Cox, Cox, Filo, Camel & Wilson, Llc v. Louisiana Workers' Compensation Corporation

FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #013
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 25th day of March, 2022 are as follows:
PER CURIAM:
2021-C-00566 COX, COX, FILO, CAMEL & WILSON, LLC VS. LOUISIANA
WORKERS' COMPENSATION CORPORATION (Parish of Calcasieu)
AFFIRMED AS AMENDED. SEE PER CURIAM.
Weimer, C.J., dissents and assigns reasons.
Crichton, J., concurs in the result and assigns reasons.
Crain, J., dissents in part and assigns reasons.
McCallum, J., concurs in the re
sult for the reasons assigned by Justice Crichton.

SUPREME COURT OF LOUISIANA
No
. 2021-C-00566
CO
X, COX, FILO, CAMEL & WILSON, LLC
VS.
LOUISIANA WORKERS' COMPENSATION CORPORATION
O
n Writ of Certiorari to the Court of Appeal, Third Circuit, Parish of Calcasieu
PER CURIAM
W e granted certiorari in this case for the purpose of deciding whether the
district court has jurisdiction over a claim for penalties against an insurer arising
from its failure to provide a defense in workers’ compensation proceedings, and, if
so, whether the insurer violated its duties of good faith and fair dealing, thereby
making it liable for damages and penalties. For the reasons that follow, we conclude
the district court has jurisdiction over the claim and correctly found that the insurer
breached its duties to its insured, but we find the district court’s damage award rises
to the level of an abuse of discretion.
UNDE
RLYING FACTS
Polly Pousson (hereinafter referred to as “claimant”) had been employed by
the law firm of Cox, Cox, Filo, Camel & Wilson, LLC (“Cox”) since 1971 as the
firm’s office manager. By 2018, claimant’s vision became increasingly impaired,
and her doctor recommended that she limit her work on a computer screen to four
hours a day due to aggravation of an eye condition that was rendered symptomatic
by this type of work.
On October 24, 2018, claimant submitted a request for supplemental earning
benefits along with proof of loss to Cox’s workers’ compensation insurer, Louisiana
Workers’ Compensation Corporation (“LWCC”). On January 7, 2019, LWCC
denied the claim, taking the position that her claim was not compensable under the
03/25/22

2

Workers’ Compensation Act. On January 15, 2019, claimant filed a disputed claim
for compensation with the Office of Workers’ Compensation (“OWC”), naming Cox
and LWCC as defendants.
The next day, Cox’s managing partner, Thomas A. Filo, though his assistant,
Amy Maynard, sent an email to the adjuster for LWCC to inform LWCC of the claim
and request the name of the counsel who would be assigned to represent Cox in the
matter. The adjuster acknowledged the filing of the claim, but advised that counsel
had not yet been assigned.
On January 22, 2019, the adjuster emailed Ms. Maynard to advise that LWCC
would assign outside counsel to the firm’s defense “due to the apparent conflict that
has arisen.”1 One week later, Mr. Filo’s assistant forwarded discovery requests
received by the firm to LWCC and again requested the name of counsel retained to
defend the firm. Over the course of several phone conver sations and email
exchanges, LWCC’s counsel, Gregory Bodin, explained to Mr. Filo that LWCC was
struggling to obtain counsel due to Cox’s conflict of interest with other firms. He
informed Mr. Filo that he had obtained an extension for Cox to file responsive
pleadings in the workers’ compensation case until February 22, 2019, and discussed
the possibility of obtaining Cox’s dismissal without prejudice in the workers’
compensation case. On March 1, 2019, Mr. Bodin obtained an indefinite extension
of time to answer discovery, but did not communicate this fact to Mr. Filo or Cox.
On March 19, 2019, Mr. Filo, believing that the delay for filing an answer was
approaching, filed an answer and cross claim in the workers’ compensation matter
on behalf of Cox. In this filing, Cox did not dispute that claimant had sustained an

1 Normally, LWCC assigns in-house staff lawyers to represent its insureds. However, in this case,
LWCC was unable to do so because Cox ’s position that claimant was entitled to supplemental
earnings benefits conflicted with LWCC’s position that such benefits were not covered.

