Often clients come to me because they are just tired of having to deal with insurance companies either paying them their indemnity benefits on a habitually- late basis, or failing to pay them at all for long periods of time. In Connecticut, there is, for all intents and purposes, no action of bad faith against a workers’ compensation insurance company unless the conduct is intentional. This is a nearly impossible burden to prove, and has eliminated almost all claims of bad faith against insurance companies in the realm of workers’ compensation.
Therefore, the claimant must utilize the penalties within the workers’ compensation system. Perhaps the best weapon in the claimant’s arsenal is §31-288b, which provides that an insurance company can be held liable up to $1,000.00 for each instance in which it unduly delays the adjustment of a workers’ compensation claim. Arguably, this means that in the situation in which an insurance company fails to pay your temporary total check for 3 weeks in a row, you can ask for a determination that the respondent insurer owes the claimant $3,000.00 ($1,000.00 for each of the 3 weeks). The commissioners are receptive to undue delay requests in instances where the claimant can prove that the respondent’s failure to pay was based on more than a mere oversight due to the adjuster’s intervening vacation, or a computer glitch known in the industry as “falling off repetitive pay” or some other unintentional reason. Where the claimant can demonstrate that the insurance company has failed to pay benefits over a significant period of time, or, over a lesser period of time, but on repeated occasions, then the claimant has a better chance of getting the commissioner to order undue delayed penalties.
The additional benefit of getting the commissioner to order such penalties is that this penalizes the adjuster because these penalties must be paid from a separate fund other than the “reserve” fund that the adjuster sets to approximate the total exposure at the outset of a case. Rather, the company must pay such penalties out of a general fund which, in theory, will reflect negatively on the adjuster.