When a workers’ compensation claim is unjustly denied, the employer’s insurance company is acting in bad faith. An estimated 4.9 million victims file a workers’ compensation claim to pay for their medical bills each year. Medical bills are the most common workers’ compensation claim and should be fully covered by the employer’s insurance. However, not all claims are automatically approved or carried out promptly. The injured worker has to follow claim submission guidelines and provide all the necessary information to the insurance company within a certain time frame. If this is not done, then the workers’ compensation insurance company may deny the claim due to the worker failing to do what was required. However, if the injured worker follows all of the guidelines and still faces claim denial, he or she may be facing an insurance company that is acting in bad faith. Your attorney can help you understand how to prove bad faith insurance in workers’ compensation claims.
Fear of denial of a claim can make it harder for the worker to heal and get back to work without worry or stress. Victims need to know the basics about how workers’ compensation works, what type of insurance the employer has, and how to tell if the insurance company is doing all it can to get claims handled correctly. It’s not always easy to know if a company is handling a claim the proper way when the employer or the worker is not familiar with the standard practices accepted by the industry. This can make it difficult to decide if the agent is doing all he or she can pay out a fair claim. Understanding what bad faith insurance is, and how the workers’ compensation system works, helps injured workers protect their rights during the claims process.
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What Is Bad Faith Insurance in a Workers’ compensation Claim?
It’s important to know the definition of insurance bad faith when trying to file a potential complaint against the insurance company involved. Bad faith insurance practices can be difficult to prove, and that burden usually falls on the worker filing a claim. Bad faith does not only apply when the insurance agent decides to unfairly deny a claim but also applies to how the claim is handled. One of the major examples of bad faith insurance is when an insurance company denies a medical procedure or consultation that is recommended as necessary by the doctor that saw the injured worker.
Some other examples include:
- Forcing the injured worker to get multiple tests for an injury that was obvious and diagnosable upon the first visit. This can also include telling a victim to visit multiple doctors, only to continue to get the same diagnosis as the first doctor he or she saw.
- Paying less to the worker than the approved amount for the claim.
- Delaying payment for an unjustifiable reason, or failing to send a payment to the correct address on file.
- Denying all or some of the benefits that are offered to the claimant in the policy, or lying about what benefits are available. It is important to know whether the insurance policy the employer carries is only for medical expenses, or it includes disability to help pay for the employee’s lost wages during recovery.
- Failing to communicate with the claimant or his or her attorney on the state of the claim. This failure might lead to possible missed deadlines if all required information has not been handed over to the insurance company in time to file all necessary paperwork. Claimants must give the insurance agent updated contact information so that the company cannot say that it was the injured party’s fault they did not have information for the claim.
It is up to the employer or the worker filing the workers’ compensation claim to prove that the insurance company has taken actions in bad faith. Most insurance companies have policies in place that state that if a denial of a claim is made, then it must be backed up with facts as to why the claim is being denied. This way, if a complaint is made against them, they can produce this documentation to back up their decision-making process. A workers’ compensation lawyer can help either the employer or the worker figure out what to do if a workers’ compensation is denied when the claimant believes that it was not handled in good faith.
What Happens When a Workers’ Compensation Insurance Company Acts in Bad Faith?
If a worker feels as though the insurance company has acted in bad faith and he or she has evidence to support this, then he or she can sue the insurance company. Most insurance policies have an “acting in good faith” clause that states that the insurance company will investigate the claim in a timely manner and payout to the claimant the full amount of money that is due to the claimant, if it is found to be due. This clause encourages companies to review each claim thoroughly and within the required timelines. A claim review is usually accomplished by looking at the medical report provided by the claimant’s medical provider and his or her recommendations for surgery or other treatments.
A claim review will also include the details surrounding how the injury was sustained by the worker. If the injury is found to have occurred due to a worker’s purposeful act or intoxication, then it will fall to the worker to pay for his or her medical bills. If these exclusions do not apply, then the review process will continue.
