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Supreme Court Removes Protection for Injured Workers

For almost 25 years, the law protected injured workers by allowing them to pursue an action against workers’ compensation insurance carriers when they act in “bad faith” during the handling of workers’ compensation claims. That protection no longer exists for those who are most vulnerable: workers whose ability to earn a living has been interrupted by an occupational injury.

The Supreme Court overturned longstanding Texas law in a decision entitled Texas Mutual Insurance Company v. Ruttinger, ___ S.W.3d. ___ (Tex. 2012). The reissued opinion was handed down on June 22, 2012.

In Ruttiger, the insurance carrier stopped benefits and medical care when it suspected that a worker’s injury had resulted from a weekend softball game. In particular, the carrier refused to authorize and pay for a hernia surgery. However, when the matter finally reached an administrative hearing, the carrier settled the claim with the worker, agreeing in the process that he had sustained a compensable injury.

The worker filed suit against the carrier, alleging that it had acted in bad faith and that it had violated the Texas Insurance Code. The Supreme Court expressly overruled ruled a case known as the Aranda decision that permitted claimants to sue carriers when they act in bad faith by denying them the benefits they are entitled to receive under the law. With this decision, the Court eliminated the rights of injured workers to require workers’ compensation carriers to act in good faith when handling claims.

In addition, the Court further ruled that statutory protections found in the Texas Insurance Code do not apply to injured employees. It held that “claims against workers’ compensation insurers for unfair settlement practices may not be made [by injured workers] under the Insurance Code.”

The effect of this ruling is to eliminate financial disincentives that restrained workers’ compensation carriers from taking advantage of injured employees. So, workers’ compensation insurance carriers now have less to fear when they abuse people who were trying to support themselves and be productive members of society but were injured during their service to their employers.

If you or someone you know has been injured in a workplace related accident, contact the attorneys at Abraham, Watkins, Nichols, Agosto, Aziz & Stogner by calling 713-396-3964.

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