Suing Workers’ Compensation Insurance for Bad Faith: A Guide

Are Your Workers’ Compensation Benefits Being Withheld? Bad Faith May Be to Blame

When you’re recovering from a work-related injury, navigating the workers’ compensation process in Iowa can seem overwhelming. The situation becomes even more complex if your employer’s workers’ compensation insurance provider keeps brushing you off or refuses to pay benefits.

Far too often, insurance companies delay paying out valid claims. This type of insurer “bad faith” can be financially devastating for injured workers who depend on their lost wages to cover basic needs.

However, Iowans don’t need to fear in these circumstances. They have the option to sue insurance companies when they mishandle a claim. At Schott Mauss & Associates, our workers’ compensation team is prepared to help injured Iowa workers through each step of the process.

Here’s a closer look at insurer bad faith and how we confront it.

What Is a Bad Faith Claim in Workers’ Compensation?

Iowa law requires most employers to carry workers’ compensation insurance. This insurance provides benefits to workers who suffer a variety of work-related injuries. Iowans who are hurt while performing their job duties should be able to secure benefits quickly to help offset lost wages and medical costs.

“Bad faith” results when the company or its insurance provider fails to perform its duty in determining or delivering these benefits. Insurance providers have a duty to investigate each workers’ compensation claim. If they deny it, they should provide a reason why a claim is denied. Additionally, the determination of a claim cannot be unreasonably withheld. Under Iowa law, insurance companies must operate in “good faith” and act reasonably when it comes to processing claims.

When insurance companies act unreasonably and fail to pay benefits, then a bad faith claim may be justified. Bad faith can put Iowans at risk of losing their home and vehicles, and their medical bills may wind up in collections. It may be challenging for these workers to put food on the table. Some are even forced to turn to high-interest loans to make ends meet, which, in turn, can start a debt spiral that is hard to escape.

How to Sue Workers’ Compensation Insurance Over Bad Faith

If you’re an Iowan who feels that your benefits are being unreasonably withheld or denied without reason, you are not without recourse. You may have a successful lawsuit for a bad faith claim.

Unlike the initial workers’ compensation claim that workers file with their company, a bad faith claim is a separate lawsuit that is handled in district court.

Generally speaking, to sue a workers’ compensation insurance company and prove a bad faith claim, you must meet two legal elements. The first is that your claim for benefits was valid despite the claim being delayed or denied. Second, you must show that the reason why the benefits are being withheld is unreasonable. This usually requires an intentional bad act on the part of the insurance company. This could include:

• Misrepresenting facts
• Failing to explain reasons for claim denials
• Failing to have reasonable standards related to the investigation of claims

A successful bad faith claim shows that because of the delay or denial of benefits, you are suffering additional physical or monetary damages. Proof could include medical records, bills, and other documents that show an insurance company misrepresented facts, as well as opinions from doctors about how delayed medical care is impacting you.

Bad faith claim lawsuits can be quite challenging. It is often difficult to prove intentional wrongdoing, and insurance companies often have teams of experienced and aggressive attorneys. This shouldn’t frighten you into inaction, though. Instead, it should motivate you to find the help you need to fight for what you deserve.

Examples of Employer & Insurer Bad Faith

A bad faith claim can be successful if it can be shown that the initial claim was likely to be successful and the reasons for withholding the benefits are unreasonable. But how do you figure out what is unreasonable?

It helps to look at some examples. Here are some situations that could serve as the basis for a bad faith claim.

• Unreasonable delays: When an insurance company takes too long to investigate a claim. Generally, claims should be assessed within 60 days.
• Deceptive behavior: When employers and insurance companies misstate the law or engage in deceptive practices.
• Refusal to pay: When the insurance company simply refuses to pay a valid claim.
• Threats: When the insurance company makes threatening statements to avoid a claim being filed.

Are You a Victim of Workers’ Compensation Bad Faith? Get Legal Help Today.

If you’ve been injured at work, you don’t need to simply sit back and accept whatever an insurance company offers you. Instead, you can be proactive by trying to understand your insurance company’s actions or inaction. Working with a trusted workers’ compensation law firm like Schott Mauss & Associates will increase the chance of a successful outcome. Contact us to get a free consultation today!