Medical records and the severity of the injury are reviewed next. This will determine which benefits are appropriate for each claim. Companies cannot ignore or reject the doctor’s diagnosis. Instead, they typically evaluate all of the possible treatment options or request an independent medical exam. Medical treatments should be fully covered by the insurance company once the treatment has been decided upon. The claimant’s choice of treatment may vary, and the injured party and the insurance company may not always agree on the best option. If the insurance company has made its decision based on all medical records and industry standards, then the claimant will find it harder to prove bad faith. Communications should be made to update the injured party or employer on the status of the claim.
Suing for Workers’ Compensation Insurance Bad Faith
Different states have different requirements when suing an insurance company for bad faith insurance. Some steps to suing an insurance company may include filing forms that notify the insurance company about the complaint and allowing the insurance company to correct any errors they may have made. Before filing the complaint, the worker, or his or her attorney, should compile evidence that shows that the company did not act in good faith, and this documentation should be easy to find upon the company’s internal review. The complaint will include the claim number that the worker was assigned when his or her case began. This claim number allows the insurance company to track how the agent assigned to the case handled each step and determine whether their behavior goes against company policies and industry standards.
Once filed, the complaint will give the company a chance to rectify an error if they should find one and avoid going to court if possible. An attorney can help to make sure that all the correct documents are filed and sent to the corresponding locations, and that this is done within the proper time frame to proceed with a bad faith insurance lawsuit. He or she will also be able to help the claimant go over the response from the insurance company and communicate directly on the claimant’s behalf, so he or she can focus on recovering from his or her injury. If the company does not respond to the complaint or correct the error, an attorney can start the legal process of suing the company to recover the amount denied. If the error was severe enough, the court might award additional settlement money.
How to Prove Bad Faith Insurance in Workers’ Compensation
One of the biggest factors in proving that an insurance company has acted in bad faith is knowing what the industry standards are and if they were followed in a particular claim. If all insurance agencies treat similar medical claims the same way, then it will be hard to prove that the agent or company was not acting in good faith when they denied the claim. It is also important to know what benefits are offered under the insurance policy that the employer holds. Not all policies are required to pay the same range of benefits. Some companies only provide insurance that will pay for medical treatment, which is referred to as medical compensation only. As the claim process begins, claimants should ask questions to uncover:
- What doctors are considered in-network versus out-of-network to ensure all medical visits will be covered by the claim?
- Deadlines for all the paperwork must be provided to the agent to get the claim completed. If these are turned over to the company, and the agent failed to use the provided information correctly or misses any deadlines, these behaviors can be evidence that helps prove bad faith.
- Whether a temporary disability benefit is offered while the injured party is recovering from his or her injury. The amount that will be paid will differ, taking into account the severity of the injury, and the benefits will stop once the worker goes back to work.
- Whether a permanent disability benefit is offered if the worker will not be able to go back to work because of complications due to his or her injury. A partial disability could be offered to the worker if he or she is unable to go back to the capacity of work that he or she was capable of before the accident occurred. This will help a worker that can go back to work but has to take a lower-paying position due to injury-based restrictions.
Additionally, claimants should:
- Make sure to keep copies of all paperwork involved with the claim and ensure that they are the same as what the insurance agent has. Claimants may want to check that the agent has kept all relevant paperwork up to date.
- Check that all payments are being sent on time, in the correct amount, and keep track of when they arrive. The worker should also track whether the payment is for medical treatments or for disability, and make sure both are being sent when applicable.
- For fatal workplace accidents, surviving dependents should ensure payments of the claim include coverage for funeral and burial expenses. There are possible cash benefits for any dependents of the deceased worker.
If an attorney handling the denied workers’ compensation case has determined that the insurance company has acted in bad faith and has started the legal process to file a lawsuit, then it is up to the courts to decide if the negligent behavior has been proven. If an insurance company has been found to have handled a claim in bad faith, then it can be sued for punitive damages in addition to compensatory damages. This means the company may not only have to pay for the amount that should have been owed, but also may be fined an additional amount intended to punish the company and correct their policies, so this error does not continue to occur. Because the insurance company might have to pay out more money in damages than just the claim itself, they should have outlined and accessible company policies to avoid breaking the good faith clause. This should also mean that they will try to resolve any complaint out of court. An attorney can help to negotiate the best settlement for the worker.