Insurer escapes liability for delay in paying worker's benefits

In Texas, an injured worker cannot sue his employer's workers' compensation insurer for a breach of duty of good faith and fair dealing.

Case name: Texas Mutual Insurance Co. v. Ruttiger, No. 08-0751 (Tex. 06/22/12).

Ruling: The Texas Supreme Court held that a worker's breach of good faith and fair dealing claims against his employer's insurer were not viable.

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What it means: In Texas, an injured worker cannot sue his employer's workers' compensation insurer for a breach of duty of good faith and fair dealing.

Summary: A worker for an electric company reported to his supervisor that he was injured while carrying pipe. He was diagnosed with two hernias. After an investigation revealed that the worker attended a softball tournament the weekend before the accident and came to work with a limp, the insurer refused to pay for surgery. Three months later, the worker and his attorney requested a benefit review conference. As a result of the conference, the worker and insurer agreed that he suffered a compensable injury and was entitled to temporary income benefits. Later, the worker sued the insurer for violations of the insurance law, including a breach of good faith and fair dealing. He claimed that the insurer's delay in paying benefits damaged his credit, worsened his hernias, and caused pain and suffering. The Texas Supreme Court held that the breach of duty of good faith and fair dealing claims were not viable.

The court pointed out that the workers' compensation law provides penalties for an insurer's failure to comply with the law's requirements. The court said that permitting a worker to additionally recover by suing under the insurance law would be inconsistent with the workers' compensation law. It could also result in rewarding a worker who delays in using the dispute resolution procedures in the workers' compensation system. The court emphasized that in this case the worker and his attorney did not seek immediate resolution of his dispute with the insurer but waited three months to request a benefit review conference.

The court also overruled its previous holding that an injured worker could assert a claim against a workers' compensation insurer for breach of duty of good faith and fair dealing. The court said that the legislature corrected deficiencies in the workers' compensation system that led to its previous ruling.

A dissenting judge said the court could not conclude that the legislature intended for workers' compensation to hold the exclusive remedy with regard to insurers.

Read more at the WorkersComp Forum homepage.

August 13, 2012

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