Andrews v. Ridco, Inc.: Bad Faith Handling of Workers’ Compensation Claims

Andrews v. Ridco, Inc., a case from the South Dakota Supreme Court, involved an individual who suffered an injury to his back and neck in March of 2005 while working as a gold polisher. Employer’s workers’ compensation insurance company paid claimant benefits for two years following his accident, until claimant filed a claim with the workers’ compensation commission seeking additional benefits, as his condition had worsened over time.

gaveljan.jpgDuring this hearing, a workers’ compensation commissioner concluded claimant’s increased head and neck pain was work-related, as his on-the-job injury was a major contributing factor. Roughly three years after this, claimant filed a lawsuit against insurance company in which he alleged bad faith handling of his workers’ compensation claims.

As part of this lawsuit, claimant alleged common law fraud and statutory fraud as well as wrongful discharge. As our Spartanburg, South Carolina workers’ compensation attorneys can explain, the difference between common law claims and statutory claims, other than statutory claims being codified, is that statutory claims often allow for additional damages for fraudulent misconduct.

His claims related to a program once allegedly run by insurance companies large parent corporation known as the “Large Loss” program. Essentially, according to court records, company officials wanted any claim valued at over a million dollars in payouts to be targeted for extra attention and scrutiny from claims handlers to prevent such a large loss of revenue. The funds mentioned in company documents had values of over $1 million. Claimant’s claim value was below $350,000, and the company argued not only was it below the threshold, but this program was stopped in 2001.

In response to this, claimant argued there was another initiative to reduce payouts with a $500,000 threshold, and his claim was close enough to fall within this loss prevention program.

During this lawsuit, claimant requested a great deal of information during discovery. Specifically, claimant was interested in his complete claim file and claim files and notes for 247 claims admittedly within the loss prevention program. In response to these discovery requests, insurance company asserted most if not all of these documents were not relevant and protected by attorney client privilege.

Trial judge order some of the documents be produced to him for an in camera review and the other documents should be turned over to plaintiff at a set date and time. Insurance company provided many of the documents with major redactions, and submitted other documents for in camera review. As our Charlotte workers’ compensation attorneys can explain, an in camera review means a judge will review documents without the other party having access to make a determination of they should be turned over to the other party.

Insurance company appealed this decision on grounds attorney client privilege protected the redacted information. Ultimately, the state supreme court reversed and remanded trial court’s evidentiary rulings for reasons trial court could not assess if these redactions were protected by attorney client privilege without an in camera review prior to an order to disclose them. Therefore, judge would have to review all of the documents before making a decision as to relevance and privilege.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:
Andrews v. Ridco, Inc., April 29, 2015, South Dakota Supreme Court

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