AREAS OF INTEREST: Insurance; Breach of Duty of Good Faith & Fair Dealing; Workers’ Compensation
LEGAL IMPACT: Bad faith claims against insurer based on handling of worker’s compensation claims were barred by exclusivity provision of workers’ compensation act, RSA 281-A:8.
CASE CAPTION: Walter H. Brady, III v. PMC Corp. & Travelers Ins. Co., Merrimack County Superior Court, No. 2011-CV-0616, (J. McNamara) (7/24/12)
On September 3, 2008, the plaintiff was found on the floor at his workplace bleeding from the back of his head. There were no eyewitnesses and he could not recall what caused the accident.
The plaintiff’s employer, PMC, filed a “First Report of Occupational Injury” stating that the plaintiff had fainted. PMC notified its workers’ compensation insurer that the injuries were “self-inflicted” and the insurer denied benefits based on lack of causal relationship to employment. The plaintiff then sent the insurer a letter from his physician advising that although the exact circumstances of the injury were unclear, the injury was not self-inflicted. The insurer, however, continued to deny benefits.
The plaintiff then filed suit against the workers’ compensation insurer based on breach of contract, breach of the duty of good faith and fair dealing and violation of the Consumer Protection Act. The defendant moved to dismiss on several grounds, including applicability of the exclusivity provisions of the workers’ compensation act, RSA 281-A:8.
HOLDING: Defendant’s motion to dismiss granted as to all claims.
While the New Hampshire Supreme Court has not addressed the applicability of the exclusivity provision to an employee’s claims based upon the implied covenant of good faith and fair dealing, the issue has been extensively litigated in other jurisdictions. The First Circuit Court of Appeals, applying Maine law, has adopted the majority view that lawsuits alleging bad faith in the handling of worker’s compensation claims are barred. This position is supported by public policy considerations including the availability of remedies under the worker’s compensation statute for addressing claims that an insurer has engaged in bad faith by making false representations or delaying payment. The court noted that New Hampshire’s exclusivity provision is broad in that it bars “all rights of action” against employers and insurers except for those specifically listed and ruled that all of the plaintiff’s claims were barred.