Work Comp Claim Denials - Good Faith And Frivolous Denials

After submitting a workers’ compensation claim, you will wait to hear back from the insurance company about the status of your claim. Ideally, you will receive notice that your claim has been accepted and a payout is imminent, but in many instances, injured workers receive correspondence stating that their claim has been denied.

A denial is not the end of your claim, and it’s important that you carefully review this denial letter to understand why your claim is being denied. Perhaps your denial was made because of a legitimate mistake or an oversight on your end, while other times your denial may have been made incorrectly or egregiously by the insurance company. It’s worth noting whether your denial was made in good faith or frivolously, because this can dictate your next steps. In today’s blog, we explain what constitutes a good faith denial and a frivolous denial, and your next steps after each of these decisions.

Good Faith Denial

When a claim is submitted to an insurance company, they have a responsibility to investigate the claim before they can approve or deny it. Once their investigation is complete, they need to inform the employee of their decision. If the claim has been denied, certain aspects need to be laid out in the denial letter in order for the denial to be considered “in good faith.” Those aspects include:

Writing a decision such that the employee can easily understand why liability is being denied.
A factual basis for the denial.
A legal basis for the denial.
Any necessary supporting basis for the denial.

In other words, the insurance company needs to do their due diligence and stand behind a factual and legal basis for a denial. A good faith denial can be countered, especially if the denial was rooted in something definitive like missing information or an incomplete medical report. You can also appeal subjective denials, but any denial is best countered with the help of an attorney.

Frivolous Denials

Conversely, there are instances where a denial may be considered frivolous in nature. When an insurance company fails to make a good faith effort to investigate the claim, or if their denial contains clearly inaccurate information, it’s possible that they may have made a frivolous denial. While nobody wants to be on the receiving end of a frivolous denial, know that if you can prove the denial is frivolous, you may be eligible for additional compensation.

In order to prevent frivolous denials, the Minnesota Department of Labor and Industry can impose penalties on businesses or insurance companies found guilty of frivolously denying injury claims. The company may be fined by the DOLI, and the employee can benefit too. A business or insurance company may be assessed a penalty, payable to the employee, up to 30% of the benefits found to be delayed. You can earn up to 30% extra on top of your claim if you and your lawyer can prove that the insurance company acted in bad faith and frivolously denied your injury claim.

Don’t let a denial be the end of your story. You and your lawyer can sit down, assess the reason for denial and come up with a plan to sort out a mistake or appeal a bad faith decision. We’d be happy to help you navigate a denial and ensure you get the benefits you deserve.

For more information about claim denials or the process of filing an injury claim, reach out to the team Margolis Law Firm today at (952) 230-2700.