In the Matter of the Certification of a Question of Law from the United States District Court, District of South…

Summary

The court answered the certified question affirmatively, holding that a worker may pursue an independent tort claim against a workers’ compensation insurer for intentional, fraudulent, or bad-faith conduct in processing, paying, or terminating benefits. The workers’ compensation exclusivity provisions do not apply because the insurer’s later bad-faith conduct does not arise out of the employment injury and intentional torts are excluded from the relevant statutory restriction. The court further held that the claim is not limited to contract damages and adopted a two-prong bad-faith test requiring both the absence of a reasonable basis for denying benefits and knowledge or reckless disregard of that absence.