Kit Case, Causey Wright's Paralegal & Media Manager

Leap of Bad Faith: TPAs May Be Sued for Aiding Their Own Actions

Today’s post was shared by Workers Comp News and comes from www.jdsupra.com

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TPAs May Be Sued for Aiding Their Own Actions

Insurers have a duty to process claims in good faith, but sometimes they farm the job out to third-party administrators (TPAs).  If the TPA fouls up, many states hold that the insurer is still liable—for its own breach of duty, even if a doctrine of vicarious liability does not apply.  The rule is summed up in the statement that the duty of good faith is not delegable; the insurer must either handle the claim in good faith or cause someone else to do so.

But what about the TPA?  If the insurer’s duty can’t be delegated, what duty can a dissatisfied insured claim that the TPA has breached?  In Temple v. Hartford Ins. Co. of Midwest, No. CV-12-2357 (D. Ariz. Aug. 26, 2014), a federal court in Arizona came up with a novel solution:  the TPA may be liable for aiding and abetting the acts that constituted the breach of duty—by committing those very acts.

The Facts

Brenda Temple, a customer service representative for Stanley Steemer, was walking to her duty station when she tripped and fell down the stairs.  The fall resulted in injuries to Temple’s knee, hip and back.  Temple consulted a nurse practitioner, who gave her a knee brace and issued a work restriction for twenty days.  The nurse practitioner found that, due to worsening pain, Temple was unable to sit at a desk, walk up stairs or stand for long periods.

The Hartford is Stanley Steemer’s workers’…

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