Workers Comp Bad Faith – The Rarely Discussed Possibility
For many years, Workers Comp bad faith remains one of those rarely-discussed topics due to many factors. The subject rears its ugly head for what seems approximately twice per year. The worn-out catchphrase is “sent a chill over the industry.”
The reason I published this article originated with me reading an article this week containing that very phrase. My good friend Kevin Quinley was interviewed for the article. The article covered an automobile adjuster’s handling of a claim in Washington. See the Keodalah Decision
The workers compensation claimant bar has been pursuing bad claims handling as a tort for over 50 years. Yes, there have been some successes in this area.
Workers Comp Board Jurisdiction
The Workers Comp Board or Industrial Commission usually retains the authority over claims handling issues. If one looks at the current Appellate Court cases, the judge usually remands the case back to the lower court – usually the Appeals level within the respective workers compensation board or commission.
Approximately 20 years ago, an adjuster was found to have altered claims forms after obtaining signatures from the employer and employee. The changes to the forms occurred due to the adjuster wanting the claims agreement forms to be approved by the workers compensation commission. The adjuster even admitted altering the agreement forms. What happened to the case? The Court of Appeals remanded the case back to the Full Commission as they were deemed to have jurisdiction.
Exclusive Remedy
Exclusive remedy has always kept most claims issues within the board or commission’s authority. If one cannot sue their employer can they also not sue their adjuster?
Exclusive remedy is one of the underpinnings of how Workers Compensation insurance survives to this day. Exclusive remedy means that an injured claimant cannot sue his employer as a liability matter. Likewise, the employer cannot sue the employee for contributory negligence.
Structured Environment Element In Avoiding Workers Comp Bad Faith
Workers comp, overall, operates in a very structured environment. For example, making an offer to settle on a property or auto liability claim has many unknowns as to value. Offering too low (low balling) can be a path to a bad faith claim.
Workers comp bad faith remains a very structured environment. All the variables are pre-calculated from the Average Weekly Wage to a fee-schedule medical bill.
The great unknown of Workers Compensation barely exists from the way a First Report of Injury is filed to the settlement approval process.
Starve Them Out
The iciest my veins had ever felt reviewing a claim that I had taken over from a terminated adjuster was this phrase:
I am going to sit on this one and starve them out to get a quick, cheap settlement. Oh, yes that was documented in the file and could not be removed by anyone.
The file was not yet settled – back TTD and medical bill payments were inked that day along with a fine for late payment. That, to me, remains my crowning example of going down the path towards a massive bad faith claim.
Bottom Line
Even though the above passages point to a safe harbor while handling workers comp claims, no adjuster should ever think they are immune to a workers comp bad faith action against them.
©J&L Risk Management Inc Copyright Notice
