How Workers’ Comp Insurance Works
Workers’ compensation insurance is a type of insurance that pays medical costs and some portion of lost wages for employees who are injured in the course of employment. It also provides death benefits to families of workers killed on the job. In exchange for the timely payment of benefits, employees give up their right to sue their employer or coworkers for negligence. For this reason, workers’ compensation insurance policies are usually delivered as part of a master workers’ compensation policy, and the terms and conditions for compensation are standardized across different policies to a degree .
While laws differ between states, the basic principles of workers’ compensation are the same: employees get no-fault protection for work-related injuries or illnesses and receive payments for certain damages even if the employer was not negligent. On the other hand, employers and coworkers receive certain protections from lawsuits by employees. In an ideal situation, workers’ compensation insurance provides a system for speedy access to medical care and benefits for employees; employers pay premiums that they can afford; and workers’ compensation claims do not clog the courts with petty disputes over small amounts of money.
Negligence Explained in Workers’ Comp Claims
Negligence refers to an act or behavior that is careless, a failure to act with the level of caution that someone of ordinary prudence would use under the same circumstances. Generally speaking, negligence involves harm or injury to another person or damage to property as a result of that careless act. But negligence doesn’t always mean a direct act. In workers’ compensation cases, a party can be considered negligent for omissions or failing to do something that they had a duty to do. For example, an insurance company has a duty to act in the best interests of their client. If that insurance company does something that goes against the best interest of the injured party, they can be considered negligent.
In some circumstances, an act of negligence is so serious that the law allows for damages outside the normal limits of workers’ compensation. In these cases, a workers’ compensation insurance company could be held liable for the following:
The first two examples are rare in workers’ compensation cases but the last one is commonly a source of conflict. When it comes to seeing the "worst" side of workers’ compensation, claimants certainly get to witness a poor level of responsiveness to claims. People have often complained that their insurance company hasn’t returned phone calls or gotten back to them about an appeal. Having to make several attempts to get in touch with your insurance carrier can be a nuisance, but rarely causes the sort of financial or mental distress that would constitute negligence of bad faith. Being denied benefits, whether temporary, permanent, or both is certainly cause for concern, but if the reason behind the denial seems reasonable, it’s likely that your insurance company will not be held liable.
On the contrary, there are situations in which an injured worker can prove that based on past benefits and the degree of pain and suffering associated with the injury, their conditions far exceed their insurance company’s level of protection. When this happens, getting less than you deserve can be considered an act of negligence or bad faith. Sometimes an insurance company fails to investigate fairly, conducts an unwarranted investigation, or misrepresents facts that adversely affects the injured worker – these are all actions that present a case for negligence towards the injured party. Early on, it’s likely that your insurance company will act within their general procedures, with little verbal or written communication with you. But when that begins to change, and the denial for your benefits continues, you may be witnessing an action that qualifies as negligence.
Reasons to Sue an Insurance Company
When you suffer an on-the-job injury, the workers’ compensation insurance company is supposed to step in and pay for all of your medical bills and lost wages. But does that mean you’re effectively limited to workers’ compensation benefits? Does that mean that you can’t sue the insurance company if they act inappropriately? Let’s look at when you might have legal grounds to sue even the workers’ compensation insurance company.
The workers’ compensation insurance company are liable to you for misrepresentation and fraud. If you get hurt on the job, and your employer protects you under their policy, the insurance company must not try to cheat you out of benefits. This might be done through treating you poorly during appointments, ignoring your injuries or telling you that you’re not in need of emergency medical treatment. In this case, they are aware of the severity of your situation but are avoiding their responsibility by lying to you.
In a recent ruling from the 1990 case Storey v. IC Bancard, Inc., and mistakenly misrepresenting your benefits levels can lead to compensation. In this case, an employee injured in a car accident was told by her workers’ compensation insurance company that she was entitled to both PPD and TTD benefits. When these weren’t paid out immediately, the employee sued the insurance company for negligence, and the ruling favored the employee. The court noted that the insurance company was negligent in referencing the employee’s eligibility for both benefits, then ignoring that eligibility.