3

occupational injury or disease and asserted that LWCC had breached its obligations
under the policy to defend and indemnify Cox.
On January 29, 2019, Cox filed the instant petition against LWCC, alleging
LWCC breached its duty of good faith and fair dealing pursuant to La. R.S. 22:1973
by failing to provide a timely and proper defense to the firm. The petition sought
damages in the form of lost revenue that would have been generated by Mr. Filo had
he not been required to defend the workers’ compensation claim himself.
LWCC filed exceptions of no cause of action and lack of subject matter
jurisdiction. The district court denied both exceptions.
The matter then proceeded to a bench trial. Cox offered three witnesses: Mr.
Filo, Bray Williams ( claimant’s attorney), and Robert Ehler, a certified public
accountant.
Mr. Filo testified that he is the managing partner of Cox and first became
aware of clai mant’s eye condition well before she filed her disputed claim for
compensation. He and Kevin Camel, another partner in the firm, advised her that
she may be eligible to receive supplemental earnings benefits because her hours had
been restricted by her do ctor. Mr. Camel prepared the report to the O ffice of
Workers’ Compensation and reported the matter to LWCC.
Mr. Filo testified regarding his discussions with the adjuster beginning in
November. According to Mr. Filo, he filed the instant petition to “get [LWCC] off
center.” Mr. Williams spoke to Mr. Filo on several occasions and suggested the firm
should pay claimant’s benefits and demand reimbursement from LWCC. Mr. Filo
was particularly concerned because the firm’s policy did not allow it to make
voluntary payments to claimant. Nonetheless, Mr. Filo was aware that employers
and insurers are liable for worke rs’ compensation benefits, and could be assessed
penalties and attorney fees for failure to pay.

4

Mr. Filo testified that his law practice concentrates on representing personal
injury claimants. Because his work focuses on this area, he does not maintain time
sheets or other such records. His productivity to the firm is strictly gauged by the
revenue he generates. The only way he knows to determine the value of the time he
spent in taking legal action to defend the firm is to look at his revenue history and
extrapolate based on the time he devoted to the workers’ compensation case. To this
end, he estimated the time he spent and created a document reflecting his estimate
of 68.5 hours spent in defending the firm in the workers’ compensation matter.
Mr. Ehler, an expert in accounting, examined the revenue Mr. Filo generated
for the ten years preceding the claim. If Mr. Filo worked 2,080 hours per year, his
hourly rate would be $2,080.50 based upon his ten-year history. Based on Mr. Filo’s
five-year average, his hourly rate would be $2,107.00. His average over the three
years prior to trial would be $2,386.50 per hour.
Bray Williams testified he represented claimant in her workers’ compensation
claim. He was aware of the difficulties Cox had because it was without an attorney
for several months. He and Mr. Filo spoke several times during those months, and
Mr. Filo expressed his opinion that the claim was compensable, but Cox c ould not
pay any benefits to her voluntarily because the policy language would absolve
LWCC of having to reimburse it. Mr. Williams explained he declined to dismiss
Cox without prejudice and proceed against the LWCC alone because the law
imposes a duty to pay benefits on both the employer and the insurer.
LWCC presented the testimony of Jamie Bourg, its assistant vice president of
claims. Ms. Bourg testified that LWCC struggled to find an attorney willing to
defend Cox. These efforts began on January 19, 2019, one day after claimant filed
the disputed claim for compensation a gainst the firm. Every attorney LWCC
contacted indicated that representing Cox would create a conflict of interest. Due to
the struggle to obtain counsel, LWCC convinced Mr. Williams to grant Cox an

5

indefinite extension for responding to the disputed cla im. Eventually, LWCC
retained attorney Ted Williams to represent Cox.
At the conclusion of the bench trial, the district court rendered judgment in
favor of Cox, finding LWCC breached its obligation of good faith and fair dealing
in failing to procure counsel to defend Cox in the worker’s compensation matter.
Based on the testimony of Mr. Ehler and Mr. Filo, the district court awarded damages
to Cox in the amount of $150,083.50, representing the 68.5 hours worked by Mr.
Filo at a rate of $2,386.50 per hour. The court further awarded penalties of
$300,167.00, which was double the amount of damages.
LWCC appealed. The court of appeal affirmed the judgment of the district
court in its entirety. Cox, Cox, Filo, Camel & W ilson, LLC v. Louisiana Workers ’
Comp. Corp., 20-0408 (La. App. 3 Cir. 3/31/21), 318 So.3d 964.
Upon application of LWCC, we granted certiorari to review the correctness
of this judgment. Cox, Cox, Filo, Camel & Wilson, LLC v. Louisiana Workers’
Compensation Corp., 21-566 (La. 6/29/21), 319 So.3d 279.

DISCUSSION
Pending Motions
Prior to addressing the merits, we must first address motions filed by LWCC
and Cox, which we previously referred to the merits.
After LWCC’s initial brief was filed, it filed a motion captioned “Motion to
Substitute Its Brief on the Merits. ” LWCC explains there was an error in both its
initial brief on the merits and its original writ application, in which it stated that Cox
conceded it was aware LWCC had obtained an unlimited extension of time from
claimant’s attorney to respond to the workers’ compensation claim. In fact, LWCC
states Cox did not admit or deny information regarding the unlimited extension.

