Can I Sue a Workers’ Compensation Insurance Company for Bad Faith in California?
If an insurance company acts in an unreasonable manner to deny or delay your claim, an injured party may be able to sue that company for bad faith; but not in workers’ compensation case.
A claim for workers’ compensation “benefits” in California can only be heard before the Workers’ Compensation Appeals Board (WCAB), an administrative board. Conversely, the California Superior Court hears, among other matters, civil claims for “damages.” California appellate courts have determined that bad faith conduct by a workers’ compensation insurance company falls within an “exclusive remedy” (there is only one remedy available – the workers’ compensation benefits provided by the Workers’ Compensation Act). An injured employee cannot file a civil bad faith claim for damages in the Superior Court for the recovery of damages against a workers’ compensation insurance company, no matter how egregious the insurance company’s conduct may be. Even though that is true, the Labor Code of California does allow the employee to seek a large increase in their workers’ compensation benefits pursuant to Labor Code sections 5813 and 5814 for bad acts of the insurance adjuster or the employer.
Labor Code section 5813
This code section permits the WCAB to order a party, a party’s attorney, or both, to pay for reasonable costs and expenses incurred due to “bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.” Specific actions or tactics that may run afoul of this code section can be found in Title 8 California of the Code of Regulations, section 10421, and include:
- Failure to appear at a conference or trial
- Filing a pleading without reasonable justification
- Failing to serve documents in a timely manner (especially medical records and reports)
- Failing to comply with the WCAB Rules of Practice and Procedure
- Submitting any document to the WCAB that contains false or misleading statements of fact, or misrepresents facts, as well as other circumstances listed.
Labor Code section 5814
This section allows the WCAB to increase an employee’s compensation by 25 percent or ten thousand dollars ($10,000) (whichever is less) when the payment of benefits is unreasonably delayed or refused by the insurance company. The imposition of this penalty is not automatic. It requires your attorney to file a petition with the WCAB requesting the penalty. If the insurance company takes action before a petition is filed, it can avoid the penalty by paying the amount of the benefits owed, plus a ten percent (10%) penalty.
With these sections in mind, we find that while a workers’ compensation insurance company cannot be sued for bad faith damages, there is action that can be taken when it acts inappropriately. Labor Code Sections 5813 and 5814 are valuable tools to use when this occurs. However, your attorney needs to have expertise in this area to understand and recognize when the insurance company has acted improperly. Richard Irwin is a state certified workers’ compensation specialist, which means that he has completed all requirements and has the experience required by the State of California for such a designation. Very few attorneys who appear before judges at the Workers’ Compensation Appeals Board attain this status.
If your workers’ compensation insurance company is withholding your benefits, or taking unreasonable positions in your, the tenacious Riverside workers’ compensation attorneys at Heiting & Irwin can help. Fight back by reaching out to us and schedule a free initial by visiting our website or by calling us at (951) 682-6400. We’re on your side.