Employees also have rights to sue insurance companies for delaying medical treatment. Workers’ compensation insurance companies aren’t allowed to deny procedures simply for no reason. Even though employers are charged with making sure that their employees have a safe work environment, there are times that accidents happen. When this happens, the workers’ compensation insurance companies must pay for any necessary medical treatments, and withholding this payment is negligence.
In the 2004 case of Gonzales v. City of San Diego, a police officer was injured both at work and off duty, and was denied workers’ compensation for the off-duty injuries. The courts ruled that the workers’ compensation insurance company was wrong in denying his benefits for that reason, and he won the suit.
Lastly, if the workers’ compensation insurance company ignores 2nd opinions from qualified doctors, they may be liable for that mistake too. An employee in Connecticut suffered severe back injuries and was told by a company-approved doctor that he had to undergo additional surgeries to fix the damage. He refused to do so because the doctor told him that it would make things worse in the long run, and the insurance company immediately filed to stop paying him workers’ compensation. Since there was a 2nd qualified medical opinion on the table that stated he needed surgery, and the insurance company failed to take that into consideration, the employee was awarded damages.
Hurdles to Suing for Negligence
Failure to provide the benefits due under the contract would be the theory for your complaint against the insurance company. To prove this, you wouldn’t actually have to prove they acted negligently, just that they breached that contract. But, they have a trump card: they are allowed to deny benefits legitimately contested. If they prove that you were not entitled to what they denied- basically, if a Judge agrees with them- then their denial is not considered negligence, and you have no case against them. Suing an insurance company for workers’ comp negligence would be very difficult. The only time it matters if you can prove the insurance company acted negligently is when the Judge agrees with them and they aren’t forced to pay benefits. As long as they have a legitimate reason for denying the claim, they have done nothing legally wrong. And if they have done nothing legally wrong, there is no legal basis by which you can sue them. If you suffer a work related injury, the insurance company that covers your employer is generally required to pay for doctor visits and other medical care. To get authorized for medical treatment, you have to have a doctor involved who will put you on a prescription medication regime or order a test, such as an MRI. The insurance company reviews all medical treatment requests. If they believe that the treatment is unnecessary, not reasonably related to the injury, provided by an unauthorized doctor, or not medically proven to be necessary, these workers’ compensation insurance companies and self-insurers will deny the request for treatment. No one, including you, disputes that the insurance company has this right. Thus, even if the Judge agrees with them and sides with them, they haven’t done anything unlawful. In fact, there are a slew of other hurdles you would have to overcome like proving errors of law and the professional standard of care by insurers.
How to Move Forward if You Think an Insurer Was Negligent
The first step an employee should take if they suspect that their workers’ comp insurance company was negligent is to document everything they spoke about together, this is especially important if the employee is a first responder. The attorneys who answer our phones 24/7 have helped thousands of first responders and we have learned that while many are very savvy and professional, you have to understand that their main job is to sell policies and that they may not always know the law and/or may not always have your best interest in mind. The next step is to consult with a workers’ compensation attorney with extensive experience in representing employees who have had issues with the handling of their claims. If it is too late and your claim has already reached a conclusion , your attorney can still examine the file for mistakes made by the workers’ comp insurance company and may be able to recover penalties from the insurance company. Your attorney may also be able to help you recover lost wage payments or future benefits that were improperly denied to you. If you have tried appealing the insurance company’s decision on your own without any success, you may also want to complain to the Illinois Department of Insurance. The department can investigate allegations of wrongdoing and can mediate disputes over policy denials, coverage questions, and other grievances.
What Could Happen If You Sue for Negligence
Self-insured employers don’t have to pay premiums, but they do have to comply with the same laws as other workers’ comp insurance companies. That means you may be able to sue them for negligence, and the compensation you receive from such a case can be higher than that available through workers’ compensation alone. The reality is that court cases have the potential to produce limited outcomes. Your chances of receiving a favorable judgment depend on the situation. The following breakdown of such outcomes will help with your decision. Please remember that this is general information only.
You might Be Compensated
If negligence is proven, the court might issue an order for compensation to pay your uncovered medical expenses and lost wages. If there was a settlement agreement, the amount could be within the same general range of the total of these two costs. You must still follow the workers’ comp guidelines and expectations to receive social security disability or Medicare benefits.
