When Do Arizona Workers’ Compensation Issues Become Bad Faith Cases?

It would be outlandish if your insurance company were to deny a claim with having done no investigation at all or having no facts upon which to deny the claim. Well, according to Charles Surrano, an Arizona attorney and member of the Advocate Law Group network with 30 years experience who specializes in bad faith litigation, and disability claims against insurance companies, that happens every day. “I hear about this constantly from workers’ compensation attorneys,” he said. “They just flat out deny claims with no basis to do it whatsoever.”

Will the process change?

We asked Surrano whether the Industrial Commission, Arizona’s administration agency that oversees the workers’ compensation process, has ever told insurers to stop acting in this manner or whether any legislation been introduced to combat it? He told us, “There are statutory remedies at the Industrial Commission where the Commission can listen to a complaint of unreasonable claims practices or bad faith tactics under the workers’ compensation laws. They can fine the insurance company a small amount of money (I believe the fine is $500) and compensation attorneys will turn to this particular statutory remedy to get that limited relief, but frankly it doesn’t make any difference. One insurer that I’m aware of had 853 different statutory bad faith complaints filed against it at the Industrial Commission over the course of several years.”

Other avenues are available

Insurance companies are unlikely to change their practices when penalties are small as it has no effect, even when the volume is greater than hundreds of complaints. However, according to Surrano, other avenues are available to claimants. “People should understand that they do have remedies outside of the Industrial Commission where there are no statutory limits on what their relief might be. For example, one of the benefits of a bad faith case filed outside of the Industrial Commission is that, unlike your limitation on benefits under workers’ compensation, suing for the tort of bad faith in Superior Court allows you to be compensated for damages which may include your unpaid injuries, unpaid medical treatment and any consequential damages you might have suffered, such as losing a percentage of your commission income or your home.”

“So, if your credit goes through the floor, that’s a consequential damage because you’re not being paid work compensation benefits. You might also get punitive damages or damages resulting from emotional distress – all of those types of damages you can’t get through the Industrial Commission and under the workers’ compensation statutes. Under the workers’ compensation statutes, you get active medical care and a small percentage of your monthly benefit. Basically, that’s it in 99% of the medical cases.”

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