A case was decided on May 8 that clarified when attorneys fees are to be awarded on cases where a denial of the claim has been made and the claim is later accepted or determined to be compensable.
In Andrews v. Yates Services, LLC, docket Number 2016-05-0854, the claim was initially accepted as compensable, but the employee was later denied benefits after the employer received an opinion from an authorized treating physician stating the condition did not arise primarily out of employment. The employee sought his own favorable opinion on causation, and at an expedited hearing the court of Workers Compensation Claims found the employee was likely to prevail at trial, and ordered temporary disability benefits and medical benefits. Subsequently the employee filed a motion for attorneys fees and expenses, leading to this decision.
In deciding that the employee was not due attorneys fees or medical expenses, the Workers Compensation Appeals Board looked to the recent amendment to Tennessee Code Annotated § 50-6-226(d)(1), which added additional language regarding wrongful denial of benefits. While the trial court had defined wrongfully as lacking good cause, the Workers Compensation Appeals Board directly quoted the language of the new statute stating that “’wrongfully’ means erroneous, incorrect, or otherwise inconsistent with the law or facts.” The Workers Compensation Appeals Board then took the analysis one step further, to define a time when that definition must be applied. In their holding, the Appeals Board found that the definition of wrongful must be applied at the time the denial is made. And the Court then opined that each case must be looked at based on its own set of individual facts and circumstances. One final point made by the Court was to caution employers not to fail to obtain or consider information reasonably available at the time of the denial, or to fail to consider any new information that becomes available after the denial decision is made.
For the employer and insurer, this is good news. This is a distinctive test, that demonstrates that if the employer and/or insurer have a good faith basis for a denial at the time a denial is completed, then they should not be held liable for attorneys fees and expenses. Certainly, an opinion from an authorized physician denying causation fits in these parameters. But having witnesses on site with the employer who can conclusively state the injury did not happen at work, obtaining proof from an outside source (surveillance, social media, etc.) that the injury is not work related, or other proof equally as definitive should also relieve the employer from exposure for attorney’s fees and expenses for a wrongful denial. If you do not have that proof at the onset of the claim, then benefits will have to be initiated, but should you later obtain evidence that shows a solid, good faith basis that the claim can be denied, we now have case law that strongly supports why that should not be considered wrongful, and why the employer or insurer should not be sanctioned with attorneys fees or expenses in those cases.