When you look at the Workers Compensation Claim form, you will see a box 21.f. which asks whether the employee is claiming that the insurance company had made an unfair or frivolous controversions.
“Unfair or frivolous controversion” is the workers compensation term for bad faith. If the Board finds that the insurance company controverted benefits without justification, i.e. unfairly or frivolously, it will refer the finding to the Division of Insurance for an investigation into that insurance company’s settlement practices. Additionally, the insurance company will be ordered to pay the employee 25% penalty plus interest on the benefits that were denied.
This applies to formal controversions and controversions-in-fact. Sometimes the insurance company stops paying benefits or refuses to pay benefits without filing a controversion notice. In that case, they have committed a “controversion-in-fact” and can be liable for penalties and interest and are vulnerable to an unfair or frivolous finding as if they had filed a controversion notice.
In the past ten years, the Law Office of Keenan Powell has obtained findings that the insurance company was unfair or frivolous in four cases:
Williams v Arctic Terra/Umiliak Ins Co, AWCB Decision No. 16-0095 (10/26/16)
On 9/17/15, the Employee won his case. Williams v Arctic Terra/Umiliak Insurance Co., AWCB Decision No 15-0116. Because of the decision, he was able to get the surgery he needed. However Umiliak was consistently late with his disability checks, which were supposed to be issued every 14 days.
A new claim was filed against Umialik for penalties. The case went to hearing on 9/28/16 and the Umialik adjuster, Robbie Sullivan, testified. Although Robbie Sullivan testified she followed the statute in issuing TTD checks and replacement checks, the Board found she had not. Once she learned a check was missing, she had 14 days to investigate and issue a replacement check. “The adjuster inexplicably waited until August 12, 2016, to stop payment and to issue the second replacement check…well beyond the 14 day period and the seven day grace period following notice on June 8, 2016 and July 15, 2016 (that the first replacement check had not been received.)
“Furthermore, Employer had an obligation to either pay or controvert the penalty and interest claims….It did neither.” Because of Umialik and Robbie Sullivan’s failure to issue the second replacement check on time and failure to pay penalties and interest, it was ordered by the Board to pay penalties and costs and fees associated with bringing the claim.
Lena v Fred Meyers, AWCB Decision No. 17-0072 (6/26/17)
This wasn't Lena's first trip to the Board, nor was it her first win. In fact, she had previously won Lena v Fred Meyer Stores, (Lena I) Decision 16-0135 issued Dec. 30, 2016.
In Lena I, Fred Meyers had used every defense available to an Employer and lost all of them. The Board ordered that her injury was a workers compensation injury and she was entitled to time loss and medical benefits.
When the Board finds that a claim is compensable, the Employer must pay all benefits due no later than 14 days following the Board’s decision. However, although the Employee won her case on Dec. 30, 2016, no benefits were paid by Fred Meyers until long after the 14 days passed. Because the benefits had not been paid, a claim was filed on her behalf for payment of the benefits plus penalties and interest. After the claim was filed, Fred Meyers paid some, but not all of the benefits owed.
In the new decision, Lena II, the Board ruled that the Employee was entitled to a 25% penalty on her temporary total disability, temporary partial disability and late-paid and unpaid medical benefits. Three of the Board’s rulings are particularly noteworthy.
First, Fred Meyers claimed that it did not owe medical benefits until received a HCFA bill and matching chart note from the physician. A HCFA bill is a particular form that providers use when billing insurance companies. The Board held that there is no such requirement under the Act. Because the Employer had been provided with chart notes and bills that had been sent to the Employee or billing statements generated by the providers, it had enough information to trigger its duty to pay. And when it did not pay on time, it owed 25% penalty plus interest to the providers. Lena II, pgs 21-22.
Second, the Employee had paid the providers directly to obtain medical treatment when Fred Meyers controverted her. She paid at the rate charged to individuals, which is ironically higher than group insurance or workers compensation or Medicaid or Medicare pays. Fred Meyers claimed that because it was only required to pay for the treatment at a reduced rate according to Alaska Workers Compensation law, it was entitled to pay the provider and then the Employee could fight it out with the provider as to how much she was entitled to get back.
The Board ruled that was unfair. When an Employee pays the provider directly, s/he is entitled to be reimbursed in full directly from the insurance company. Because Fred Meyers did not reimburse her, or reimbursed her late on some of the bills, she was entitled to 25% penalty plus interest. Lena II, pgs 23-24.
Third, the Board ruled that the defenses raised by Fred Meyers were unfair and frivolous, which in turn could result in a referral to the Division of Insurance for investigation. Each of the defenses raised by Fred Meyers was found to be “incorrect”. Fred Meyers claimed that it didn’t have the chart notes and bills from a certain provider until January of 2017. That wasn’t true. It had those chart notes and bills in 2016. It also claimed that the payment pursuant to the Lena I was not due until 14 days after the decision and that penalties were not due for an additional 14 days after that. That is not the law.
When the Board renders a decision, the benefits must be paid 14 days after the decision’s date. If the payment is mailed even one day late, there is a 25% penalty that must be paid. And, that penalty is to be paid with the benefit payment. The Employee should not have to file a claim to collect it.
Baker v Liberty Northwest, AWCB Decision No 15-0069 (6/16/15)
Liberty Northwest was represented by Holmes, Weddle & Barcott. The Employee had negotiated a settlement by which Liberty agreed to assume liability for paying medical bills in excess of $100,000 and for holding the Employee harmless on the bills. After the settlement was approved by the Board, Liberty refused to pay the Providence bill, demanding that Providence negotiate the amount. Providence refused and began pursuing the Employee again for payment. Keenan Powell filed a Claim against Liberty. Liberty=s response was that it was only responsible for reimbursing the Employee if he paid the bills. After a hearing, a Decision and Order was entered finding that the Employee was entitled to payment of the bills, the providers were entitled to payment of the bills, that Liberty had acted in bad faith when refusing to pay the bills and mandating Liberty pay the bills with 25% penalties.
Liberty Northwest was represented by Holmes, Weddle & Barcott. The insurance company had provided the Employee with a Aprescription card@ to use to fill his prescriptions. On at least four occasions, the pharmacy would not fill the prescriptions because it called the insurance company and the insurance company refused to authorize the specific prescription. The insurance company=s position is that it does not have a duty to pre-authorize prescriptions and instead is only obligated to reimburse for prescriptions paid by the Employee. At the hearing, Keenan Powell was successful in obtaining an order from the Board requiring the insurance company to arrange for filling the prescriptions when they are presented, plus a finding that the insurance company had acted in bad faith and would be reported to the Division of Insurance for an investigation, plus fees and costs. The order has subsequently been appealed and the appeal is on-going.
Hubbard vs. Zurich American, AWCB Decision 08-0245 (12/11/2008)
Zurich was defended by Holmes, Weddle & Barcott. Zurich received a PPI rating from its doctor on May 18, 2007. PPI should have been paid no later than 21 days from its receipt of PPI rating, which would have been June 7, 2008. PPI was mailed out ten days late, on July 17, 2008. Keenan Powell on behalf of the Employee was successful in obtaining a Board award of 25% penalty for late payment of PPI and fees and costs.
Keenan Powell has practiced law in Alaska for more than 30 years and has dedicated her practice to Workers Compensation representing injured Alaskans.
All consultations are free. If you want to set up a meeting, use the contact form on www.keenanpowell.com or call: 907 258 7663.