6

In response to LWCC’s motion, Cox filed a “Motion to Recall Writ of
Certiorari.” Cox assert s LWCC’s motion to substitute represents an
acknowledgment that LWCC made false statements in its writ application and brief.
According to Cox, LWCC’s failure to correct this misstatement earlier shows
LWCC’s attorney violated duties of candor to the court. C ox asserts that had the
court “known of said misinformation, it would have been incumbent on the Court to
deny LWCC’s application.” Accordingly, Cox request s that we recall our order
granting LWCC’s writ of certiorari and deny the writ.
Given the factua l complexity of this case, we believe any misstatement
concerning the unlimited extension was inadvertent and not made in an effort to
mislead the court. Moreover, this statement did not factor into our decision to grant
certiorari in the case.
Accordingly, we grant LWCC’s motion and deny Cox’s motion.

Subject Matter Jurisdiction
Article V, §16 of the Louisiana Constitution grants the district courts “original
jurisdiction of all civil and criminal matters,” but provides a limited exception “as
heretofore or hereafter provided by law for administrative agency determinations in
worker’s compensation matters. . . .” Pursuant to this article, the legislature enacted
La. R.S. 23:1310.3(F) , which sets forth the jurisdiction of the Office of Workers’
Compensation (“OWC”) as follows:
F. Except as otherwise provided by R.S. 23:1101(B),
1361, and 1378(E), the workers’ compensation judge shall
be vested with original, exclusive jurisdiction over all
claims or disputes arising out of this Chapter, including
but not limited to workers’ compensation insurance
coverage disputes, group self -insurance indemnity
contract disputes, employer demands for recovery for
overpayment of benefits, the determination and
recognition of employer credits as provided for in this
Chapter, and cross-claims between employers or workers’
compensation insurers or self -insurance group funds for
indemnification or contribution, concursus proceedings

7

pursuant to Louisiana Code of Civil Procedure Articles
4651 et seq. concerning enti tlement to workers’
compensation benefits, payment for medical treatment, or
attorney fees arising out of an injury subject to this
Chapter. [emphasis added].

The question in this case is whether the dispute between Cox and its workers’
compensation insurer falls under the limited grant of jurisdiction to the OWC. We
have not had occasion to pass on this specific issue in our prior jurisprudence.
Nonetheless, a plain reading of La. R.S. 23:1310.3(F) reveals it requires that the
claim must “arise out of” the chapter containing the Workers’ Compensation Act.
Following this reasoning, we have held that disputes between employers, insurers
and preferred provider networks do not “arise out of” the Act, “ even where the
relevant claims involve the payment of third party medical bills required under the
Act.” Broussard Physical Therapy v. Family Dollar Stores, Inc ., 08 -1013 (La.
12/2/08), 5 So.3d 812, 816 -18. See also Gunderson v. F.A. Richard & Associates,
07-0331 (La. App. 3 Cir. 2/27/08), 977 So.2d 1128, 1135 (finding OWC possesses
jurisdiction only over claims that are actually brought to recover benefits under the
Workers’ Compensation Act).
Cox’s claim for penalties pursuant to the provisions of La. R.S. 22:1973 does
not “arise out of” the workers’ compensation laws. Rather, the “duty of good faith
is an outgrowth of the contractual and fiduciary relationship between the insured and
the insurer, and the duty of good faith and fair dealing emanates from the contract
between the parties.” Smith v. Citadel Ins. Co., 19-0052 (La. 10/22/19), 285 So.3d
1062, 1069.
Therefore, it follows subject matter jurisdiction over Cox’s claim for penalties
against its insurer properly rests with the district court. The district court correctly
denied LWCC’s exception of lack of subject matter jurisdiction.

