Bad Faith in Workers' Compensation
A workers' compensation insurance company can only deny or end benefits if it has a reasonably debatable reason to do so. If it does not have one and it can be shown the insurance company knew or recklessly disregarded that there was no basis to deny workers' compensation benefits, the company has acted in bad faith. The penalty for bad faith is up to 200% of the benefits denied up to a maximum of $30,000. The penalty also applies to an employer who unreasonably refuses or fails to report a work injury to its insurance company. Benefits subject to a bad faith penalty include temporary disability (wage loss), permanent disability, vocational rehabilitation, and medical expenses.Employer Does Not Report Worker Injury
There are situations in which acts of bad faith are common. The most common is when an employer does not report an alleged injury. Some employers believe their insurance premiums will increase if they report a work injury so they discourage the injured worker from making a claim. If the employer has knowledge of an injury, however, it is its obligation to report it.Insurer Denies Claim Without Medical Support
Another common occurrence is an insurer denying a claim without medical support. For example, an insurance adjuster may deny a repetitive use injury (e.g. carpal tunnel syndrome) because he or she does not believe the employee’s work could have caused the claimed medical condition. Such a denial is bad faith if there is an opinion from the treating physician supporting the claim. The adjuster is not a medical expert and cannot substitute his or her own opinion for that of an expert. Keep in mind, however, the burden is on the injured worker to bring forth medical evidence that a work injury occurred before the insurer has a duty to pay. Also, an insurer is not acting in bad faith by denying a claim if it had a reason to believe the facts do not support the claim. For instance, if a worker reports an injury as work-related but the employer or insurer has information that the injury did not occur as alleged, a denial under that circumstance is not bad faith.Delay in Payment of Work Comp Benefits
A penalty may also be imposed when there is no dispute that a work related injury occurred but benefits are not paid in a timely fashion. If an employer or insurer inexcusably fails to make payments due within 14 days of when an employee first is unable to work, there may be a 10% delay in payment penalty (discretionary on the part of the Department of Workforce Development). If the inexcusable delay results in the first payment being made more than 30 days after wage loss begins, a 10% penalty is mandatory. For a late payment after the first payment, a 10% penalty will be applied if it is inexcusable. What is or is not inexcusable depends on the facts of each case. An insurer simply not paying in timely fashion due to laziness is inexcusable. On the other hand, a late payment due to mail delivery problems outside insurer control will likely be considered excusable. A very common late payment situation occurs when the an Administrative Law Judge orders payment after a decision or settlement. Insurers have 21 days to make payment in those cases. If a settlement payment is not paid in a timely fashion, there may be a 10% penalty. If an insurer fails to pay an order after a hearing on the merits, it may be penalized 25% of ordered payments due.Contact a Wisconsin Workers' Compensaiton Attorney
If you believe that your workers' compensation benefits have been denied without a valid reason or your payments are not bing paid timely, please contact one of the experienced attorneys at Hawks Quindel for a free consultation. Please call a Madison workers' compensation attorney directly at (608) 257-0040 or a Milwaukee workers' compensation attorney at (414) 271-8650, or email us via our Contact Page.