Worker Made Destitute by Workplace Injury; Comp Carrier Avoids Bad Faith Claim, Fails to Recover Fees

The Arizona Court of Appeals, Division One, held that a workers’ compensation claimant’s failure to seek an adjudication by the Industrial Commission was fatal to her bad faith claim against the comp carrier.

The plaintiff inhaled some nasty stuff on the job, and the comp carrier stepped up to pay medical expense and temporary total disability benefits. When the plaintiff was unable to attend a scheduled IME, the doctor wrote a report confirming that the inhaled substance was toxic, but questioned the existence of any injury. A second IME was scheduled with another doctor, who examined the claimant, found chronic airway disease from the exposure, and recommended further testing. A third examiner reported that plaintiff had no respiratory conditions and suggested a mental health evaluation. The comp carrier terminated benefits.

Plaintiff did not seek an adjudication from the Industrial Commission but went straight to Superior Court with a bad faith claim.

The Superior Court dismissed the complaint and Division One affirmed. The court held that even if the evidence would show bad faith, only the Industrial Commission had the power to determine that benefits were due.

The Court also held that the carrier’s bid for attorneys’ fees was properly denied, because the claimant demonstrated that she was unable to work and destitute due to her workplace injury.

The decision contains an instructive history and analysis of the court’s earlier rulings on bad faith in the workers’ comp setting.


Merkens v. Federal (May 21, 2015)

Careful What You Say – No Immunity for Workers’ Comp Med Reviewer

A workers’ compensation claimant was treated by a neurologist/pain management specialist. The comp carrier retained an internal and occupational medicine doctor to review the records. The reviewer issued an 8 page report that, in addition to the medical analysis, observed that “there are hosts of individuals out there seeking to try to take advantage . . . in order to perpetuate financial interests . . . with unsupportable and unexplained costs for whatever reason.” After concluding that the claimant did not need various treatments, the reviewer offered that “I don’t think I would end it there. It would be my suggestion that that this medical file be bundled up and sent off to both the Office of Professional Misconduct [sic] and to the Attorney General’s office.”  These remarks were perhaps softened by the acknowledgement that “[w]hile I can reach no specific conclusions . . . there are areas that are worthy of investigation . . .”


The treating physician sued for defamation per se and intentional infliction of emotional distress. The complaint alleged that the report contained numerous untrue statements about the medical treatment, and that the comp carrier’s own adjuster said the remarks were “over the top.” The complaint said that the reviewer’s conduct demonstrated “malicious intent” and that the reviewer acted in a “grossly irresponsible manner.”


The trial level court dismissed the complaint, finding that, under New York’s workers’ comp scheme, the report was absolutely privileged, and the reviewer’s remarks were not so outrageous as to support the emotional-harm claim. The Appellate Division, First Department reversed and reinstated the defamation claim. The unanimous panel held that there was no absolute privilege, and that the complaint sufficiently alleged facts to support a claim of actual malice so as to overcome any qualified privilege.


Schottenstein v. Silverman,  2015 NY Slip Op 04416 (May 26, 2015).

The e-filed case documents can be reviewed by searching for New York County Index # 158186/2013 on New York’s Web Civil Supreme and following the links.

High-Low Hijinks

Seems like a deal is never done. The parties to a high-low agreed that a hung jury would bust the deal but otherwise waived post-trial motions and appeals. After the jury was sent to deliberate, the lawyers noticed that the verdict sheet required apportionment of fault and assessment of damages, even if the jury found no liability. In off-the-record discussions, the court decided, without objection, that a defense verdict would be entered on a no-liability finding, even if the jury went on to apportion fault or award damages.

So what happened? The jury found negligence but no proximate cause, and dutifully awarded and allocated damages. So what else happened? The court granted Plaintiff’s oral post trial motion to set aside the verdict as inconsistent. The defendants moved to vacate that order and appealed when their motion was denied. The defendants asked for rescission of the high-low due to plaintiff’s “substantial and fundamental” breach of her promise not to make post-trial motions. The Appellate Division, First Department, said it wasn’t that bad, and directed entry of judgment for the “low”.

Crosby v Montefiore Med. Ctr. (May 19, 2015)