Workers’ compensation systems are set up a bit differently than other insurance systems – it’s important to remember that the policy holder is actually the employer in a workers’ compensation system as they are the one who purchases the policy. So, what do they owe their policyholders?

To find out, we asked Charles Surrano, an Arizona attorney and member of the Advocate Law Group network with 30 years experience in bad faith litigation, and disability claims against insurance companies. According to Surrano, “The obligations that they owe to the employer/policy holder would basically be to provide the benefits to injured workers on the job that are required by law. That’s what the insurance company contracts with the employer to do. Otherwise, the employer has to do it. So, the insurance company, visa via the employer/policy holder, basically is stepping in to do the job that the law would otherwise require it to do.”

Investigating the claim

Investigating a workers’ compensation claim actually applies the same standard that would apply to any insurance company. Surrano explained the process, “You might not see that it’s the same process in regular practice with workers’ compensation attorneys because a lot of them seem to be oblivious to the rules that would govern insurers in normal, every day cases (outside of workers’ compensation) where they’re cognizant at least to the duty of good faith.”

“Their obligations are the same to the insurer/injured worker. They have to quickly, reasonably and fairly investigate a claim, come to a determination of whether or not they’re going to accept it or deny it, have enough facts to make a reasonable and informed decision on whether to accept or deny the claim, to fairly evaluate what the claim is worth and then to properly pay it.”

A fair evaluation every time?

We asked Surrano whether insurance companies actually do a fair evaluation of a workers’ compensation case on a regular basis. According to an emphatic Surrano, “They don’t! That’s why I say that workers’ compensation rules seem to operate in a microcosm of workers’ compensation law. There is an impression, or a misperception if you will, that somehow the rules outside of the Industrial Commission, the ones that apply in everyday life to insurance companies, don’t apply in the workers compensation context and that’s just not true. So, you find a lot of insurance companies that will just deny a claim when they haven’t even done an investigation. I mean none. They simply get the report of injury and they sent out a notice of denial.”

“After they’ve denied it, they wait to see if the claimant will contest the denial; if he doesn’t contest it within a timely fashion, he can lose his right to workers’ compensation benefits. If he does contest it, then they might start an investigation. However, if they do the investigation, it might not be a complete investigation. It might be inadequate. I’ve seen cases where they’ve done the investigation after they’ve denied a claim and come up with facts to support payment of the claim and force the claimant to go to hearing anyway. They’ve held fast to their denial.”

A huge bag of tricks

Surrano has seen situations where an insurance company has agreed to have a claimant evaluated by a doctor, but then makes the claimant see another doctor if they don’t like the first doctor’s recommendation. He explained, “They’ll go to a claimant’s attorney and say, “Let’s pick Doctor X and have him evaluated and see if he needs active medical treatment.” Then, after Doctor X says, “Yes, he does need active medical treatment; he was injured on the job”, they turn around and say, “Well, that’s not good enough. We now want to send him to a different doctor and they’ll pick a doctor whom they know is more ‘inclined’ to find for the insurance company. That doctor will give them the opinion they want and then they’ll use it to justify the denial of the claim. So it runs the gamut; they often use a huge bag of tricks.”