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Vantine v. Elkhart Brass Manufacturing Co.

May 7, 1985


Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. Case No. S82-0510 - Allen Sharp, Judge.

Bauer and Coffey, Circuit Judges, and Doyle, Senior District Judge.*fn*

Author: Coffey

COFFEY, Circuit Judge.

The plaintiffs, Kenneth and Rebecca Vantine, filed suit in the Elkhart Indiana Superior Court alleging that the actions of the defendant, Elkhart Brass Manufacturing Company, Inc. in terminating the employment of Kenneth Vantine constituted a retaliatory discharge for his filing a workmen's compensation claim. The plaintiffs further alleged that the defendant, Wausau Insurance Company, fraudulently and wrongfully retaliated against Kenneth Vantine to deprive him of the benefits he was entitled to receive under the Indiana workmen's compensation laws. Following removal of the suit to the Federal district court, summary judgment was granted to each of the defendants. We affirm.


The following facts relevant to the Vantines' claim against the defendant, Wausau Insurance Company ("Wausau") are not in dispute and were cited by the plaintiffs in their complaint against Wausau. On January 25, 1980, Kenneth Vantine sustained a severe and permanent injury to his back while performing his duties as an employee of the Elkhart Brass Manufacturing Company, Inc. ("Elkhart Brass") located in Elkhart, Indiana. Vantine was referred by his employer to the company's physician, a Dr. Hastings, who referred him to Dr. Echeverria, an orthopaedic surgeon, for evaluation. Dr. Echeverria found that Vantine had suffered a severe sprain of the lumbo-sacral spine. On May 14, 1980, Wausau requested that Vantine be examined by a Dr. Earl Heller, a South Bend, Indiana orthopedist.*fn1 Dr. Heller examined Vantine on May 29th and reported to Wausau that Vantine:

"most likely sustained a lower back strain as a result of the injury. . . . However, I was unable to substantiate his continued complaints with any objective physical findings in the office. This patient should be encouraged to increase his activities and I do not find any objective findings that would prevent him from working at this time."

After learning of Dr. Heller's evaluation of Vantine's condition, Wausau terminated Vantine's weekly temporary total disability benefits. On August 29, 1980, Wausau requested that Vantine be examined by a Dr. Morris Friedman, another South Bend, orthopedic surgeon. Vantine, who once again had to correct a scheduling error made by Wausau, was examined by Dr. Friedman on September 19, 1980 and was advised that he should avoid surgery because, in Dr. Friedman's opinion "patients with his clinical picture," i.e., "the absence of true, hard clinical findings for a herniated disc, . . . the absence of a strongly positive myelogram, and especially . . . patients who report work related injuries," often did not benefit from surgery. Dr. Friedman informed Vantine that if he followed a recommended exercise program he could return to work in approximately four to six weeks. Wausau restored Vantine's temporary disability benefits based upon Dr. Friedman's recommendation. Vantine, who had continued to be treated by Dr. Echeverria since his initial consultation with him, elected to have the lumbar fusion surgery recommended by Dr. Echeverria on October 2, 1980. On October 14, 1980, Wausau sent a letter to Vantine denying any responsibility for the expense of the surgery and further informing Vantine that it would cease to pay temporary total disability benefits after October 30, 1980 - the date Vantine could have returned to work according to Dr. Friedman.

On November 26, 1980, Vantine filed a claim for workmen's compensation benefits with the State of Indiana and a hearing was held on June 15, 1982, before a Single Hearing Member of the Indiana Industrial Board. The Single Hearing Member was asked to determine whether Vantine should be paid temporary total disability benefits beyond October 30, 1980; whether the additional medical expenses of Dr. Echeverria were justified; whether Vantine suffered a permanent partial impairment; and whether Vantine should be awarded attorneys' fees because either Elkhart Brass or Wausau acted in bad faith in handling his claim. Based upon the evidence presented, the single Hearing Member awarded additional temporary total disability benefits from October 30, 1980 to January 13, 1981 and required Wausau to reimburse Vantine for all medical expenses stemming from the accident, including Dr. Echeverria's surgery. The single Hearing Member also found that there was no evidence to substantiate a claim that either Elkhart Brass or Wausau had acted in bad faith.

