HB 1702 has been filed in the Texas legislature. The proposed bill would allow injured workers to sue for insurance code violations in their workers' compensation claims handling. Up until 2012, an injured party whose claim was improperly denied or delayed (i.e. was a victim of "bad faith" insurance practices) could sue for damages. The Texas Supreme Court in the Ruttiger case construed to insurance code not to authorize such lawsuits.
This bill would bring necessary balance back to a system rife with aggressive denial and delay tactics. In Ruttiger, the Texas Supreme Court did two things: eliminate the common law tort of bad faith in workers' compensation law, and rule out of bounds attempts to shoehorn such claims into the Insurance Code.
Arguably the Court was correct that workers' compensation wasn't written for workers' compensation because these aren't first party matters like (e.g.) hail and windstorm claims against your homeowner's insurance. But the Court simultaneously eliminated common law bad faith, a creation of the Court that the legislature had made specific allowance for in the 1989 Act.
The combination ended workers' compensation bad faith claims-- but not the bad acts which spurred the claims to begin with. In a post-Ruttiger world, the worst that can happen to an insurance carrier for repeated acts of bad faith that devastate injured employees and their families is a slap on the wrist from the administrative agency. Conservative "Law and Economics" legal theorists have long described this phenomenon as "regulatory capture." Put enforcement into the hands of the agency overseeing an industry, and that industry will find ways to work the system to its own advantage.
The Court in Ruttiger assumed that the agency would vigorously enforce standards for claims handling. Of course it doesn't. But even if it did, it wouldn't put a nickel in the pocket of an injured worker who is left financially drained and emotionally scarred after running the Texas workers' comp gauntlet just because the carrier bet the worker would give up short of the finish line. An insurance carrier paying even a hefty fine into the coffers of the agency doesn't put a roof back over the heads of a family that was evicted. It doesn't un-repossess their minivan or re-open a recovery window that has slammed shut due to delayed medical care.
Employers buy workers' compensation insurance to protect their employees. They are frustrated when the insurance they paid for hurts rather than helps. So much so that they often leave the system entirely. Bad faith imposes costs on other insurance products (desperate employees may flee to group health coverage for treatment) and entitlement programs (destitute workers cling to benefits such as SNAP, SSI/SSDI, and Medicare/Medicaid in the absence of reliable medical and income benefits).
Insurance carriers have found a way to live with statutory bad faith claims across the range of insurance products in Texas. Why can't they do so in work injury claims? Granted-- not every denial is in bad faith, and not every delay is unreasonable. But when an insurance carrier does harm to an injured worker for no good reason, what precisely is the argument against making families whole again?
This bill would bring necessary balance back to a system rife with aggressive denial and delay tactics. In Ruttiger, the Texas Supreme Court did two things: eliminate the common law tort of bad faith in workers' compensation law, and rule out of bounds attempts to shoehorn such claims into the Insurance Code.
Arguably the Court was correct that workers' compensation wasn't written for workers' compensation because these aren't first party matters like (e.g.) hail and windstorm claims against your homeowner's insurance. But the Court simultaneously eliminated common law bad faith, a creation of the Court that the legislature had made specific allowance for in the 1989 Act.
The combination ended workers' compensation bad faith claims-- but not the bad acts which spurred the claims to begin with. In a post-Ruttiger world, the worst that can happen to an insurance carrier for repeated acts of bad faith that devastate injured employees and their families is a slap on the wrist from the administrative agency. Conservative "Law and Economics" legal theorists have long described this phenomenon as "regulatory capture." Put enforcement into the hands of the agency overseeing an industry, and that industry will find ways to work the system to its own advantage.
The Court in Ruttiger assumed that the agency would vigorously enforce standards for claims handling. Of course it doesn't. But even if it did, it wouldn't put a nickel in the pocket of an injured worker who is left financially drained and emotionally scarred after running the Texas workers' comp gauntlet just because the carrier bet the worker would give up short of the finish line. An insurance carrier paying even a hefty fine into the coffers of the agency doesn't put a roof back over the heads of a family that was evicted. It doesn't un-repossess their minivan or re-open a recovery window that has slammed shut due to delayed medical care.
Employers buy workers' compensation insurance to protect their employees. They are frustrated when the insurance they paid for hurts rather than helps. So much so that they often leave the system entirely. Bad faith imposes costs on other insurance products (desperate employees may flee to group health coverage for treatment) and entitlement programs (destitute workers cling to benefits such as SNAP, SSI/SSDI, and Medicare/Medicaid in the absence of reliable medical and income benefits).
Insurance carriers have found a way to live with statutory bad faith claims across the range of insurance products in Texas. Why can't they do so in work injury claims? Granted-- not every denial is in bad faith, and not every delay is unreasonable. But when an insurance carrier does harm to an injured worker for no good reason, what precisely is the argument against making families whole again?
Law Office of Alan Tysinger
110 West Nueva Street
San Antonio, TX 78204
(210) 446-0713 phone/fax
Toll free (866) 957-2667
866-957-COMP
[email protected]
Areas of practice: workers' compensation, personal injury, work injuries, nonsubscriber workplace injuries.
Comments