Andrew F. Ruder, Pond Lehocky Stern Giordano

Once an insurance carrier is notified of a work injury, it is required by law to promptly investigate the injury and determine whether the claim is compensable within 21 days under Section 406.1 of the Pennsylvania Workers' Compensation Act. Before any decision is made on each claim, one can only assume that at the very least these investigations involve speaking with the injured worker, obtaining witness statements and incident reports from the employer, and reviewing medical records. However, there is a growing concern that claims adjusters too commonly deny claims without performing a reasonable investigation of the injury and ignore pertinent information they do have in their possession at the time a denial is issued.

Imagine being transported by ambulance to the emergency room following a witnessed work accident. The injury was timely reported to the employer on the date it occurred and medical records documenting the work injury were turned over once they became available. Due to the severity of the injury, it is undetermined when a return to work is possible, if at all, and the only available form of income while being out and recovering is weekly workers' compensation benefits. Then, out of nowhere, a notice of workers' compensation denial is received in the mail indicating that no work injury was sustained on the date in question.

Unfortunately, this scenario has become a reality for many individuals who sustain work-related injuries in Pennsylvania and are denied the benefits they are owed without any explanation from the insurance carriers. In this situation, the investigation performed by the claims adjusters must be scrutinized and penalties should be imposed on insurance carriers when it is clear that no reasonable investigation was performed required by the act. Under Section 435, workers' compensation Judges have the authority to award penalties against insurance carriers when a violation of the law is committed. Therefore, when an obvious work injury is denied by a claims adjuster, a penalty petition should be filed based on the adjuster's failure to properly investigate the claim and the adjuster's file and log notes should be subpoenaed immediately. The sole purpose of imposing penalties in these situations is to deter bad and illegal behavior and failing to sanction insurance carriers when claims are wrongfully denied will not stop these practices from being performed again in the future. In fact, in 1996, the penalty provision of the act was amended by Act 57 and the penalty limit of 20 percent was increased to 50 percent in an effort to deter bad faith behavior.

While defense attorneys typically object to a request to depose claims adjusters in an effort to shield them from being questioned about their investigation (or lack thereof), injured workers and their attorneys are entitled to cross-examine adjusters when a penalty petition is pending in this context. Under Pennsylvania Rule of Evidence 611(b), “A party witness in a civil case may be cross-examined by an adverse party on any matter relevant to any issue in the case, including credibility, unless the court, in the interests of justice, limits the cross-examination with respect to matters not testified to on direct examination.” When a penalty petition is filed, the burden of proving that a violation of the act occurred obviously lies with the injured worker. Therefore, when the defense fails to make the claims adjuster available to be questioned regarding their investigation, the Rules of Evidence are not being followed and it prejudices claimants' attorneys from fully establishing their case. In this instance where the defense refuses to produce the claims adjuster, who is a witness in the litigation and in its reach and control, the injured worker is entitled to seek an adverse inference from the court, as in Wood v. Workers' Compensation Appeal Board (County Care Private Nursing), 915 A.2d 181, 187 (Pa. Cmwlth 2007).

In some instances, the adjuster's file and log notes clearly reveal that an investigation was performed and compensability was established, but then a denial was issued regardless. Other times, the documents received in discovery show that the claims adjuster simply failed to perform any investigation at all before denying the claim outright. This type of illegal and unethical behavior was recently exposed when California's insurance commissioner launched an investigation into Aetna after one of its former medical directors conceded under oath that he never reviewed patients' records in determining whether to approve medical care. Drash, Wayne. CNN. “California launches investigation following stunning admission by Aetna medical director.”

Moreover, only in instances where there is uncertainty surrounding the compensability of a particular claim, the act allows insurance carriers to issue a “temporary” acceptance of an injury, which is called a notice of temporary compensation payable (NTCP), in order to further investigate the claim for an additional ninety days without truly accepting liability of the claim at that time. However, if the NTCP is not properly stopped during the ninety day period, this temporary acceptance automatically converts as a matter of law into a full acceptance of the claim. It is important to note that the NTCP was not created to give insurance carriers additional time in order to create a strategy as to how to handle a claim. In fact, the duty to investigate under the act “naturally includes the duty to perform a reasonable investigation in good faith,” and therefore, it is also a violation of the law where the claims adjuster issues an NTCP when there is no doubt an injury occurred at work and is fully compensable, as in Gumm v. Workers' Compensation Appeal Board (J. Allan Steel), 942 A.2d 222 (Pa. Cmwlth. 2008).

It is imperative for insurance carriers to perform thorough investigations before making determinations regarding the compensability of each and every claim. If the claims adjuster fails to do so, injured workers' and their families could be left with no income or medical coverage for an entire year throughout the litigation process. The time is now to stop this common trend and begin investigating the adjusters' investigation of workers' compensation claims.

Andrew F. Ruder is an associate with Pond Lehocky Stern Giordano and concentrates his practice in the area of workers' compensation litigation.