The following facts relevant to the plaintiffs' claim against Elkhart Brass are not in dispute. Kenneth Vantine's employment relationship with Elkhart Brass was governed by a collective bargaining agreement between the company and the International Association of Machinists and Aerospace Workers, Local No. 118, district No. 103 ("Union").*fn2 the collective bargaining agreement provided that all dismissals of employees must be for just and proper cause and defined a grievance as "any dispute between the Company and any employee in the Bargaining Unit, regarding the interpretation, application, claim of breach or violations of this Agreement." the collective bargaining agreement also provided that any employee having a grievance with Elkhart Brass must attempt to settle that matter in the manner provided in the grievance procedure of the agreement. The grievance procedure, which was the sole method for settling disputes, contained a four-step method of dispute resolution, the final step being arbitration. According to the terms of the collective bargaining agreement, the decision of the arbitrator was final and binding on the Union, its members, the employee or employees involved, and Elkhart Brass. The collective bargaining agreement also established the procedure to be followed when an employee was unable to work because of an extended illness or injury. Article III, Section 4(c) provided:

"Sick leave will be granted for a period of one (1) year, or a period of time equal to the employee's seniority, whichever is the shorter. After such a period of time, the employee will revert to a lay-off status and his job will be filled on a permanent basis."

The Collective Bargaining Agreement provided further that, "[a]n employee shall cease to have seniority if:. . . .he is laid off for a period equal to his length of seniority, at time of lay-off, without being recalled."

Elkhart Brass placed Vantine on sick leave January 28, 1980, and he remained on sick leave for one year. On January 28, 1981, at the expiration of the sick leave period, Elkhart Brass placed Vantine on layoff status. When the Union learned that Vantine was placed on layoff status, it filed a grievance claiming that "employees off work because of an injury covered by workmen's compensation should not be treated the same as those on sick leave but should retain seniority rights indefinitely." On April 22, 1981, the Union filed a grievance on behalf of Vantine, alleging that Elkhart Brass violated the collective bargaining agreement when it placed Vantine on sick leave and layoff status pursuant to Article III, Section 4(c). this grievance was processed through the first three steps of the grievance procedure, and because the matter was not resolved, it was submitted to an arbitrator for a final and binding resolution. Elkhart Brass and the Union, acting in its capacity as collective bargaining representative but without Kenneth Vantine's knowledge much less consent, entered into a written agreement on January 4, 1982 in which they agreed that, if the arbitration were resolved in favor of Elkhart Brass, the Union would agree not to file a grievance protesting Vantine's termination. On August 16, 1982, the arbitrator issued an award concluding that Elkhart Brass properly interpreted the collective bargaining agreement when it placed Vantine on sick leave and lay-off status pursuant to Article III, Section 4(c). During the pendency of the arbitration, Elkhart Brass terminated Vantine because he had been on lay-off status for a period of time equal to his length of seniority, and neither the Union nor Vantine filed a grievance concerning this termination.

On October 7, 1982, the plaintiffs filed a complaint in Elkhart Indiana Superior Court alleging that Wausau acted in bad faith because: (1) it would not recognize that Dr. Echeverria was an "authorized physician: within the meaning of the Indiana Workmen's compensation Act.*fn3 (2) it sought out the services of Drs. Heller and Friedman instead of relying entirely upon the opinion of Dr. Echeverria; (3) it informed Vantine of incorrect appointment dates with Drs. Heller and Friedman; (4) it failed to obtain a permanent partial impairment evaluation from Drs. Heller and Friedman; (5) it failed to advise Vantine that it would not pay for the surgery performed by Dr. Echeverria; and (6) it improperly terminated Vantine's temporary total disability benefits on October 30, 1980. The complaint further alleged that the actions by Wausau and Elkhart Brass were ...

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