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S.D. bill aims to prevent lawsuits against comp insurers, employers

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Lawmakers in South Dakota are slated Tuesday to hear about legislation that would prevent injured workers from suing their employers, workers compensation insurers and third-party administrators on bad faith claims.

S.B. 145, sponsored by 21 state senators and representatives, would leave bad faith claims up to the state’s Department of Labor and Regulation, which oversees the state’s workers compensation program, and would ensure that an employee receives that which is due. Currently, parties involved in workers comp claims can be sued in civil court if an employee finds that he or she has been treated unfairly.

The department, if it finds favor in the employee’s claim, can “allow the employee a reasonable sum for attorney's fees to be recovered and collected as part of the costs following a separate hearing of record,” according to a draft of the legislation.

“No person may bring or maintain a cause of action in relation to workers' compensation benefits sounding in tort or in contract against any employer, employer who is self insured, a risk sharing pool, a third-party administrator, or any insurance company, including any reciprocal or interinsurance exchange, based on a wrongful act, omission, wrongful denial or any claim for refusal to investigate a claim or pay a loss that was considered vexatious, without reasonable cause, or in bad faith,” the draft states.