Cavalcade of Risk #94 is posted at My Wealth Builder. Among the many good posts, our friend Hank Stern offers some good news for the holiday season.
Our fellow blogger Joe Paduda was recently speaking at the Casualty Actuarial Society’s annual meeting on the topic of health reform and its impact on workers comp, and his remarks were covered by Insurance Journal. Paduda noted that, whether or not it gets enacted, health care reform is already having a major impact on workers’ comp. On the same topic, Roberto Ceniceros has a post about how healthcare reform is stalling some return-to-work advancements.
Jon Gelman on Genetics and Workers’ Compensation Claims. Also see our past posts on the topic: Brave new World and Genetic Testing And Workers Comp
Risk & Insurance has posted some interesting case law: In Michigan, a worker establishes asthma as compensable disability and in Colorado, a claim for a bad faith denial of benefits is considered to be separate and distinct from the underlying workers’ compensation entitlement claim and therefore is not precluded. However, an insurer can preclude certain issues in a subsequent proceeding.
We recently touted Mark Wall’s WC forum on LinkedIn as an excellent resource – but one feature that we neglected to mention is an active job board, where members can post a job or find a job. That’s a natural use for LinkedIn, particularly in today’s tough times – register for the Forum.
Winter safety tips from BLR Daily Advisor: Cold Weather Hazards: Are Your Workers at Risk? and Brrr-ing Down the Risk of Cold-Related Injuries
Finally, this item made us wonder if the North Pole’s workers’ comp coverage includes stress?
Posts Tagged ‘bad faith’
Cavalcade of Risk #94 and general workers comp news notes
Thursday, December 17th, 2009Exclusive remedy, “bad faith” claims, and the $12 million lawsuit
Friday, January 23rd, 2004Exclusive remedy generally protects an employer from a lawsuit. If an employee suffers a work related injury, the employer provides a state-regulated schedule of benefits to cover medical care and lost wages during recovery. In exchange for these benefits, the employee forfeits the right to sue. Workers compensation becomes the sole or exclusive legal remedy. Often, this protection is extended to insurers who are acting as agents for the employer.
However, there are exceptions. One exception is bad faith on the part of the insurer. A successful bad faith suit might be triggered by an insurer’s nonpayment of claims, mass denial of claims, or the like.
This week, a woman in South Dakota just secured a $12 million award for a bad faith claims practice, most of it in punitive damages. The claim involved the denial of about $8,000 in medical bills for a carpal tunnel injury. The original grounds for denial centered around compensability and whether the injury arose out of and in the course of employment.
Her insurer said the denial occurred because “there was a lack of proof that her hand problems were caused by her work” and further suggested that “her hand problems were likely the result of a 1998 home injury, not her work in the kitchen of the nursing home.”
A determination of work-relatedness and compensability are huge issues in many repetitive stress injuries, and if this claim dispute had ended there, the claim might have stayed within the realm of the state workers comp authority to uphold or deny. But in this case, the insurer’s claims handling practice was the smoking gun that gave rise to a charge of bad faith, opening the door to a suit.
” … the case centered around a Travelers Insurance incentive program that offered bonuses to claims workers who lowered payouts on claims. Called the Claim Professional Incentive Program, it offered workers end-of-year bonuses of as much as 20 percent of their pay if they reduced overall payouts from one year to the next.
Abourezk argued that the program created an improper conflict of interest for claims adjusters, who are supposed to be motivated by fairness to claimants, not cost control for insurance companies.”
The judgement will be reviewed by a higher court so the punitive award may or may not stand, but it serves as a cautionary tale to insurers — who are, after all, essentially finance companies — that managing a workers compensation claim is not simply the exercise of processing paper in the most cost efficient way possible, but the response to a human event. In our experience, keeping the focus on the person rather than the dollars generally results in the most favorable outcome by whatever measures you use for success.