Exception of No Cause of Action

8

LWCC urged exceptions of no cause of action in both the district court and in
this court. In essence, it contends Cox’s claim for penalties is in fact a disguised
claim for attorney fees, which are not available under La. R.S. 22:1973.
It is undisputed that La. R.S. 22:1973 does not provide for an award of
attorney fees. See Calogero v. Safeway Ins. Co. of Louisiana, 99-1625 (La. 1/19/00),
753 So.2d 170, 174 (explaining that La. R.S. 22:1220, a precursor of La. R.S.
22:1973, “does not provide for attorney fees . . .”) . However, Cox denies that its
petition seeks attorney fees. Instead, it argues its petition seeks to recover revenues
lost by the firm resulting from Mr. Filo’s handling of the defense of the workers’
compensation litigation while LWCC searched for counsel.
In deciding an exception raising the objection of no cause of action, this court
is guided by the well-settled principle that the function of an exception of no cause
of action is to test the legal sufficiency of the petition by determining whether the
law affords a remedy on the facts alleged in the pleading. Darville v. Texaco, Inc.,
447 So.2d 473, 474 -75 (La. 1984). No evidence may be introduced to support or
controvert the objection that the petition fails to state a cause of action. La. C ode
Civ. P. art. 931. Therefore, the court reviews the petition and accepts well-pleaded
allegations of fact as true , and the issue at the trial of the exception is whether, on
the face of the petition, the plaintiff is legally entitled to the relief sought. Everything
on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d 1234, 1235 (La. 1993).
Cox’s petition alleges its damages “consist of lost revenue which would have
been generated by its managing partner for each and every hour expended in
defending and dealing with the workers' compensation claim for which LWCC
provides coverage.” [emphasis added]. La. R.S. 22 :1973(C) permits recovery of
“any general or special damages to which a claimant is entitled for breach of the
imposed duty.” Loss of business income or profits is a type of special damages.

9

Nick Farone Music Ministry v. City of Bastrop, 50,066 (La . App. 2 Cir. 9/30/15),
179 So.3d 629, 631.
We acknowledge that in a broad sense, any revenue derived from a law firm’s
representation of clients may be termed to be attorney fees. However, it is obvious
our discussion of the term “attorney fees” in Calogero, supra, did not refer to such
fees in their broadest general sense, but instead focused on the ability of the attorney
to recover fees occasioned by prosecution of the penalty claim. 2 It is clear Cox’s
petition is not seeking to recover any fees incurred as a result of its pursuit of the
penalty claim.
In sum, accepting Cox’s allegations as true for purposes of the exception, we
conclude Cox’s petition states a cause of action for loss of business income .
Accordingly, LWCC’s exception of no cause of action is denied.

Breach of Duties under La. R.S. 22:1973
Having found Cox stated a cause of action under La. R.S. 22:1973, we must
now determine whether Cox established LWCC breached its duties under this
statute. The statute provides, in pertinent part:
A. An insurer, including but not limited to a foreign line
and surplus line insurer, owes to his insured a duty of
good faith and fair dealing. The insurer has an
affirmative duty to adjust claims fairly and promptly
and to make a reasonable effort to se ttle claims with
the insured or the claimant, or both. Any insurer who
breaches these duties shall be liable for any damages
sustained as a result of the breach. [emphasis added].

This statute codified the implied covenant of good faith and fair dealing
existing between insureds and insurers. Kelly v. State Farm Fire & Cas. Co., 14-

2 In our opinion in Calogero, we explained that although the attorney could not recover attorney
fees under La. R.S. 22:1220 (now La. R.S. 22:1973), he could recover such fees pursuant to La.
R.S. 22:658 (now La. R.S. 22:1892), which provided for penalties “together with all reasonable
attorney fees for the prosecution and collection of such loss. . . .” Calogero, 753 So.2d at 174.

10

1921 (La. 5/5/15), 169 So. 3d 328, 336; Theriot v. Midland Risk Ins. Co ., 95-2895
(La. 5/20/97), 694 So.2d 184, 187.
In finding LWCC breached its duty of good faith and fair dealing, the district
court found LWCC should have known its delay in appointing counsel could cause
harm to Cox. In particular, the court explained, “ LWCC knew that this was
developing to an undesirable situation and potentially getting worse quite early,
under the circumstances.”
A district court’s factual findings in connection with an award of penalties is
subject to the manifest error standard of review . See Guillory v. Lee, 09-0075 (La.
6/26/09), 16 So.3d 1104, 1127; Reed v. State Farm Mut. Auto. Ins. Co., 03-0107 (La.
10/21/03), 857 So.2d 1012, 1021.
Based on our review of the record, we cannot say the distr ict court’s factual
findings are clearly wrong. The record demonstrates that Cox, through Mr. Filo ,
advised LWCC of the claim one day after it was filed on January 15, 2019. Although
Cox made multiple demands for representation from LWCC, LWCC ultimately did
not assign counsel until April 22, 2019, over four months later.
LWCC’s communications with Cox during this time were incomplete.
Although LWCC advised Cox it had obtained an extension until February 22, 2019
for the filing of responsive pleadings in the workers’ compensation case, it did not
advise Cox that it obtained a second unlimited extension on March 1, 2019. This
omission left Cox justifiably concerned that its lack of representation could expose
it to adverse consequences in the OWC proceeding, such as a default judgment or
penalties and attorney fees.
Considering these facts, the district court’s finding that LWCC breached its
duty of good faith and fair dealing is not manifestly erroneous.

