This story is reprinted with permission from FC&S Legal, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.

The Oklahoma Supreme Court — in a case involving what a concurring justice referred to as an insurer's “appalling conduct” — has expanded the ability to bring bad faith claims against workers' compensation insurance carriers.

The case

On Sept. 10, 2014, Tracy Meeks filed a petition in an Oklahoma state court alleging that Southside Recycling LLC, through its insurance carrier, Guarantee Insurance Company, had in bad faith engaged in a systematic pattern and practice of refusing to pay court-ordered temporary total disability (TTD) benefits on 26 separate occasions, without just cause.

In support, Meeks relied on various previously entered TTD orders by the Oklahoma Workers' Compensation Court (WCC). In particular, Meeks proffered a June 26, 2014, WCC order that stated:

The Court previously determined, and ordered, that claimant was, and is entitled to temporary total disability payments. The Court ordered respondent to pay such benefits and respondent had repeatedly failed to comply with the Court's orders.

The Court has given respondent the opportunity to provide just cause as to its refusal or failure to comply with the Court's orders in this matter, and respondent has failed to satisfy its burden in that regard resulting in the court ordering this respondent to pay penalties and interest in its APRIL 15, 2010, AUGUST 18, 2010, SEPTEMBER 30, 2011, JANUARY 4, 2012, JUNE 15, 2012 AND OCTOBER 12, 2012 orders.

Respondent continued to fail to comply with the Court's order for payment of temporary total disability benefits to claimant and now on this 19th day of JUNE 2014, this cause came for consideration, and after hearing arguments of counsel, the Court FINDS and ORDERS AS FOLLOWS:

THAT respondent has again, without just cause, failed to comply to pay claimant temporary total disability payments since the last order of OCTOBER 12, 2012, … for a total of twenty-six (26) separate occasions.

No 'outright refusal'

Guarantee Insurance moved to dismiss Meeks' bad faith petition, contending that he had failed to follow the procedural requirements under the Oklahoma Workers' Compensation Act before filing the bad faith action. Guarantee Insurance contended that a bad faith action could be premised only upon a carrier's “outright refusal to pay a compensation award,” noting that it ultimately had paid the awards.

The trial court sustained the insurer's motion to dismiss. Although the trial court acknowledged that the June 26, 2014, order had made detailed findings of fact about Guarantee Insurance's 26 separate occasions in failing to comply with the WCC orders absent good cause shown, it noted that Guarantee Insurance had satisfied all prior awards prior to the WCC hearing.

The dispute reached the Oklahoma Supreme Court.

The Oklahoma Supreme Court's decision

The state Supreme Court reversed, ruling that Meeks could proceed in the trial court on his bad faith claim against Guarantee Insurance for its alleged bad faith refusal to provide TDD benefits as ordered by the WCC.

In its decision, the court explained that a trial court may exercise jurisdiction in an employee's bad faith action against his or her employer or insurer when that employee had obtained a WCC order certifying “that a final workers' compensation award either (1) remains unpaid or (2) benefits have not been provided as ordered” without good cause.

The certification order, the court continued, was the vehicle that conferred jurisdiction on the trial court.

The court then pointed out that the WCC had found and had expressly held that General Insurance had been ordered to pay benefits, had repeatedly failed to do so as ordered, and had not provided just cause for its failures. According to the court, General Insurance's actions placed it “squarely within the scope of the second category for certification.”

Therefore, the court held, the June 26, 2014, WCC order, finding General Insurance in violation on 26 separate occasions in its duty to comply with previously authorized TTD benefits absent good cause, satisfied the certification prerequisites permitting Meeks to begin a bad faith action against General Insurance — notwithstanding that the insurer had made the required payments prior to the WCC hearing.

The case is Meeks v. Guarantee Ins. Co.

FC&S Legal comment

A concurring justice wrote a separate opinion “to emphasize the appalling conduct” that led to Meeks' suit against General Insurance:

On June 25, 2008, Appellant Tracy Meeks suffered an on-the-job injury with Southside Recycling, who was insured by the Defendant Guarantee Insurance Company. By order of April 15, 2010, Mr. Meeks was awarded temporary total disability benefits, payable at the rate of $299.00 per week for a period of 156 weeks. On more than twenty-six (26) occasions, Guarantee Insurance refused to pay the benefits. Counsel for Mr. Meeks was forced to make multiple trips to the court to seek additional orders for payment. Some orders included a 15% penalty and interest. This pattern continued for several years.

On June 26, 2014, the Workers' Compensation Court of Existing Claims [] issued the final order on arrearages, finding that Guarantee Insurance had failed to pay benefits in the amount of $8,940.10 without justifiable reason. The claim was eventually settled. For a period of over four years, Guarantee Insurance habitually ignored valid court orders to pay benefits. The facts of this case are outrageous, and this is exactly the reason why a claimant must have a common law remedy of bad faith. In spite of flagrant violations of multiple court orders over a period spanning from 2010 to 2014, Guarantee Insurance was merely held in contempt and assessed penalties and interest over and over again…. Guarantee Insurance's continued conduct evidenced intentional, malicious, and bad faith refusal to pay multiple awards, and neither the payment of the arrearages and penalty nor the settlement stands as a bar to an action for bad faith.

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc.

Special Reports /

Workers&rsquo; comp case involving insurer&rsquo;s &lsquo;appalling conduct&rsquo; expands bad faith claims in Oklahoma

Related Stories

Recommended For You

Workers’ comp case involving insurer’s ‘appalling conduct’ expands bad faith claims in Oklahoma