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A New Mexico bill would eliminate workers compensation exclusive remedy protections for lawsuits over bad faith dealings and unfair claims processing practices.
House Bill 359, introduced by New Mexico Rep. Daymon Ely, D-Corrales, earlier this month, was scheduled for discussion in the state House Labor and Economic Development Committee Friday.
The bill adds language to New Mexico’s workers comp law that would remove exclusive remedy for “claims of bad faith, unfair claims-processing practices or similar common law or statutory claims against an employer, insurer or other party.”
If the claim of unfair claim handling or bad faith is upheld, the claimant would be entitled to workers comp benefits due, as well as a penalty of up to 25% of the benefit amount ordered, according to the legislation.
Employers, insurers or claim-processing representatives who are found to have a history of repeated unfair claim processing practices or bad faith face a civil penalty of up to $5,000 per violation under the bill, up from a current penalty of $1,000 per violation.
The legislation also would modify a points system used for calculating workers comp partial disability benefits and clarify the use of independent medical evaluations to resolve medical treatment disputes, among other provisions.
A construction worker who was found not guilty of workers compensation fraud cannot sue his employer's workers comp insurer for bad faith based on his acquittal, the Montana Supreme Court has ruled.