“Good Faith” in the Workers’ Compensation Context

Here, partner Brad Miller and associate Gail Benson secured a favorable judgment from the Colorado Court of Appeals (not selected for publication).

In this case, the claimant challenged the statutory process for selecting a physician to perform a division independent medical examination (“DIME”). She contended that the process unfairly harms injured workers by failing to ensure the selection of specialists to perform DIMEs. She further contended that she should have been awarded penalties because the employer did not have a “good faith” basis to dispute the medical conclusions of her authorized treating physician (“ATP”). The Court affirmed the final order of the Industrial Claim Appeals Office (“Panel”) dismissing claimant’s statutory challenge for lack of finality and rejecting her claim to penalties on the basis that the employer adhered to all statutory and regulatory requirements for requesting a DIME and the applicable statute does not contain a good faith provision.

This claim began when claimant sustained an admitted work-related injury. The claimant received treatment and was placed at maximum medical improvement (“MMI”). Thereafter, the employer filed a notice and proposal for a DIME. Because the parties could not agree on a physician, the employer filed an application for a DIME. The DIME physician was selected after each party executed a strike to one of the three physicians on the DIME panel.

The claimant filed at least five applications for hearing, each challenging the DIME selection process and propriety of the employer’s conduct. Claimant also sought penalties against the employer.

After conducting a hearing, the ALJ found that the claimant had failed to establish entitlement to penalties and failed to show that the employer acted improperly by requesting a DIME, as the employer had followed the statutorily prescribed procedure. The Panel affirmed the ALJ’s decision. Claimant subsequently appealed.

Claimant advanced two arguments on appeal: (1) the employer acted improperly by requesting a “preemptive DIME” without demonstrating a good faith basis to challenge the ATP’s impairment rating or MMI date; and (2) the employer acted in bad faith by requesting the DIME in violation of the implied duty of good faith and fair dealing incorporated into workers’ compensation. Claimant essentially challenged the propriety of the DIME selection process.

Due to lack of finality, the Court dispensed with claimant’s argument that failure to include specialists on the DIME panel precluded her from obtaining an objective and unbiased opinion. The Court held that until the DIME is completed and an order denying or awarding benefits associated with that DIME is issued, claimant’s contention that the DIME panel selection process harmed her is not final and appealable.

Next, the Court affirmed the ALJ and the Panel’s decision that claimant failed to establish entitlement to penalties for employer’s alleged failure to act in good faith when requesting a DIME. To successfully seek penalties under the Act, the claimant must show that the employer violated a provision of the Act, or did not obey a lawful order of the director or Panel, and that the employer’s actions were unreasonable. The Court noted that claimant did not dispute that the employer complied with all statutory requirements. Further, the Court found that claimant did not meet her burden to show that employer’s actions were unreasonable, as the employer complied with the applicable law when it requested a DIME and there was no evidence to suggest that a reasonable insurer or employer would have acted differently.

The Court further rejected claimant’s contention that the employer should have been required to demonstrate a “good faith” basis for requesting a DIME. The Court agreed, in general, that insurers are required to deal in good faith with their insureds and beneficiaries, however, the Court held that it was prohibited from reading non-existent provisions into the Act, and the DIME statutory provision does not contain a “good faith” requirement. The Court agreed with the discussion from the Panel that “a party need not provide any explanation for the reasoning behind their request for a DIME review.” Finally, the Court found that even if it were inclined to include such a “good faith” provision into the Act, the employer did not act in bad faith in requesting a DIME. To prove that an insurer acted in bad faith, “an insured or beneficiary must establish that the insurer acted unreasonably or with knowledge of or reckless disregard for the fact that no reasonable basis existed for acting as it did.” The Court held that employer adhered to all the statutory and regulatory requirements for requesting a DIME and, therefore, the employer did not act in bad faith.

Thus, the Court affirmed the ALJ and Panel, ruling in the employer’s favor.

Heinz v. Indus. Claim Appeals Office, 2016CA2236 (Nov. 22, 2017).

Would you like to know more? Contact Brad J. Miller at bmiller@pollartmiller.com or Gail L. Benson at gbenson@pollartmiller.com or 720.488.9586.

 

From the January 2018 Pollart Miller Newsletter

2019-01-29T09:25:11-07:00