A. Claims may be filed under the Workers’ Compensation Act [52-1-1 NMSA 1978] alleging unfair claim-processing practices or bad faith by an employer, insurer or claim-processing representative relating to any aspect of the Workers’ Compensation Act. The director may also investigate allegations of unfair claim processing or bad faith on his own initiative.
B. If unfair claim processing or bad faith has occurred in the handling of a particular claim, the claimant shall be awarded, in addition to any benefits due and owing, a benefit penalty not to exceed twenty-five percent of the benefit amount ordered to be paid.
C. If an employer, insurer or claim-processing representative has a history or pattern of repeated unfair claim-processing practices or bad faith, the director or a workers’ compensation judge may impose a civil penalty of up to one thousand dollars ($1,000) for each violation. The civil penalty shall be deposited in the workers’ compensation administration fund.
D. Any person aggrieved by an order under this section may request a hearing pursuant to the Workers’ Compensation Act [52-1-1 NMSA 1978].
E. The director shall adopt by regulation definitions of unfair claim-processing practices and bad faith.
F. This section shall not be construed as limiting or interfering with the authority of the superintendent of insurance as provided by law to regulate any insurer, including his jurisdiction over unfair claim settlement practices.
HISTORY:
Laws 1990 (2nd S.S.), ch. 2, § 29.
Notes to Decisions
Attorney fees.
Court rejected a worker’s contention that under 52-1-28.1 NMSA 1978, attorney fees should have been included in the calculation of his award for an insurer’s bad faith conduct; the Workers’ Compensation Act did not consider attorney fees to be compensation. Meyers v. Western Auto, 2002-NMCA-089, 132 N.M. 675, 54 P.3d 79, 2002 N.M. App. LEXIS 73 (N.M. Ct. App.), cert. denied, 132 N.M. 551, 52 P.3d 411, 2002 N.M. LEXIS 297 (N.M. 2002).
Construction with other law.
Under 52-1-28.1 NMSA 1978, any claim for unfair claim processing practices or bad faith by an employer, insurer or claim processing representative relating to any aspect of the Workers’ Compensation Act was within the exclusivity provisions of the Act, 52-1-6E NMSA 1978, which meant that a bad faith claim against an insurer for failure to pay for certain treatment after an award had been issued could not be brought in the district court. Cruz v. Liberty Mut. Ins. Co., 1995-NMSC-006, 119 N.M. 301, 889 P.2d 1223, 1995 N.M. LEXIS 57 (N.M. 1995).
Exclusive remedy.
Worker's claim that the Workers' Compensation Act, N.M. Stat. Ann. §§ 52-1-1 to 52-1-70, provided an inadequate remedy for unfair claim-processing practices and bad faith claims lacked merit and the WCJ awarded the maximum benefit penalty allowed under the statute. Romero v. Laidlaw Transit Servs., 2015-NMCA-107, 357 P.3d 463, 2015 N.M. App. LEXIS 85 (N.M. Ct. App. 2015).
Premature suit.
Legislative intent of former § 57-913, 1941 Comp. is that a claimant’s right to bring suit to enforce payment of a workmen’s compensation award matures upon a failure to pay compensation when due, whether or not that failure is intentional or inadvertent. Therefore, although an adjuster for an employer’s carrier threatened that an injured employee’s regular installments would stop if he did not choose to settle, the employee’s suit to enforce his employer’s payment of workmen’s compensation award under the terms of former § 57-918, 1941 Comp. was filed prematurely because the payments had not stopped. State ex rel. Mountain States Mut. Casualty Co. v. Swope, 1954-NMSC-082, 58 N.M. 553, 273 P.2d 750, 1954 N.M. LEXIS 1164 (N.M. 1954).
Remedies.
Court rejected a worker’s contention that under 52-1-28.1 NMSA 1978, future medical benefits should have been included in the calculation of his award for an insurer’s bad-faith conduct; the Workers’ Compensation Act did not allow present awards based on future medical benefits. Meyers v. Western Auto, 2002-NMCA-089, 132 N.M. 675, 54 P.3d 79, 2002 N.M. App. LEXIS 73 (N.M. Ct. App.), cert. denied, 132 N.M. 551, 52 P.3d 411, 2002 N.M. LEXIS 297 (N.M. 2002).
A worker had no cause of action against his workmen’s compensation carrier for damages for the wrongful termination of benefits because the Workmen’s Compensation Act, 52-1-1 NMSA 1978 et seq., provided a remedy for wrongful termination of benefits and the worker had successfully pursued that remedy. Gonzales v. United States Fidelity & Guar. Co., 1983-NMCA-016, 99 N.M. 432, 659 P.2d 318, 1983 N.M. App. LEXIS 688 (N.M. Ct. App. 1983).
Research References and Practice Aids
New Mexico Law Review.
Note: A Third-Party Claimant Becomes an Insured: Hovet v. Allstate and the Expanding Right to Sue under New Mexico’s Insurance Code, Thomas Giordano-Lascari, 35 N.M. L. Rev. 651 (2005).