Legal Question in Workers Comp in California
WC insurance company's breach of duty to investigate
Can a workers compensation insurance company be considered to be in bad faith if it pays out benefits on a claim which turns out to be fraudulent? A workers comp. claim was submitted; the insurance company paid the claim without first investigating. Then witnesses (coworkers) came forward stating the injury could not have happened at work. We are trying to find case law (preferably California) on this issue.
1 Answer from Attorneys
Re: WC insurance company's breach of duty to investigate
Although I haven't exactly researched this issue myself, I would have to say no.
First, I am not sure what you mean by "paying out." Usually, if a worker files a fraudulent claim, at the end of the day, one of two things usually occur. Either the defense settles the case at nuisance value or the matter goes to trial and the Applicant will take nothing (If the Applicant does in fact have no case or a very bad case). It sounds like here that your insurance company paid the nuisance value which doesn't amount to bad faith. However, everything I just said above is only a hypothetical since I am not sure what "paying out" means in your case. In any event, paying a workers� comp claimant will usually require some very special and extraordinary facts to amount to bad faith on behalf of your carrier.
Best regards,
David B. Lupoff, Esq.
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