Damages

11

Finally, we turn to the question of damages. As dis cussed earlier, La. R. S.
22:1973 provides for an award of “ general or special damages” in a ddition to
penalties. In this case, the district court’s damage award was limited to special
damages in the form of lost revenue.
Special damages are those damages which either must be specially pled or
have a “ ready market value, ” i.e., the amount of dam ages supposedly can be
determined with relative certainty. Prest v. Louisiana Citizens Prop. Ins. Corp., 12-
0513 (La. 12/4/12), 125 So. 3d 1079, 1090; Wainwright v. Fontenot, 00–0492 (La.
10/17/00), 774 So.2d 70, 74. The jurisprudence has recognized loss of business
income or profits is a type of special damages that must be proved with reasonable
certainty and cannot be based on speculation or conjecture. Bailes v. U.S. Fidelity
& Guar. Co., 512 So.2d 633, 643 (La. App. 2 Cir. 1987); Rosenblath v. Louisiana
Bank & Trust Co., 432 So. 2d 285, 290 (La. App. 2 Cir. 1983). The plaintiff bears
the burden of proving entitlement to special damages by a preponderance of the
evidence. Breaux v. Woods, 20-0161 (La. App. 3 Cir. 11/18/20), 307 So. 3d 395,
402; Caruso v. Academy Sports & Outdoors, 18-0496 (La. App. 5 Cir. 4/24/19), 271
So.3d 355, 362.
The difficulty of proving a loss of business revenue under the facts of this case
is readily apparent. Mr. Filo testified that his law practice concentrates on
representing personal injury claimants, and, as a result , he does not maintain time
sheets or other such records. Rather, h is productivity to the firm is strictly gauged
by the revenue he generates. As shown by Mr. Ehler’s testimony, the amount of
revenue he generated varied considerably over the ten -year period selected by Mr.
Ehler.
Thus, Mr. Ehler’s attempt to calculate a theoretical hourly rate for Mr. Filo’s
services was speculative at best.
Moreover, putting aside the difficulty of calculating the value of Mr. Filo’s
services, we question whether it was a wise decision for him to forsake his ordinary

12

practice to concentrate on the defense of the firm in the workers’ compensation
matter. It is well settled that “ if the plaintiff could readily avoid or mitigate the
damage caused by defendant’s conduct and he knows how to do so, he cannot act in
such a manner as to invite injury. ” Langlois v. Allied Chem. Corp. , 258 La. 1067,
1087, 249 So. 2d 133, 141 (1971) . Under the facts of this case, Cox could have
mitigated any harm caused by LWCC’s conduct by simply retaining separate
counsel to represent the firm in the pending workers’ compensation proceeding.
By retaining separate counsel, Cox would have minimized any impact on its
revenues, as Mr. Filo would have been free to pursue his ordinary practice. Special
damages could then be determined based on the amount billed by an average
workers’ compensation attorney, which would certainly be well below the $2,386.50
per hour figure calculated by Mr. Ehler.
We further find the costs of substitute counsel is a better and more consistent
measure of damages for the harm caused by LWCC’s conduct. Cox, as a law firm,
was in the unique position of being ab le to represent itself. An entity consisting of
non-lawyers would not have a similar option and would be required to retain counsel.
Cox’s position as a law firm should not entitle it to damages which would be
unavailable to non-lawyer defendants under identical circumstances.
Considering these circumstances, we must conclude the district court’s award
of lost revenues in the amount of $150,083.50, representing the 68.5 hours worked
by Mr. Filo at a rate of $2,386.50 per hour , represents an abuse of discretion. The
proper measure of damages should be based on the costs Cox would have incurred
in hiring separate counsel to represent it in the workers’ compensation proceeding.
Pursuant to La. Code Civ. P. art. 2164 , we are authorized to “ render any
judgment which is just, legal, and proper upon the record on appeal.” As noted in
the Official Revision Comments under that article, an appellate court has “complete
freedom to do justice on the record irrespective of whether a particular legal point

