Insurer can be sued while workers compensation case pending: Court

DES MOINES, Iowa—An injured worker can sue Liberty Mutual Group Inc., his employer's insurer, for bad faith even though his workers compensation claim is still being litigated, the Court of Appeals of Iowa ruled Wednesday.

The decision in Leliefeld vs. Liberty Mutual Insurance shows that James Leliefeld was in a work-related car accident in 2007 and filed a workers comp claim against his employer, Bismarck, N.D.-based Knife River Corp.

In 2010, while that claim was being litigated, Mr. Leliefeld sued Boston-based Liberty Mutual for bad-faith denial of workers comp benefits and negligent infliction of emotional distress.

In response to the bad faith suit, Liberty Mutual filed a motion to stay the proceedings, including discovery. The insurer argued the issues raised in the bad faith case still were pending before a workers comp commissioner.

But a district court ruled because the accident occurred in 2007, it was unreasonable to deny the parties the opportunity to conduct discovery while the workers comp case continued.

The appellate court upheld the lower court ruling finding, among other issues, that the facts in the two cases are not identical, as one addresses the insurer’s conduct, not benefits eligibility.