Case name: Ag-One Co-op and Trane Co. v. Scott, No. 93A02-0904-EX-298 (Ind. Ct. App. 10/13/09).
Ruling: The Indiana Court of Appeals determined that a former employer did not act in bad faith when it denied workers' compensation benefits to the worker.
What it means:
In Indiana, an insurer may be held liable for bad faith in adjusting or settling a compensation claim. However, if the insurer properly denies a compensation claim, it has not acted in bad faith.
A worker sustained a compensable injury to his shoulders working for Trane Co. He received medical treatment and was assigned an impairment rating. He subsequently began working for Ag-One and returned to the doctor complaining of increased shoulder pain. Two physicians disagreed over which employer was responsible for his injuries. The worker filed for an adjustment of the claim against Trane. Trane claimed Ag-One was responsible for paying the worker's benefits. As a result of the dispute, neither employer provided the worker benefits or compensation for almost two years. Even though Ag-One was found not responsible for the worker's injuries, the Workers' Compensation Board ruled that it acted in bad faith. The Court of Appeals reversed, holding that Ag-One did not act in bad faith. The court noted it had properly denied the worker benefits and lacked the required element of conscious wrongdoing. It remanded the decision.
The court explained that when discussing the denial of insurance claims, a finding of bad faith requires evidence of a "dishonest purpose, moral obliquity, furtive design, or ill will." The court explained that a bad faith claim does not arise simply because an insurance claim is erroneously denied.
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December 7, 2009
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