Workers' Compensation Bad Faith Claims
The Montana workers' compensation act provides the exclusive legal remedy for a worker injured in the course and scope of their employment. Unfortunately, workers' compensation benefits have become increasingly limited in Montana, and insurers are becoming increasingly aggressive in their claims handling practices. Montana also represents less than 1 percent of the national workers' compensation market, and low market share can disincentivize insurers from tailoring their practices to comply with Montana's unique laws. Finally, insurers are using unlawful methods to cut costs by reducing workers' benefits. These developments have forced injured workers to utilize alternative avenues of recovery. One such avenue is a direct action against the insurer when the insurer engages in bad faith conduct.
Insurance bad faith claims are alive and well in Montana. Insurers can, and do, engage in unfair and/or malicious claims handling practices which can have devastating consequences for injured workers. One common form of insurance bad faith is an action under Montana's Unfair Trade Practice Act ("UTPA") pursuant to Montana Code Annotated 33-18-201. Some examples of UTPA violations by the insurer are:
- Failing to implement reasonable standards for the prompt investigation of claims.
- Refusing to pay claims without conducting a reasonable investigation.
- Neglecting to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims where liability is reasonably clear.
- Failing to promptly provide an explanation of the basis for denial of a claim.
- Misrepresenting facts or insurance policy provisions relating to coverages at issue.
Additionally, there are other bad faith actions which arise directly under Montana's workers' compensation act. Such as:
- Failing to follow proper procedures in handling claims and/or providing appropriate benefits.
- Failing to provide a 14 day notice letter prior to terminating benefits.
- Failing to make a reasonable settlement offer when liability is clear.
- Failing to provide a worker with domiciliary care when needed.
- Failing to accept coverage for a claim within a reasonable time period.
- Unreasonably delaying or refusing to provide appropriate medical treatment.
- Conditioning a settlement upon resignation of the injured worker’s job.
Other forms of bad faith arise when an insurer utilizes a third party to perform claims management tasks, such as bill review/auditing, medication management, nurse case managers, private investigators, etc
In these direct actions, information not normally discoverable becomes available. Examples of such information include the insurance adjuster's private claim notes, the insurer's financial reserve information, insurance training manuals, the insurer's bad faith claims history, and the level of involvment between the insurer and the injured worker's employer. This additional information often leads to the discovery of relevant information in determining whether your claim was handled appropriately.
If you believe that your insurance adjuster is not fairly handling your claim, or if any of the above actions are taking place in your claim, you may have a bad faith claim which could lead to additional compensation. Damages in an insurance bad faith claim in Montana include:
- Interest calculated from the date on which an insurance company should have paid an insurance claim.
- Mental and Emotional Distress.
- Punitive damages if the insurer acted with actual malice in its claims handling practice.