Thursday, February 26, 2015

Bad Faith Followup

A couple days ago I asked whether workers' compensation claims payers should be subject to "bad faith" civil liability, or whether the cloak of exclusive remedy that employers and workers bargained for should also cover those tasked with administering claims.

As I noted, jurisdictions are split, though the details of those that do recognize bad faith liability vary quite a bit.

The responses to my highly unscientific, completely anecdotal, and purely sophomoric inquiry surprised me.

First a couple disclaimers. While the backgrounds of those who responded are varied and different, I don't know from which jurisdictions respondents are from or what political affiliations these folks harbor.

Also, my question was posted only two days ago, so it is likely that there is still some pent up response out there.

Bad Faith Followup

Nevertheless, I was still surprised that every single response, regardless of perceived orientation, was that exclusive remedy should NOT protect the payor, and that if egregious behavior was committed then liability for bad faith claims administration should be applied.

A risk manager said: Not only should they be held accountable for clear violations of Law but publicly announced. I will also suggest that directors of (Police, Fire etc) make sure that Risk Management is not buying their legal failures in their budgets and claiming that Workers Comp cost are too high for (Police/Fire) departments.

A California Qualified Medical Examiner stated: It is a sensitive question because what some of these carriers are doing to the IWs is horrible! They routinely DENY straightforward claims with no legitimate reason. You fall off a ladder in front of your boss, get taken to the ER in full spinal precaution and they very well may deny your claim! (My example isn't hyperbole, I have cases similar to that!) It's like, are you kidding me? Obviously, they must not even be getting a slap on the wrist...more like high fives and slaps on the back.

An injured worker's advocate (not an attorney) commented: Workers' compensation insurers routinely controvert claims in a manner that cannot be described in any other way -- the are clearly acts of legal "bad faith".

A Senior Claims Examiner noted: Sometimes in some companies the bad faith does exist. They should be able to bring a civil law suit against the carrier or TPA. They bring class action law suits. Why not ?

A Georgia injured worker's attorney said: If state statutes (like in GA) are not going to have any meaningful 'teeth' then yes, bad faith actions should be allowed. Perhaps it would encourage more ethical behavior from insurance companies.

And a Wisconsin defense attorney agreed: In Wisconsin bad faith claims are part of the workers compensation statute and allow recovery of the lesser of $30,000 or a 200 percent increase in benefits to be paid. Seems to be among the better equitable ways to deal with such situations.

I'm interested in more comments. Please post them or send them to me.

In the meantime, my colleagues and friends Mark Walls, vice president of communications & strategic analysis at Safety National Insurance Company and Kimberly George, senior vice president of corporate development, M&A and healthcare at Sedgwick Claims Management Services, Inc., are collaborating on a new initiative to further educate the industry, which I applaud.

From their press release, with a little editing by me:

They will be hosting a regular, complimentary webinar series and interactive forum called "Out Front Ideas with Kimberly and Mark." The series – sponsored by Sedgwick and Safety National – will be dedicated to covering important workers' compensation-related topics that are not receiving enough attention in the industry.

"Out Front Ideas with Kimberly and Mark" will provide a unique alternative to the traditional webinar format by including a mix of communication methods, such as podcasts and live interviews from industry events. The approach will be to collaborate on meaningful topics that are not discussed openly in the industry or, in some cases, not at all.

Both well-known experts and advocates in their fields, George and Walls plan to explore the perspectives of risk managers, brokers, third-party administrators, human resources professionals, carriers and other industry stakeholders. The goal of the series is to bring in a variety of experts to provide input from each thought-provoking angle to initiate or advance conversations.

"Out Front Ideas with Kimberly and Mark" will launch with its first webinar on the advantages of unbundled claims handling scheduled for March 31, 2015. Visit for more information.

So Mark and Kimberly, you both knew THIS was coming!

Should claims payers be cloaked with exclusive remedy immunity from bad faith civil liability? Or should they be made to answer civilly for egregious claims handling behavior?

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