Crackdown on unfair workers compensation denials proposed

Arizona lawmakers are considering a bill that would introduce penalties for workers compensation insurers, self-insured employers and claims handlers that process compensation claims in bad faith.

H.B. 2334, introduced last month, was discussed in a meeting of the Arizona House of Representatives insurance committee on Wednesday, according to the Arizona State Legislature website. The bill would allow injured workers to file complaints with the Industrial Commission of Arizona, the state’s workers compensation agency, within 60 days of an incident involving alleged “unfair claim processing practices or bad faith.”
Penalties for bad faith dealings could apply to employers, self-insured employers, insurers, or “claim processing representative(s),” the bill says.

The legislation would award various penalties to injured workers if the industrial commission found that an alleged incident caused harm to the claimant, the bill reads. For instance, if a claim was denied without any reasonable basis, the claimant would receive $5,000 if their period of disability was 14 days or less.

A claimant whose injury resulted in more than 14 days of disability could receive $10,000 or 100% of the disability benefits owed to them — whichever is greater — if the commission found that the person was denied benefits without a reasonable basis, the bill reads.

Bad faith dealings that lead to denied or delayed medical treatment for an injured worker could result in a penalty of $5,000 for each occurrence of denied or delayed care, the bill says.

Injured workers also would be able to file for civil damages outside of their workers compensation benefits and receive up to $5,000 in penalties if a payer is found to act in bad faith, according to the legislation.