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Workers’ Compensation Update Part 2: No Bad Faith in Workers’ Compensation Context – Hopper v. Argonaut Insurance Company

Two recent Texas court decisions, including the October 18, 2013, decision in Hopper v. Argonaut Insurance Company, Inc., have established that there is no common law bad faith in Texas regarding workers’ compensation claims. First, last year, in Texas Mut. Ins. Co. v. Ruttiger, the Texas Supreme Court, finding that the reforms to the Texas workers’ compensation statutes in the 1990’s provided for adequate safeguards, abolished the common-law duty of good faith and fair dealing.

In Ruttiger, Texas Mutual disputed plaintiff Timothy Ruttiger’s claims for a workplace injury because his employers reported that the injury occurred at a non work-related softball game. Though the insurance carrier eventually agreed to pay workers’ compensation benefits, Ruttiger filed suit alleging both common law and statutory bad faith causes of action because his claim was initially denied. Initially, the trial court found that Texas Mutual’s insurance adjuster acted in bad faith when it believed the employer instead of the employee, Ruttiger. However, the Texas Supreme Court disagreed and held that an injured employee could not assert a common-law claim for breach of duty of good faith and fair dealing against a workers’ compensation insurance carrier. Notably, at the time, the court did not go as far as to hold that the Texas Workers’ Compensation Act was the exclusive remedy for all work-related injuries, meaning that following that decision, workers could still bring a bad faith claim against a workers’ compensation insurer under the Texas Insurance Code Section 541.061 for a misrepresentation of the policy.

More recently, however, in Hopper v. Argonaut Insurance Company, a decision by the Court of Appeals of Texas all but eliminated a claimant’s ability to bring a bad-faith claim of any kind. In Hopper, Mr. Hopper sustained a wrist injury on the job and received workers’ compensation benefits. Several years later, he died of a drug overdose of the pain medication he was prescribed following his injury. After the deceased’s family sought workers’ compensation death benefits, the workers’ compensation insurer denied the claim for two years, challenging whether Mr. Hopper’s death was work-related and his family’s status to bring the claim.

Eventually, the insurer agreed to accept the claim. However, Mr. Hopper’s family sued the insurer and the insurer adjuster for mishandling the claim and delaying payment of death benefits. Among other claims, plaintiffs asserted common law claims for fraud, negligent misrepresentation, and breach of good faith and fair dealing, as well as a statutory claim for bad-faith under the Texas Insurance Code section 541.061. More specifically, the family argued that the insurer misrepresented facts about Mr. Hopper’s death and the family’s right to assert a claim. The insurer and the adjuster filed motions for summary judgment, alleging that the Texas Supreme Court abolished the common-law duty of good faith and fair dealing in the workers’ compensation context and held that the Workers’ Compensation Act was the exclusive remedy for failing to comply with the provisions of the Act.

The trial court agreed and granted the motions for summary judgment. On appeal, the Court of Appeals emphasized that although the Ruttiger held that a claim under section 541.061 was not necessarily incompatible with the Act, the supreme court stated that section 541.061 applies to misrepresentations of a policy’s terms, not misrepresentations about whether a specific claim is factually within a policy’s terms. Since there was no evidence the insurer or the adjuster misrepresentation the terms of the actual policy, the Court of Appeals affirmed the trial court’s decision dismissing plaintiffs’ common law and section 541 claims.

These two decisions substantially curtail a workers’ compensation claimant’s remedies and make it very difficult for claimants to state a claim of misrepresentation of the policy. Nonetheless, if you were injured on the job, there are other claims you may bring against an employer. Whether or not your employer has workers’ compensation, the experienced workers’ compensation attorneys at Carabin and Shaw can you receive the compensation you deserve. Call us toll-free at 1-800-862-1260.

Related blog post:

Texas A&M Construction Accident Highlights Dangers faced by Construction Workers in Texas, Texas Injury Lawyers Blog, August 17, 2013

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