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Comp proceedings not binding in worker’s bad-faith action against insurer


The Colorado Court of Appeals ruled that findings of fact and conclusions of law in a workers compensation proceeding concerning issues other than compensability and benefits are not binding on an insurance company in the injured worker’s subsequent bad-faith claim against the insurer.

Aaron Madalena was an installer for SunTalk Solar. He reported a back injury to his employer in October 2015. SunTalk reported the injury to its workers compensation insurer, Zurich American Insurance Co., which denied the claim following its investigation, according to Madalena v. Zurich American Insurance Co., filed Thursday.

An administrative law judge later found the injury compensable and an Industrial Claim Appeals Office panel affirmed, after which Zurich accepted Mr. Madalena’s claim.

After Zurich terminated his benefits, Mr. Madalena applied for a hearing, which resulted in a ruling that he was entitled to permanent total disability payments. Zurich did not appeal.

Mr. Madalena then sued Zurich in district court for acting in bad faith by unreasonably denying him workers comp benefits and delaying payment. The first bad-faith case resulted in a mistrial, but the second trial resulted in a verdict for Zurich, ruling the insurer’s actions did not cause damages. 

The Colorado Court of Appeals said the trial judge did not err, ruling that “the legal issue underlying the bad-faith insurance case — whether the Zurich defendants had breached their duty to deal with Madalena in good faith — was distinct from the legal issue underlying the workers compensation proceedings — whether Madalena’s injury was compensable.”

WorkCompCentral is a sister publication of Business Insurance. More stories here.