US: Injured Employee May Not Sue Insured Iowa Employer For Bad Faith Failure to Pay Workers’ Comp Claim

A federal district court, sitting in Iowa, recently granted an employer’s motion to dismiss an action filed against it by a worker who had asserted that he had been injured in the course of his employment and that the various defendants, including the employer, had in bad faith failed to pay his workers’ compensation claim, or alternatively, had in bad faith engaged in a conspiracy to delay or refuse to pay benefits, and had breached their fiduciary duty [Kent v. United Heartland, 2012 U.S. Dist. LEXIS 146752 (N.D. Iowa, Oct. 11, 2012)].

The district court, noting that the employer was neither an insurer, nor a self-insured employer, held that the extension of bad faith liability, as urged by the plaintiff-employee, would undermine the purpose of the exclusive remedy provisions of IC Chapter 85.20, with respect to employee tort claims against an insured employer. The court indicated the employee was able to bring a bad faith action against the insurer and that the common thread in the decisions that had allowed the civil action to proceed was the defendant’s status as an insurer, or in the case of a self-insured employer, the substantial equivalent of an insurer. Here, the employer here was neither.

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