Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

Decedent was killed on the job in a traffic accident.  His estate received workers comp death benefits.  His estate also sued the parties involved in the accident for wrongful death.  The workers comp insurer sought to intervene in the tort action, claiming a right to be reimbursed for the payments it made under the workers comp law.  

HELD:  

The Oklahoma State Legislature has not included the insurance company the rights to subrogation for monies paid to an employee's beneficiaries and thus, the workers comp  insurance company has no standing to intervene in the case.  The statutory language is neither ambiguous nor uncertain. The workers comp insurer  may not stand in the shoes of the Employer and since the Employer did not pay any benefits to the employee's beneficiaries, the Employer has no right to seek reimbursement for benefits paid by the workers comp insurer.

McBride v. Grand Island Express, 2010 OK 93

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In McBride v. NES Rentals, an employee was killed on the job in a multi vehicle accident.  The employee's family received workers comp death benefits, then sued the various tortfeasors.  The employer and the workers comp carrier sought to intervene.  The trial court denied the intervention, but the COCA (Court of Civil Appeals) found that the employer should have been allowed to intervene and press its claim regarding death benefits and both the employer and the carrier should have been allowed to intervene and recoup expenses of the last illness and the funeral.  

The case is rather difficult because of recent changes in the workers comp laws in Oklahoma.  It used to be that an employer had no right to subrogate against comp death benefits.  But the statute was changed, and allowed the employer to recover from a third party the amount of death benefit payments made to a claimant's survivors under the Workers Comp Act.

The court states: 

Because §44(d) grants employer the right to recover from the third party causing the death ofits employee, but specifically independent of the death benefits paid to claimant's survivors under the Workers' Compensation Act, the claimant's survivors suffer no unconstitutional reduction or limitation of their recovery against the third-party tortfeasor.

Thus the employer has the right to intervene for death benefits paid by the carrier, and both the carrier and the employer have the right to intervene for last illness and funeral expenses.

This case has not yet been released for publication, and is subject to change. 

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In Sizemore v. Continental Cas. Co,   the Oklahoma Supreme Court said that if a workers compensation insurer refused to pay benefits when due, the employee could get a certification from the workers comp court about the amount of benefits due.  From there, the employee could either (1) file a certified copy of the certification order, with the award attached, in the district court as a judgment and proceed to execution pursuant to section 42(A) or (2) the claimant may file a claim in tort for the insurer's bad faith -- in which case, the amount of unpaid benefits would be part of the damages.  

But what about the employee who was ordered to receive treatment, which the insurance company did not provide?  That is the situation in SUMMERS v. ZURICH AMERICAN INSUR. CO.,just decided by the Oklahoma Supreme Court. Since there is no monetary award to garnish, the court decides that the only recourse for a worker in that situation is to proceed directly with a bad faith action.

A claimant who has obtained an order certifying that non-monetary benefits have not been provided as ordered does not have the option of enforcing the award as a judgment in the district court. See Okla. Stat. tit. 85, § 42(A). That claimant's remedy is to proceed with a tort claim for bad faith in district court.

The "bad faith conduct by a workers' compensation insurer in refusing to pay an award of benefits to an injured worker is judged by the same standard as bad faith conduct by any other insurer." Id. citing Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 28, 121 P.3d 1080, 1094 ("the minimum level of culpability necessary for liability against an insurer to attach is more than simple negligence, but less than the reckless conduct necessary to sanction a punitive damage award against said insurer").

It should be noted, however, that the workers comp insurer is only liable for bad faith after notice and a hearing in the workers comp court.  In Summers the court found that there were fact issues precluding dismissal.

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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). 

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