In DeOliveira v. Liberty Mut. Ins. Co., Nos. 17132, 17169, 2005 WL 975685 ( Conn. May 3, 2005), the Connecticut Supreme Court held that the exclusivity provision of the Workers Compensation Act barred a bad faith action against an insurer.
Antonio DeOliveira suffered a back injury on the job after lifting a heavy bag of materials. No one witnessed the accident, and he reported it to his supervisors the next day. He filed for workers compensation. His employer contested the claim that his injury arose in the course of his employment.
The company directed DeOliveira to an orthopedic specialist, who confirmed his version of events regarding how the injury occurred and stated that the “back injury was directly and causally related to the accident at work.” DeOliveira was released for light duty but could not find a position.
DeOliveira sought psychiatric treatment for depression, the cause of which was determined to be his inability to work and the way his company had treated him regarding his workers compensation claim. The psychiatrist concluded that DeOliveira suffered from posttraumatic stress and was deemed totally disabled as a result.
DeOliveira filed a claim against his company and its workers compensation insurer “alleging that they acted negligently, recklessly, intentionally and in bad faith by contesting his workers compensation claim.” Thus, he contended that the insurer and the company were liable for his physical and psychological injuries.
The commissioner found his back injury to be compensable and that the company's denial of the claim was unreasonable—DeOliveira was awarded attorney's fees. The commissioner, though, did not find the psychological injury to be directly related to DeOliveira's work.
The following question was submitted to the Connecticut Supreme Court: does Connecticut recognize a cause of action against an insurer for bad faith processing of a workers compensation claim?
DeOliveira claimed that since the psychological damage and intentional torts are not compensable under the act, the commission lacked jurisdiction regarding the psychological injury. Therefore, the exclusivity provision should not apply. He also asserted that victims of the tort have no redress under the act since the employer and insurer are punished but do not compensate the claimant.
Liberty Mutual countered that “the commission's jurisdiction is not limited to claims for injuries that ultimately are compensable, but extends to alleged acts of misconduct in the course of workers compensation proceedings.” The court agreed, stating that “the mere fact that an injury is not compensable under the act does not mean necessarily that an action for damages may be brought and that the exclusivity provision does not bar such an action.”
The court concluded that Connecticut does not recognize a cause of action for bad faith processing of a workers compensation claim. The court reasoned that, just because the remedy is inadequate to the claimant, this does not allow the court to overlook the legislature's set limits.