A California workers compensation claim cannot legally be denied unless the insurance company performs a full and fair investigation
Workers’ compensation insurance companies sometimes deny claims for workers compensation benefits. A claims administrator might claim that the injured worker made a false claim for an injury that he did not suffer. A claims administrator might also decide that the injured worker has a legitimate injury but that the injury is not work-related. In either of those cases, the claims administrator will deny that the claim is compensable.
When the law entitles an injured employee to workers compensation benefits, the claim is said to be compensable. When a claims administrator denies that the employer is responsible for paying workers compensation benefits for the injury, the claims administrator is saying that the injury is not compensable.
A dispute about the nature and extent of an injury or disability is not the same as a dispute about compensability. A claims administrator might agree that a claim is compensable while disputing the amount of benefits that should be paid for the compensable injury. However, a dispute about payments for compensable injuries usually revolve around medical opinions concerning the degree of an employee’s disability or whether the disability has become permanent. Determining whether an injury is compensable, on the other hand, requires an investigation of how or whether the injury occurred.
Duty to Investigate
Title 8 of the California Code of regulations §10109(a) requires claims administrators to “conduct a reasonable and timely investigation” of a workers’ compensation claim before denying the claim. No investigation is needed before accepting a claim, but denials must be based on evidence that the claims administrator obtains in an investigation.
This section also requires that the claims administrator “fully and fairly gather the pertinent information” necessary to admit or deny the claim. The claims administrator cannot simply search for reasons to deny the claim. Rather, the claims administrator must search for the truth.
A claims administrator might be tempted to deny every claim, regardless of its merit, but California law includes protections that discourage claims administrators from denying claims in bad faith. For that reason, claims administrators generally obey the law by investigating workers’ compensation claims and acting in good faith when they decide to accept or reject a claim. When claims administrators do not act in good faith, a Santa Rosa workers’ compensation lawyer can help injured employees pursue a remedy.
Medical Treatment Begins Immediately
Injured workers often require prompt medical attention. Waiting for a claims administrator to investigate a claim would delay treatment, subjecting the injured worker to unnecessary pain and potentially a worsening of his condition. For that reason, employers must pay for treatment without waiting for the claim to be investigated.
If an injured worker files a workers’ compensation claim, the employer or its insurance company must authorize up to $10,000 of medical treatment for the injury. The employer must continue to provide treatment, until it has spent $10,000, or until the claims administrator denies the claim, whichever happens first.
If the claim is denied, the claims administrator must notify the treating physician of the denial, and the treating physician must notify the injured worker. Until that happens, the treating physician may not bill the injured worker directly for any treatment received. Therefore, insurance companies have an incentive to investigate claims promptly to avoid continued payment for medical treatment of claims that are not compensable.
Presumption of Compensability
To encourage prompt investigation of claims, the California workers’ compensation system presumes that an injury is compensable if the claims administrator does not deny the claim within 90 days of receipt of a claim form. After 90 days, an employer can only challenge compensability if it learns about evidence that it could not reasonably have discovered during the first 90 days after a claim is filed.
Occasionally a claims administrator will obtain evidence of non-compensability after the 90 day period has expired. In those cases the claims administrator will be allowed to present that evidence to a judge and attempt to challenge the compensability of the claim. As a general rule, however, if a diligent investigation would have produced evidence related to compensability within 90 days after the claim was filed, the claims administrator cannot base a denial of the claim on that evidence after the 90 day period has expired.
The presumption of compensability is an important protection for injured workers, but the 90 day period does not begin to run until the day that a claim is filed. That’s one of many reasons why workers’ compensation claims should be filed as soon as the injury occurs.
Proof of Compensability After Claim Is Denied
While the denial of a claim ends the employer’s responsibility for providing medical treatment and for paying other workers’ compensation benefits, a claims administrator takes a risk when it denies a claim. This is because an injured worker can then treat with whomever she wishes. The injured worker can receive treatment from a doctor who agrees to take a lien on the workers’ compensation benefits. And the doctor may be willing to provide medical evidence that the injury is work-related.
Penalties for Bad Conduct
If an employer contests compensability of a claim at a hearing and loses, there is no legal recourse for an injured worker if the claim was denied following a full and fair investigation. The injured worker will simply go on to receive all the workers’ compensation benefits to which he is entitled. However, if an employer contests compensability at a hearing and loses, and it is proven that the claims administrator denied the claim in bad faith, or without conducting an investigation, it may be required to pay a penalty. That penalty could amount to up to 25% of the value of the benefits that should have been paid but weren’t. A penalty cannot exceed a total of $10,000.
The Division of Workers’ Compensation can also assess a penalty of up to $5,000 upon a workers’ compensation insurance company that does not have proof in its claims file that it conducted an investigation and found evidence that raised a reasonable doubt about the compensability of the claim.
Get Help with Denied Claims
When a claim is denied, an injured worker can benefit from legal advice. An experienced workers’ compensation lawyer can help injured workers prove that their work-related injuries are compensable. If your workers’ compensation claim was denied, call Kneisler & Schondel at (707) 542-5132. You can also tell us about your workers compensation case by submitting our online contact form.