Worker’s compensation insurance companies frequently deny claims, and not always for good reasons. Wisconsin worker’s compensation law, however, provides some basic protections by penalizing insurance companies and employers who refuse to pay worker’s compensation benefits without any basis for doing so.
“Bad Faith” Penalties Under WI Worker’s Compensation Law
Bad faith can occur when an employer or insurance company fails to report an injury, fails to make payments on claim, or stops payments. There are two basic requirements to establish bad faith:
- there was no reasonable basis for denying the claim; and
- the employer or insurance company knew or recklessly disregarded that there was no reasonable basis for denying the claim.
The most common situation in which bad faith claims arise is when insurance adjusters try to “play doctor.” If medical records indicate an injury is work-related, insurance adjusters cannot simply say that they have concluded otherwise. To do so, the insurance company needs the opinion of a doctor saying the injury or medical condition is not work-related. Another example of bad faith is an employer refusing to report an injury because they say that they do not believe the employee. The law requires that the employer report all injuries. They cannot refuse to do so simply because the employer disagrees with the employee.
Insurance companies and employers may have other bases to deny a claim. For example, there might be witnesses saying that no injury occurred, or that the injured worker slipped and fell for no apparent reason (an “idiopathic” defense). Still, for the employer or worker’s compensation insurance company to deny or refuse payment they need “credible evidence” that a claim is “fairly debatable.”
If an employer or insurance company acts in bad faith, the law provides a penalty of three times the amount due to the injured worker (including benefits and medical expenses), or $30,000 for each instance of malice or bad faith, whichever amount is less. It is important to note that the penalties are discretionary. If an Administrative Law Judge finds that an employer or insurance company acted in bad faith, the judge could assess the full penalty or none at all, depending on seriousness of the conduct in question. In persuading a judge to assess the penalty, it is important to have evidence of any hardship the failure to pay has caused the injured worker.
“Delay in Payment” Penalties Under WI Worker’s Compensation Law
There is also a separate penalty when an employer or insurance company simply takes too long to make a payment. The law provides a 10% penalty on delayed payments, and also allows the injured employee to recoup finance, collection, and interest charges on payments for medical bills that were inexcusably delayed. In most claims, temporary total disability benefits should be paid 14 days after the employee has missed work. There are separate deadlines for paying permanent partial disability payments. If a delay has already resulted in a bad faith penalty, the delay in payment penalty cannot be applied on top of that.
If you have suffered a work injury and you have been denied or refused worker’s compensation benefits, please call Hawks Quindel at (608) 257-0040 for a free consultation with one of our workers compensation attorneys.
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