13

or theory was made, argued, or passed on by the court below.” Georgia Gulf Corp.
v. Board of Ethics for Public Employees, 96-1907 (La. 5/9/97), 694 So.2d 173, 176.
In addition to our authority under La. Code Civ. P. art. 2164, this court,
pursuant to its inherent judicial power and its original jurisdiction, has exclusive
authority to regulate the practice of law in this state. La. Const. art. V, § 5(B);
O’Rourke v. Cairns, 95-3054 (La. 11/25/96), 683 So.2d 697, 700. Regardless of the
language of the statutory authorization for an award of attorney fees or the method
employed by a district court in making an award of attorney fees, we may inquire as
to the reasonableness of attorney fees as part of our prevailing, inherent authority to
regulate the practice of law. Smith v. State, Dept. of Transp. & Dev., 04-1317 (La.
3/11/05), 899 So.2d 516, 527–28; Rivet v. State, Dept. of Transp. & Dev., 96-0145
(La. 9/5/96), 680 So.2d 1154, 1161.
Considering the facts and circumstances of this case, we conclude a
reasonable fee for an attorney defending Cox in the workers’ compensation matter
is $300 per hour. Accepting the district court’s finding that the defense of the
workers’ compensation case would have required a total of 68.5 hours, we conclude
an award of $20,550.00 in special damages is appropriate to compensate Cox for the
loss it sustained as a result of LWCC’s failure to appoint counsel in a prompt manner.
We will further award penalt ies in the amount of $41,100.00 (representing a
doubling of the damage award) as authorized by La. R.S. 22:1973.

DECREE
For the reasons assigned, the judgment of the court of appeal is amended to
award damages in favor of Cox, Cox, Filo, Camel & Wilson, LLC and against
Louisiana Workers’ Compensation Corporation in the total amount of $61,655.00,
representing $20,550.00 in special damages and $41,100.00 in penalties. In all other
respects, the judgment of the court of appeal, as amended, is affirmed.

SUPREME COURT OF LOUISIANA
No. 2021-C-0566
COX, COX, FILO, CAMEL & WILSON, LLC
VS.
LOUISIANA WORKERS’ COMPENSATION CORPORATION
On Writ of Certiorari to the Court of Appeal, Third Circuit,
Parish of Calcasieu
WEIMER, C.J., dissenting.
The majority opinion of this court affirms the trial court’s ruling that LWCC
breached its duty of good faith and fair dealing under La. R.S. 22:1973, finding the
ruling was not manifestly erroneous. After review of the record, I am compelled to
respectfully dissent.
Liability under La. R.S. 22:1973 is dependent on a finding that an insurer’s
actions are “arbitrary, capricious, and without probable cause.” This court has held
that the phrase is synonymous with “vexatious.” Guillory v. Lee, 09-0075, p. 31 (La.
6/26/09), 16 So.3d 1104, 1127 (citing Reed v. State Farm Mut. Auto. Ins. Co. ,
03-0107, pp. 13-14 (La. 10/21/03), 857 So.2d 1012, 1021). An insurer’s action is
“vexatious” when it is unjustified, without reasonable or probable cause or excuse,
and is not based on a good-faith defense. See Reed, 03-0107 at 14, 857 So.2d at
1021. Moreover, a determination of whether an insurer acted arbitrarily, capriciously,
or without probable cause must focus on the facts known to the insurer at the time of
its action. Id.
The majority opinion does not properly take into account the record evidence
that despite appropriate and adequate efforts, LWCC was unable to immediately
03/25/22

obtain counsel for Cox due to the nature of Cox’s extensive workers’ compensation
practice, which created a conflict of interest with attorneys qualified to work on the
case. The record demonstrates that while attempting to retain counsel for Cox,
LWCC’s in-house counsel remained in contact with Cox, as well as the workers’
compensation counsel for the claimant, to ensure that Cox was not unfairly prejudiced
in the workers’ compensation proceeding. To that end, LWCC contacted claimant’s
counsel and obtained several extensions of time, both for the answer and discovery,
and Cox was never in danger of having a default judgment rendered against it and
was never required to represent itself in the OWC matter to protect its interests. The
record also demonstrates that LWCC kept Cox informed of its actions both by phone
and email.
I acknowledge that the determination of whether an insurer acted arbitrarily,
capriciously, or without probable cause is a factual question and the trial court’s
factual findings are entitled to deference; however, when the record does not support
its determination on this issue, the trial court’s decision must be reversed. Reed, 03-
0107 at 14, 857 So.2d at 1021 (citing Darby v. Safeco Insurance Company of
America, 545 So.2d 1022, 1028 (La. 1989)). Based on the record before the court,
I would hold that the trial court was clearly wrong in finding LWCC breached its duty
of good faith and fair dealing in denying a defense to Cox. Therefore, I respectfully
dissent.1
1 Based on my dissent, I would not address the amount of damages awarded. However, I do agree
with the majority’s finding that the amount awarded by the trial court is excessive.
2

