We were recently asked whether a workers compensation carrier could be liable for bad faith for denying a claim. The quick answer appears to be no, there is only bad faith in workers comp where the insurance company fails to pay an award.
This appears to be a contentious issue with the Oklahoma Supreme Court. In the latest pronouncement, Sizemore v. Continental, the court said that it recognizes a tort for bad faith when a workers compensation carrier refuses to pay a workers compensation award. The decision was 5/4 with one concurring and two dissenting opinions. The reason for the multiplicity of opinions is that the court’s decision in Sizemore reversed recent opinions in DeAnda and Kuykendall which held that the sole remedy for failure to pay an award was interest on the payment as set forth in the workers comp statutes.
In Whitson, the court said that a workers comp insurer could not be liable for bad faith for a vigorous defense of a claim. But in the seminal Oklahoma bad faith case, Christian, the insurance company had no defense but went to trial anyway, allowed the insured to present his case and then rested without presenting any evidence.
So perhaps the next chapter of this saga will provide some sort of guidance on a bad faith defense without just cause, (bad faith) vs providing a strong defense — or litigation tactics (not bad faith).