'Questionable' diagnoses, light job duties allow insurer to deny claim

In Texas, a worker cannot prove bad faith without evidence that at the time the insurer denied her claim, it was reasonably clear the claim was covered.

Case name: Aleman v. Zenith Insurance Co., No. 08-09-00168-CV (Tex. Ct. App. 05/04/11).

Ruling: The Texas Court of Appeals granted summary judgment to a manufacturer on a packer's claims of bad faith in the denial of her workers' compensation claim.

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What it means: In Texas, a worker cannot prove bad faith without evidence that at the time the insurer denied her claim, it was reasonably clear the claim was covered.

Summary: A packer for an automotive parts manufacturer suffered a work-related injury to her right hand. She reported the injury three weeks later. The manufacturer immediately referred her to a doctor, who diagnosed her with a right wrist sprain and tenosynovitis. The following day, a chiropractor diagnosed her with carpal tunnel syndrome. The insurer decided to contest compensability. The packer was subsequently awarded benefits. She claimed the insurer denied her benefits in bad faith. The Texas Court of Appeals granted summary judgment to the manufacturer. The court explained that a bona fide dispute about an insurer's liability does not rise to the level of bad faith. The court explained that the compensable injury did not extend to carpal tunnel syndrome, and no bad faith can be shown when an insurer denied a claim that was not covered.

The insurer initially handled her claim as a compensable injury but continued to investigate the claim. The packer's supervisor refuted her claim that she packaged 600 orders per day because the entire department only packed 160 orders per day. The packer stated she was in pain five weeks after the date of the injury. An MRI did not reveal soft tissue swelling or tendon damage.

The packer had to show the insurer denied the claim when it knew or should have known it was reasonably clear the claim was covered. The court explained that the insurer had 60 days to contest liability, and at the time it disputed compensability, the insurer's investigation did not indicate that it was reasonably clear the packer suffered a compensable injury. The diagnoses were questionable since she waited three weeks to report her injury. The manufacturer said her job duties were so light they would not be physically traumatic.

Read more at the WorkersComp Forum homepage.

June 23, 2011

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