuries and that it was sympathetic to his situation. It nevertheless rejected his argument that Sedgwick’s alleged willful negligence allowed him to bypass the Workers’ Compensation Appeals Board. The court also stated that Montesano had not provided legal authority supporting that argument.

Disposition

The court granted Sedgwick’s motion to dismiss. It held that each claim in Montesano’s amended complaint was properly addressed by the Workers’ Compensation Appeals Board and that the complaint could not be cured by adding more facts because the claims would still arise from workers’ compensation issues. The complaint was dismissed with prejudice. The court stated that this did not mean Montesano had no possible remedy, only that he could not seek it in federal or state court through this action.