S
UPREME COURT OF LOUISIANA
No
. 2021-C-00566
CO
X, COX, FILO, CAMEL & WILSON, LLC
VS.
LOUISIANA WORKERS' COMPENSATION CORPORATION
O
n Writ of Certiorari to the Court of Appeal, Third Circuit, Parish of Calcasieu
C
RICHTON, J., concurs in the result and assigns reasons:
I concur in the result reached in this opinion. However, I write separately to
note that because there is no clear majority in agreement with the reasoning utilized
herein, the matter is considered a plurality opinion and not a majority. See Linda
Novak, “The Precedential Value of Supreme Court Plurality Decisions,” Columbia
L. R
ev., Vol. 80, No. 4 (May, 1980), n. 1. (“Plurality decisions, also called no-clear-
majority opinion, are those in which a majority of the Court agrees upon the
judgment but not upon a single rationale to support the result. Thus, there is no
“opinion of the Court” in the ordinary sense.”) and Marks v. United States, 430 U.S.
188, 193 (1977) (internal quotations omitted) (“When a fragmented Court decides a
case and no single rationale explaining the result enjoys the assent of five justices,
the holding of the Court may be viewed as that position taken by those Members
who concurred in the judgments on the narrowest grounds.”).
03/25/22

SUPREME COURT OF LOUISIANA
No. 2021-C-00566
COX, COX, FILO, CAMEL & WILSON, LLC
VS.
LOUISIANA WORKERS' COMPENSATION CORPORATION
On Writ of Certiorari to the Court of Appeal, Third Circuit, Parish of Calcasieu
CRAIN, J. dissents in part and assigns reasons.
I respectfully dissent from that part of the majority opinion finding LWCC
breached its dut y of good faith to Cox . Louisiana Revised Statutes 22:1973(A)
imposes “a duty of good faith and fair dealing” on insurers. This extends to an
insurer’s duty to defend its insured against covered claims , which is the basis of
Cox’s suit against LWCC. See Pareti v. Sentry Indem. Co., 536 So.2d 417, 423 (La.
1988). Thus, to prove liability under Section 1973, Cox was required to prove, as a
threshold element, a breach of the duty to defend. While there is no jurisprudential
or statutory definition of a “duty to defend,” cases have generally held it requires
acting in good faith and with due regard for the insured’s best interest and to protect
the interest of the insured, especially from exposure to excess liability. Id; see also
Holtzclaw v. Falco, Inc., 355 So.2d 1279, 1283-84 (La. 1977).
The facts of this case are unusual. The insured is a law firm. The workers’
compensation claimant was the insured’s office manager, Ms. Pousson. Due to her
progressive vision loss, she was demoted to assistant office manager at a reduced
salary. With encouragement and assistance from Cox, she claimed supplemental
earnings benefits under the worker’s compensation law due to her salary reduction.
Cox clearly believed the benefit was owed. LWCC believed progressive vision loss
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was not compensable under the act. That issue continues to be litigated in the
workers’ compensation courts.
Faced with the disagreement over whether the claim is compensable or not
and, thus, whether it should be paid or defended, LWCC chose to retain outside , as
opposed to in -house, counsel to defend Cox. Although LWCC denied the claim,
they never denied Cox a defense.
As explained by Chief Justice Weimer in his dissent, r etaining separate
counsel for Cox proved difficult. LWCC contacted lawyers all over the state, but
because of the breadth of the Cox firm ’s law practice, all had conflicts preventing
them from representing Cox . The district court even took judicial notice of the
difficulty in finding conflict -free counsel due to Cox’s extensive workers’
compensation practice. That process took approximately four months. It is for that
time period that Cox claims it was denied a timely defense.
While seeking counsel for Cox, LWCC obtained an extension of time for both
LWCC and Cox to answer the workers’ compensation claim. Despite that extension
being in place, Cox unilaterally filed discovery responses in the compensation case.
In the context of the workers’ compensation litigation, the responses were not
compelled, but gratuitous.
When the initial extension to answer the compensation claim expired, LWCC
obtained an indefinite exte nsion of time. Nevertheless, Cox unilaterally filed an
answer in the workers’ compensation case. The answer was filed while the indefinite
extension of time was in place. Just like the discovery responses, in the context of
the workers’ compensation litigation, the answer was not compelled, but gratuitous.
These extensions prevented the possibility of any adverse actions or default
judgment against Cox. By any definition, that is defending Cox. Cox was never
required to either provide its own defe nse or represent itself in the compensation
case.

