Insurers Reportedly Moving to Quash Bad-Faith Claims

Tuesday, June 13, 2017 | 0

Insurers will ask the Workers’ Compensation Advisory Council to recommend legislation limiting the ability of injured workers to sue over bad-faith dealings.

Claimants’ attorneys told the Argus Leader that they expect caps on damages awarded in cases in which insurers were intentionally dishonest or even prohibiting cases from being filed in circuit court.

“There’s been a concern raised in the past that workers’ compensation insurance companies are unduly susceptible to liability for bad faith,” James Marsh, who oversees the South Dakota Division of Labor and Management and the state’s workers’ compensation system, told the Sioux Falls newspaper.

Attorneys who represent carriers were expected to make a presentation at the advisory council’s Monday meeting but will delay it until August so discussions can continue with claimants’ attorneys to reach a resolution, Mike McKnight, a Sioux Falls defense attorney, told the newspaper.

Going to the advisory council is a first step in getting legislation introduced.

Two prominent court cases might have triggered the desire for legislation, the Argus Leader reported.

A federal jury in May 2016 awarded a Sioux Falls woman nearly $4 million after learning the Charter Oak Fire Insurance Co., doing business as Travelers, hid the details of a $1 million insurance policy after Laura Dziadek suffered catastrophic injuries in a car accident.

The case is here.

In September 2016, the South Dakota Supreme Court reversed a lower court ruling that threw out a case filed by a 20-year-old worker with Fischer Furniture in Rapid City. The worker was hit by a 275-pound sofa that fell from a truck.

The lower court ruled that Dakota Truck Underwriters and Risk Administration Services had a “reasonable basis” to deny Mordhorst’s bad-faith claim based on the independent medical examiner’s report, but the high court ruled that the opinion of a medical practitioner is not necessarily a reasonable basis for denying benefits.

James “Jake” Mordhorst v. Dakota Truck Underwriters and Risk Administration Services is here.