Bad-Faith Failure to Pay Workers’ Compensation Benefits

March 15, 2017 (2 min read)

Supreme Court of Oklahoma addresses “crafty gamesmanship”

We have asked our expert in Oklahoma, Jacque Brawner Dean, Esq., at Jacque Brawner Dean Law, PLLC, about the recent decision in Meeks v. Guarantee Ins. Co. In that case, the Supreme Court of Oklahoma, in a divided decision, held that an employee could maintain a bad-faith action against a workers’ compensation insurer alleging that following an award of compensation benefits by the state’s Workers’ Compensation Court (WCC), the insurer withheld employee’s benefits on 26 separate occasions. The insurer’s contention that the district court lacked jurisdiction to hear the case since the employee had failed to obtain a WCC order stating the amounts remained unpaid or that benefits had otherwise not been provided as ordered was misplaced, said the majority of the state’s high court. The majority added that under the rule established in Summers v. Zurich Am. Ins. Co., 2009 OK 33, 213 P.3d 565, an order of the WCC that clearly identifies previously ordered benefits and finds that an insurer failed to demonstrate good cause for its delay in, or noncompliance with, providing court ordered benefits satisfies the certification requirements. The majority concluded that barring the injured employee from pursuing a bad-faith claim against the insurer for the latter’s “crafty gamesmanship” clearly violated Summers and the policy rational underlying the Oklahoma Workers’ Compensation Act. See Meeks v. Guarantee Ins. Co., 2017 OK 17, 2017 Okla. LEXIS 18 (Feb. 28, 2017)

LexisNexis: What would be some valid reasons that would justify an insurer’s refusal to pay an employee his workers’ comp benefits?

Dean: A legitimate dispute as to the injury itself, the major cause for the need for treatment, whether or not the injury was in the course and scope of employment, and if there truly and employer-employee relationship. However, in this case, the bad faith action is against the uninsured motorists carrier. In Oklahoma, a bad faith action can be maintained against a workers' comp carrier only if an order of the Court or Commission has not been followed. However, the tort of bad faith in a UM claim is based upon case law.

LexisNexis: Here, it appears that the insurer did not give any valid reasons for doing so. Do you believe that, pursuant to Summers, the court made the correct decision in this case in allowing the injured worker to pursue his bad-faith claim against the insurer?

Dean: The Supreme Court obviously believes that the UM carrier never gave a legitimate reason for denying the claim. Bad faith is subjective, but the majority of Oklahoma's Supreme Court did not believe Liberty Mutual put forth any reason for not paying a reasonable value for the UM claim.

LexisNexis: What are the implications of the Meeks case for your state?

Dean: It appears that the Supreme Court will be tough on insurance companies who do not reasonably evaluate their exposure and the value of a claim. The concurring opinion of Vice Chief Justice Gurich (who will be the Chief Justice next year) is strong, "Based on the record, Liberty Mutual acted in bad faith." Justice Gurich suggested sending the case to the jury simply on damages.