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Counsel was ultimately procured for Cox four months after the workers’
compensation claim was filed, and with no adverse actions having been taken against
Cox. Cox’s concern was that not paying the claim would expose it to damages and
penalties. But, the time required to hire counsel did not adversely affect the handling
of the Pousson claim, as LWCC had months earlier made, and conveyed to Cox, its
decision to deny that claim as not compensable under th e act. Any breach of the
duty to defend must be prejudicial to be actionable. Cox suffered no prejudice by the
delay. See Smith v. Audubon Ins. Co. , 95-2057 (La. 9/5/96), 679 So. 2d 372, 377
n.10. (“While the insurer still had the duty to act in good faith in protecting the
insured against excess exposure, no prejudice has been shown to the [insured]
because the insurer failed to inform him of settlement offers or to seek his
participation in offering a compromise.”).
The record establishes that LWCC, at all times, protected Cox from having to
file pleadings in the compensation case and from being exposed to an adverse
judgment. It is not clear what more LWCC could have done to defend Cox, other
than immediately tendering payment and admitting a compensable injury. LWCC
has a right to defend what it believes is a non-compensable injury under the act. In
fact, Cox stands to benefit from that defense. This is not a failure to defend. It is a
disagreement over strategy. Awarding damages under Section 1973 for that has no
precedent in our jurisprudence.1
The majority adopts the district court’s “factual findings” to conclude that the
four-month delay in procuring counsel, alone, is sufficient to constitute a breach of

1 Other jurisdictions have expressly recognized that a disagreement over defense strategy is
not sufficient to override the insurer’s right to control the defense. See OneBeacon Am. Ins. Co.
v. Celanese Corp., 92 Mass. App.Ct. 382, 392; 84 N.E.3d 867, 875 (2017) (“[O]pposing tactics of
defense . . . do not give rise to a sufficient conflict of interest under our law to justify [the insured’s]
refusal of [the insurer’s] control of the defense .”); Northern County. Mutual Ins. Co. v. Davalos ,
140 S.W.3d 685, 689 (Tex. 2004) (“ Every disagreement about how the defense should be
conducted cannot amount to a conflict of interest . . . . If it did, the insured, not the insurer, could
control the defense by merely disagreeing with the insurer’s proposed actions.”)

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the duty of good faith and fair dealing. I cannot find either factual or legal support
for that conclusion. For factual support the majority cites Cox’s unawareness of the
second, indefinite extension, which “left Cox justifiably concerned that its lack of
representation could expose it to adverse consequences in the OWC proceeding. . .”
The record establishes that notice was sent to Cox, but was unread because it went
to an email address that is not checked often. In any event, that concern could have
been relieved by getting a report of the case status from Mrs. Pousson, who remained
employed by Cox, or her attorney, Mr. Williams, who continued to talk to Cox about
the case, if not from LWCC. I find that the threshold element of breach of the duty
to defend was not proven.
Nevertheless, the majority awards penalties under Section 1973. That requires
finding that LWCC committed a bad faith breach of its duty to defend. Facts to
support bad faith do not exist in this record. Bad faith is an essential element of any
claim under Section 1973(A), which is premised on the insurer’s “duty of good faith
and fair dealing .” See La. R.S. 22:1973A. A simple breach of the contract is not
sufficient to trigger penalties. The duty to defen d is provided in the insurance
contract; therefore, its breach is determined by ordinary contract law principles ,
and for damages the insurer is liable for the insured ’s reasonable defense
costs. Arceneaux v. Amstar Corp., 10-2329 (La. 7/1/11), 66 So. 3d 438, 452. But,
if the breach is in bad faith, statutory penalties are available. Arceneaux, 66 So. 3d
at 452.2

2 Arceneaux applied La. R.S. 22:658, now designated La. R.S. 22:1892. The requirement of
a bad faith breach, while never addressed in detail by this court, has been repeatedly acknowledged.
See Baack v. McIntosh, 20-01054 (La. 6/30/21), ____ So. 3d ____ (2021WL2679825, *7) (“[La.
R.S. 22:1973] provides for the imposition of penalties against insurance companies who act
in bad faith.”); Smith v. Citadel Ins. Co ., 19-00052 (La. 10/22/19), 285 So . 3d 1062, 1069 (The
“bad faith cause of action” under Section 22:1973 is subject to a 10 -year prescriptive period.);
Kelly v. State Farm Fire & Casualty Co. , 14-1921 (La. 5/5/15), 169 So. 3d 328, 338 (An insurer
can be liable “for a bad-faith failure-to-settle claim” under Subsection 22:1973(A).)

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LWCC diligently searched for conflict -free counsel, communicated with
Cox’s managing partner, negotiated for and obtained legal extensions on behalf of
Cox, protected Cox’s interests, attempted to obtain a dismissal for Cox, and ensured
that Cox was not unfairly prejudiced in the workers’ compensation proceeding. But,
even if the four-month delay was not timely, Cox was not prejud iced by that delay
and nothing suggests LWCC was in bad faith. Absent such proof, penalties cannot
be awarded under Louisiana Revised Statutes 22:1973. I respectfully dissent.