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By David McClard

The cover article in this week’s Houston Press illustrated an interesting battle going on between a Texas workers’ compensation insurance carrier and its unfortunate policyholders. Texas Mutual Insurance has recently appealed to the 14th Appeals Court a bad-faith judgment in which it was found to have caused undue suffering by wrongfully denying a claim. The insured in this case had a back injury which worsened over several years and TMI had denied paying medical bills for years. This was the second bad faith claim that TMI had lost, the first being a case where an adjuster had added a word to the insured’s doctor’s notes.

The lead counsel for TMI and senior vice president, Mary Nichols, has an interesting proposition in her appeal. She wants the higher courts to eliminate bad faith damages from workers’ compensation suits. In her words: “We’re going to be paying for [the insured’s] injury. We pay for unlimited lifetime medical. So if we delay your shoulder surgery and your shoulder gets worse, that’s still our nickel… That’s not a separate and independent injury. That is the comp claim that we are taking care of. That’s the shoulder that we bought.”

Mrs. Nichols could probably work on her choice of words, but more importantly, maybe reconsider the public policy issue at hand. Insureds who fight a workers’ comp claim must go through the internal complaint system, which is a series of mediations and hearings that can last for years, or hire a lawyer and haul the case through potentially multiple courts. If TMI has it their way, workers’ comp carriers could delay and deny payments through any manner of fraudulent means, and ultimately be subjected to nothing more than compensatory damages. All the while, they could drag the insured through a punishing internal review and civil court/appeals process without any worry of being punished for misrepresentation or fraud.

It remains to be seen if Texas Mutual will prevail in changing Texas law on the matter, but for the sake of policyholders who have the misfortune of being injured on the job, one would hope that it does not.

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