AN ACT GRANTING WORKERS' COMPENSATION COMMISSIONERS POWER TO RENDER DISCRETIONARY FINDINGS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 31-278 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

Each commissioner shall, for the purposes of this chapter, have power to summon and examine under oath such witnesses, and may direct the production of, and examine or cause to be produced or examined, such books, records, vouchers, memoranda, documents, letters, contracts or other papers in relation to any matter at issue as he may find proper, and shall have the same powers in reference thereto as are vested in magistrates taking depositions and shall have the power to order depositions pursuant to section 52-148. [He] Each commissioner shall have power to certify to official acts and shall have all powers necessary to enable him to perform the duties imposed upon him by the provisions of this chapter. Each commissioner shall have the discretion to render findings of bad faith and impose penalties should said commissioner determine a party has not made reasonable effort to comply with, or maliciously refused to comply with, the commissioner's orders or requests. Each commissioner shall hear all claims and questions arising under this chapter in the district to which the commissioner is assigned and all such claims shall be filed in the district in which the claim arises, provided, if it is uncertain in which district a claim arises, or if a claim arises out of several injuries or occupational diseases which occurred in one or more districts, the commissioner to whom the first request for hearing is made shall hear and determine such claim to the same extent as if it arose solely within his own district. If a commissioner is disqualified or temporarily incapacitated from hearing any matter, or if the parties shall so request and the chairman of the Workers' Compensation Commission finds that it will facilitate a speedier disposition of the claim, [he] said commissioner shall designate some other commissioner to hear and decide such matter. The Superior Court, on application of a commissioner or the chairman or the Attorney General, may enforce, by appropriate decree or process, any provision of this chapter or any proper order of a commissioner or the chairman rendered pursuant to any such provision. Any compensation commissioner, after ceasing to hold office as such compensation commissioner, may settle and dispose of all matters relating to appealed cases, including correcting findings and certifying records, as well as any other unfinished matters pertaining to causes theretofore tried by him, to the same extent as if he were still such compensation commissioner.

(The underscores are the proposed Raised Bill changes to the present 568 Workers Compensation Statute. )

(Here is the entities in support and against HB 5626 as testified March 4, 2008)
Labor and Public Employees Committee

JOINT FAVORABLE REPORT

SPONSORS OF BILL:

Rep. Melissa Olson, 46^th District

REASONS FOR BILL:

To permit civil actions against a self insured employer, insurer, and third party administrators for acting in bad faith.

Substitute Language:

The substitute language changes the title of the bill to “An Act Clarifying the Handling of Worker's Compensation Claims” in order to accurately reflect the provisions therein. The substitute language also provides for civil actions to resolve situations involving the breach of “the covenant of good faith and fair dealing in the handling of claims” under the Worker's Compensation Act or of a violation of the unfair and prohibited practices statutes in insurance law.

RESPONSE FROM ADMINISTRATION/AGENCY:

None submitted.

NATURE AND SOURCES OF SUPPORT:

Connecticut Trial Lawyers Association

Supports the bill but would amend the bill to findings of “undue delay or unreasonable contest” to make it consistent with other provisions of the act.

AFL-CIO

NATURE AND SOURCES OF OPPOSITION:

Kia Murrell, Connecticut Business and Industry Association (CBIA)

We oppose this bill because we believe that it will create additional costs and burdens to businesses by allowing workers compensation commissioners to penalize parties for acting in bad faith based upon their subjective determination that an order or request was not complied with.

This bill does not define the term “commissioner's orders or requests.” Therefore, it can be assumed that failing to comply with a particular “order” or “request” no matter how trivial could be the basis of a commissioner finding that the party acted in bad faith.

