Insurance companies are required by law to deal with their consumers fairly and honestly. When they do not, it called “bad faith,” and if proven, it can result in an insurer paying triple the amount of damages they might otherwise have paid.
This is true of carriers of workers’ compensation insurance just as it is for auto insurers and others.
However, outcomes in these cases can vary extensively from state-to-state.
Recently, the North Carolina Court of Appeals weighed one such case, Bowden v. Young, reaching a wholly different outcome than the 5th Circuit Court of Appeals last year applying another state law in Williams v. Liberty Mutual, a similar case.
Let’s start with Bowden. According to court records, plaintiff managed a fast-food restaurant in North Carolina when a man allegedly assaulted him during an attempted armed robbery of the restaurant. Subsequently, plaintiff filed a workers’ compensation claim alleging various physical and emotional injuries caused by the assault. The claim was handled by his employer’s insurer.
While the workers’ compensation claim was pending, plaintiff filed a separate complaint against insurer alleging insurer engaged in a pattern of improper conduct while processing his claim, and that conduct amounted to bad faith. Those actions involved being belligerent to him over the phone, wrongly communicating with his doctors absent his consent, denying requests for medical treatment through “form letters,” pressing to suspend his compensation and demanding he settle the claim.
Defendant insurer moved to dismiss all claims pursuant to N.C. R. Civ. P. 12(b)(1), arguing trial court lacked subject matter jurisdiction on the case because the Workers’ Compensation Act granted the state Industrial Commission exclusive jurisdiction over such matters. Trial court denied request for summary judgment, but appellate court reversed.
The Workers’ Compensation Act does provide the commission has exclusive jurisdiction not only over work-related injury claims, but also all claims that are ancillary to the original. Those include allegations of mishandling or bad faith.
Plaintiff acknowledged, but argued that because the insurer’s actions amounted to an intentional tort, it was an exception to the exclusive jurisdiction of the commission. Generally, this is true, but, the court noted repeated precedent has held all claims regarding the processing and handling of workers’ compensation claims have to go before the commission.
That was not the conclusion reached by the 5th District in Williams. In that case, a Mississippi construction worker was working for an Alabama-based contractor in Mississippi when he fell 15 feet and suffered severe injuries to both feet. After making a workers’ compensation claim (in which contractor and insurer initially denied coverage, but later conceded), worker was to receive a total of $400,000 in compensation.
However, the settlement didn’t release a bad faith claim worker had filed against insurer in Mississippi court. Although the carrier sought to dismiss the claim, both on the exclusivity of the workers’ compensation payout and also because it argued Alabama law, which bars bad faith in workers’ comp law, was applicable, the 5th District rejected that argument. Mississippi state court was the appropriate venue for the dispute, despite the exclusivity of workers’ compensation claims, because plaintiff lived there and also that’s where the injury occurred.
The court pointed out in Mississippi, injured workers can recover damages from a workers’ compensation insurer for the independent tort of bad faith.
The circumstances of your case and the state in which your claim arises will affect your ability to pursue bad faith action against a workers’ compensation insurer in state court.
Contact the North Carolina work injury lawyers at the Lee Law Offices by calling 800-887-1965.
Bowden v. Young, Feb. 17, 2015, North Carolina Court of Appeals
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L & L Enterprises v. Arellano – Worker Legal Resident Status Irrelevant, Feb. 24, 2015, Winston-Salem Workers’ Compensation Lawyer Blog