Carrier's delay in paying benefits justified by duty to investigate claim

Under Mississippi law, an insurance carrier will not be found to have delayed payment in bad faith where it has a legitimate reason for the delay, the delay does not amount to a malicious or willful wrong, and the carrier never denied the compensability of the claim.

Case name: Casey v. Liberty Mutual Ins. Co., No. 08-60379 (5th Cir. 01/26/09, unpublished).

Ruling: The 5th U.S. Circuit Court of Appeals upheld summary judgment for the insurance carrier, finding that it did not delay paying workers' compensation death benefits in bad faith.

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What it means: Under Mississippi law, an insurance carrier will not be found to have delayed payment in bad faith where it has a legitimate reason for the delay, the delay does not amount to a malicious or willful wrong, and the carrier never denied the compensability of the claim.

Summary: The plaintiff's husband was killed when he swerved into oncoming traffic and collided head-on with a semi-truck. There was no dispute he operated in the scope of his employment, and the carrier never denied the claim. However, the plaintiff alleged that the carrier's delay in paying benefits within 14 days and its unreasonably long investigation into the compensability of her claim constituted bad faith. The 5th Circuit disagreed, holding that the carrier was awaiting the results of a Highway Patrol toxicology report and an order from the Mississippi Workers' Compensation Commission approving the lump-sum payment the claimant sought.

Mississippi law provides that an employee's intoxication will bar payment of workers' compensation benefits. Therefore, the carrier needed to obtain the results of the toxicology report to determine compensability. The investigation took longer than expected, and the carrier tried to obtain the toxicology results from the highway patrol numerous times. When the toxicology report came back negative, the insurance carrier promptly informed the plaintiff of its intention to pay.

The plaintiff also sought a lump-sum payment of benefits, but the payment of lump-sum benefits must be approved by an order of the MWCC. Before the MWCC order was issued, the plaintiff requested immediate compensation. The carrier, in good faith, immediately paid all biweekly benefits that had accrued to that date.

The court ruled that although the carrier had not initially begun payment within the state's 14-day time frame, the carrier never denied the claim, and the delay was due to the carrier fulfilling its duty to fully investigate the claim. Thus, summary judgment was appropriate for the carrier.

March 9, 2009

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