Unreasonable Conduct by Insurer


White v. State of Montana, 2013 MT 187 Montana State Fund may be subject to a common-law bad faith claim if it engages in tortious conduct outside the employment relationship while processing or settling a workers’ compensation claim.  However, where State Fund terminated a claimant’s benefits after it determined that he was violating Montana law by receiving wages and disability benefits at the same time,  the District Court correctly concluded that State Fund’s termination of benefits was reasonable as a matter of law.

S.L.H. v. State Fund [12/28/00] 2000 MT 362 A claims examiner acts unreasonably if s/he, without any medical consultation or advice, ignores the opinion of claimant's treating physician and refuses to pay for medication prescribed by the treating physician. However, where the treating physician's notes were equivocal as to the cause for the need for medication, denial was not unreasonable.

S.L.H. v. State Fund [12/28/00] 2000 MT 362 Twenty percent penalty upheld against insurer under section 39-71-2907, MCA (1991) for insurer's unreasonable refusal to pay for two diagnostic tests ordered by treating physician, to recognize ten percent wage loss, and to promptly determine claimant's physical restriction.

New Hampshire Ins. Co. v. Matejovsky [08/07/15] 2015 MTWCC 15 Since IME’s are the most invasive type of discovery and implicate a person’s constitutional right to privacy, an insurer may not coerce a claimant to attend an IME by making an ultimatum to attend or lose benefits when there is a legitimate dispute over the conditions of the IME.

Kramlich v. The Montana Municipal Interlocal Authority [12/17/14] 2014 MTWCC 21 Petitioner’s argument that Respondent’s failure to accept his claim and pay benefits forced him “to live a life of devastation” does not prove that Respondent acted unreasonably when it denied Petitioner’s claim.

Koch v. Employers Ins. Group [05/19/14] 2014 MTWCC 14 While the Court can envision some circumstances in which an insurer could justifiably refuse to authorize certain treatment on the grounds of causation, the present circumstances are not those.  Here, this Court previously ordered Respondent to pay for reasonable primary medical services as recommended by Petitioner’s treating physician.  Where Respondent subsequently arbitrarily terminated authorization for treatment while the physician was in the middle of diagnosing Petitioner, was unreasonable.  Furthermore, Respondent ceased authorizing Petitioner’s prescription medications because she had allegedly reached MMI, but it gave no consideration to whether, under Hiett, it was appropriate to do so.

Baeth v. Liberty NW Ins. Corp. [05/05/14] 2014 MTWCC 10 Where Respondent relied on the opinions of three physicians who did not see evidence of Petitioner’s exposure to asbestos and who opined that her pulmonary condition was either emphysema or COPD brought on by years of smoking, Respondent was not without a reasonable basis to deny liability.

Cornelius v. Lumbermen's Underwriting Alliance [04/27/12] 2012 MTWCC 13 An insurer acted unreasonably when it failed to pay benefits under § 39-71-407(5), MCA, in a case in which Petitioner’s condition was either compensable under her previous industrial injury claim or her new occupational disease claim.  The subsequent insurer had a duty to pay her benefits under § 39-71-407(5), MCA, and its failure to do so was unreasonable

Salazar v. Montana State Fund [12/28/11] 2011 MTWCC 28 Tendering a settlement offer does not constitute unreasonable conduct under § 39-71-611, MCA, because it has no effect on whether the insurer denied liability or terminated benefits.
Fleming v. Montana Schools Group Ins. Authority [06/04/10] 2010 MTWCC 13 Where the insurer accepted liability for Petitioner’s claim, no physician had opined that the aggravation of Petitioner’s preexisting condition was permanent, and an IME physician offered an unsolicited opinion that the aggravation was temporary, the Court concluded it was not unreasonable for the insurer to inquire into that matter further.  Prior to terminating Petitioner’s benefits, the insurer contacted her treating physicians and requested their concurrence or disagreement with the IME physician’s opinion.  Petitioner’s physicians failed to respond.  The Court, therefore, concluded that the insurer’s denial of further liability was not unreasonable.
Kramer v. Montana Contractor Compensation Fund [10/27/08] 2008 MTWCC 48 The Court was troubled by some actions of the claims adjuster, including communications with the treating physician which, while ostensibly for the purpose of clarifying Petitioner’s physical restrictions, were also apparently intended to call Petitioner’s credibility into question with his treating physician. This behavior is inappropriate and is not consistent with reasonable claims handling.
Re: John David Miller - The St. Paul Travelers Companies Inc. v. Liberty Northwest Ins. Co. [10/26/07] 2007 MTWCC 44 Where Respondent objected to or provided incomplete responses to Petitioner’s requests for production and interrogatory regarding a complete claims file, including, but not limited to all claims correspondence, claims adjusting notes, and communications with and between Respondent’s medical director, the Court found Respondent’s assertion that the requests were irrelevant and not calculated to lead to the discovery of admissible evidence to be unreasonable and awarded attorney fees and costs.
Vanbouchaute v. Montana State Fund [08/23/07] 2007 MTWCC 37 Although the Court doubts neither the sincerity nor veracity of Respondent’s claims examiner’s testimony that she was constrained from approving a surgery after the surgery had been disapproved by a managed care organization with which Respondent contracted, for purposes of determining whether the denial of Petitioner’s surgery was reasonable, the ultimate responsibility rests with Respondent as the insurer.
Vanbouchaute v. Montana State Fund [08/23/07] 2007 MTWCC 37 Where Respondent denied a request from Petitioner’s treating physician for surgery based on the opinion of a non-treating physician who conducted a file review and the opinion of a physician who conducted an independent medical exam, Respondent’s denial of the surgery was unreasonable. Although the treating physician’s opinion is not conclusive, none of the factors which would mitigate toward disregarding the treating physician’s opinion are present in this case. There were no issues of credibility as to any of the witnesses involved, nor was there any indication during the handling of the claim before trial that credibility was an issue.


Popenoe v. Liberty Northwest [12/01/06] 2006 MTWCC 37 Respondent's denial of Petitioner's claim was unreasonable where the Montana Supreme Court's ruling in a factually similar case in which a worker was injured while on his employer's premises in the process of reporting to work supported the compensability of Petitioner's claim.
Wall v. National Union Fire Ins. Co. [2/24/98] 1998 MTWCC 11 Penalty and attorneys fees are warranted based on the insurer's unreasonable denial of the claim, reflected in its failure to ascertain the IME physician's qualifications for the condition at issue, continued reliance on the IME physician's opinions despite information suggesting the treating physician was more qualified, denial of an OD claim in its entirety despite the IME physician's opinion 50% of the condition was occupational, and disregard for some facts and for the opinions of the nurse manager and treating physician.
Ostwald v. Plum Creek Manufacturing [12/19/95] 1995 MTWCC 107 Adjusting firm acted unreasonably in denying incident was injury where employee felt pop in lower back accompanied by sharp burning pain and loss of feeling in leg; the incident met the definition of injury and was an “unusual strain” in the classical sense.