Connecticut Construction Industries Association, Inc. (CCIA)

Connecticut Conference of Municipalities (CCM)

Insurance Association of Connecticut (IAC)

Bill Lawler, Manchester, CT    (paybilly.com) (Mr. Picket)

House of Representatives, March 27, 2008

The Committee on Labor and Public Employees reported through REP. RYAN, K. of the 139th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CLARIFYING THE HANDLING OF WORKERS' COMPENSATION CLAIMS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (a) of section 31-284 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(a) An employer who complies with the requirements of subsection (b) of this section shall not be liable for any action for damages on account of personal injury sustained by an employee arising out of and in the course of his employment or on account of death resulting from personal injury so sustained, but an employer shall secure compensation for his employees as provided under this chapter, except that compensation shall not be paid when the personal injury has been caused by the wilful and serious misconduct of the injured employee or by his intoxication. All rights and claims between an employer who complies with the requirements of subsection (b) of this section and employees, or any representatives or dependents of such employees, arising out of personal injury or death sustained in the course of employment are abolished other than rights and claims given by this chapter, provided nothing in this section shall prohibit any employee from securing, by agreement with his employer, additional compensation from his employer for the injury or from enforcing any agreement for additional compensation; and further provided, the exclusivity of remedy provided by this section shall not apply to an action against an insurer, third-party administrator or self-insured employer for breach of the covenant of good faith and fair dealing in the handling of claims under this chapter or for violation of chapter 704 or section 38a-815.

(OLR) Office of Legislative Analysis Bill Analysis

sHB 5626

AN ACT CLARIFYING THE HANDLING OF WORKERS' COMPENSATION CLAIMS.

SUMMARY:

This bill permits civil actions against self-insured employers, insurers, and third-party administrators to address situations involving (1) breach of good faith and fair dealing in the handling of workers' compensation claims or (2) a violation of the unfair and prohibited practices chapter in insurance law. Under state law, the workers' compensation system is the exclusive remedy for employees seeking compensation for work-related injuries.

EFFECTIVE DATE: October 1, 2008

BACKGROUND

DeOliveira v. Liberty Mutual Ins. Co. , 273 Conn. 487 (2005)

In this decision, the Connecticut Supreme Court ruled that Connecticut law does not recognize a lawsuit filed against an insurer for bad faith handling of a workers' compensation claim because the state workers' compensation act bars such private action.

In this case, a compensation commissioner ruled in 1995 that the claimant's back injury was compensable under workers' compensation, but ruled against the claim for a psychological injury (depression) caused by the back injury and the insurer's handling of the claim.

In 2002 the claimant sued the insurance company seeking damages for a psychological injury stemming from the company's post-1995 delays and related actions. He argued that although workers' compensation ruled his psychological injury was not compensable, the compensation commissioner found the insurer unduly delayed payment.

The insurance company, Liberty Mutual, argued that the exclusivity provision in workers' compensation law bars such private action. The existing remedies for misconduct, the company argued, means the legislature intended such issues to be resolved within workers' compensation.

The Supreme Court ruled in favor of the company noting that the exclusivity provision of the Workers' Compensation Act prohibits an employee from seeking redress outside of the workers' compensation system (CGS § 31-284). The Court ruled that the Workers' Compensation Commission's jurisdiction is not limited to acts of misconduct in the course of workers' compensation proceedings, but addresses remedies for misconduct in handling claims. It noted that to construe the act to permit torts for an injury for which it already provides a remedial process would “invite the indefinite prolonging of litigation and risk double recoveries and inconsistent findings of fact, a result which the legislature, in enacting such a system . . . in place of common law remedies, certainly wished to avoid” (Robertson v. Travelers Ins. Co. , 95 Ill. 2d 441, 451, 448 N. E. 2d 866 (1983)).

Unfair and Prohibited Insurance Practices

By law, the insurance commissioner may discipline and penalize insurers that he finds has committed an unfair practice. Prohibited practices include misrepresentation of policies, making false financial statements, and unfair claim settlement practices. Persons aggrieved by the commissioner's decision may appeal to Superior Court.

COMMITTEE ACTION

Labor and Public Employees Committee

Joint Favorable Substitute