The Court Could Provide a Single Lump-Sum Award
The court may find that the defendant is 100 percent liable for your damages, leading to a lump-sum award. The goal of this scenario is to ensure sufficient funds for years of future medical treatments and to cover lost wages. In addition, the sum should be large enough to avoid penalties if the amount isn’t properly distributed.
The Defendant May Be Liable for Additional Damages
In some cases, the defendant is responsible for triple the amount of damages suffered by the plaintiff. It must be proven that negligence was deliberate and that the defendant had "malice" toward the injured party. This scenario often applies to truck drivers and commercial vehicle operators. The amount of damages then becomes punitive rather than compensatory. In other words, the punishment rather than the injuries suffered becomes the focus of the award.
Court Could Find the Plaintiff At Fault
Sometimes the fault may lie with the injured party, instead of the workers’ comp insurance company. Courts may also find employees partially at fault for their accidents. In such cases, workers’ comp benefits are the only ones available, as the court does not allow for double dipping.
The Division of Workers’ Compensation Could Become Involved
Regardless of the case outcome, the DWC will be notified if your workers’ comp claim is reopened. Your lawyer will inform you of the pending result of the negligence case, and the insurance company will have to inform the DWC afterward. In some cases, the gift of additional benefits may push your case into an investigatory process.
The DWC Involves Insurance Commission
If it is determined that the workers’ compensation insurance provider engaged in fraud, the DWC will be notified. The insurer and the client may be investigated by the California Department of Insurance and fined. Employers found guilty of fraud may be forced to offer their injured employees an amount greater than insurance premiums.
What to Do Instead of Suing
If an employee believes the workers’ comp insurance is being negligent but still doesn’t want to sue, there are other alternatives to a lawsuit. This includes mediation and arbitration.
Mediation is simply sitting down with your attorney and the insurance company and trying to negotiate a settlement. The mediation doesn’t always work but if you feel strongly that you want to stay out of court, it’s worth a try. They usually don’t require you to attend these unless there is a good reason for it. Sometimes the insurance company will even get together with the Judge and they’ll see if they can work it out the old fashioned way.
That may not be the best time for you due to your ongoing medical care, but if you have a case that looks like it’s going to be tied up in court for several months or years, this will give you a chance to make some money sooner. It’s also a chance for the Judge to get to know you, which is important in these types of cases.
The arbitration process is a little more formal. In this scenario, both sides agree that the Judge will make a decision. It’s basically a mini-trial where each side presents their case and the Judge makes their ruling.
Some people prefer arbitration because they have a good idea who the Judge would side with. Arbitration also usually happens much faster than a trial. The downside is that the parties must agree to arbitration, if either side says no you cannot do it. Also, whatever the Judge decides is final; no one can appeal their decision.
Talking to a Workers’ Comp Attorney
Although not a large percentage of Illinois work injury claims, we do get calls from people that want to know if they can sue their workers’ compensation insurance company. They have been denied medical treatment or benefits. Some are fighting with a delay tactic to keep an accident reported as pending when in fact it’s clearly a work accident under the law. Others have been under paid or in one case got a check for 2 cents.
The truth is you can’t sue an insurance company unless they have done something illegal or fraudulent. For example, if they just stop paying weekly benefits or refuse to approve medical treatment, they have broken the law, violated an Illinois Workers’ Compensation Commission ruling and failed to abide by the Illinois state insurance code rules.
On the other hand, there are a ton of attorneys who try to frighten you into getting a lawyer by telling you that there is nothing that they can do and that the only way to fix your problem is to sue them . That would be like me going to a car mechanic, getting a bad diagnosis on my car and being told they can’t fix it unless I have surgery on my car. I’d be asking why do I need surgery when you are a mechanic?
A workers’ compensation attorney will be able to help you obtain benefits if you’ve been denied, but if you are seriously interested in suing the insurance company then you need to file a regular injury lawsuit. Workers’ compensation lawyers don’t handle those cases and so at best you would end up with two attorneys that aren’t very happy with each other.
The bottom line is that your best course of action right now is to get a free, immediate consultation with an attorney that specializes in Illinois workers’ compensation law. They’ll certainly be able to handle benefits and medical treatment, in all likelihood for free, and get you the benefits you deserve.
