Good Faith Denial of Benefits When Insurer Relies on Rulings of Workers’ Compensation Court

Last week, the Montana Supreme Court held that the insurer acted reasonably when it stopped payments based upon its reliance on a prior order from the Workers’ Compensation Court (“WCC”).  Steward v. Liberty Northwest Ins. Corp., 2013 WK 1739577, *7 (Mont. Apr. 23, 2013).  The insurer terminated payments to the claimant without notice, but only after the insurer reviewed an order from the WCC.  The WCC denied the claimant’s request for an increased impairment rating because it did not see any causal relationship between the complained pain issues and the claimant’s on-the-job injury.  In addition, after a short break in payments, the insurer resumed paying for the pain patches under a reservation of rights.

The Court held that since the insurer acted reasonably in relying on the WCC’s ruling, the claimant was not entitled to statutory penalties or reimbursement of attorneys’ fees.  Id.


About The Author

April Zubizarreta joined Cozen O’Connor’s Houston office in January 2006 as a member in the Global Insurance Group. Over the past 14 years, she has represented various London market insurers in coverage disputes involving environmental pollution, energy, marine, property, and financial lines matters.

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Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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