Sizemore v. Continental Casualty Company

In Sizemore v. Continental Casualty Company, the Supreme Court of Oklahoma held that the common law tort action for Bad Faith could be brought against a Workers’ Compensation insurance carrier for refusal to pay the monetary award for permanent partial disability in a Workers’ Compensation claim. The Claimant asserted a Bad Faith action in federal court, and the Insurer contended that there was no such cause of action under Oklahoma law against a Workers’ Compensation insurer.

The Court details the historical background for Bad Faith actions against Workers’ Compensation insurance carriers. The Court ultimately rejects the language in Kuykendall and DeAnda, which found that § 42 of the Workers’ Compensation Act provided the sole remedy for an insurer’s refusal to pay Workers’ Compensation awards. The Court looked to the plain language of the act, policies and legislative intent, finding nothing to suggest that § 42 provided the exclusive remedy.

Section 42 of the Workers’ Compensation Act addresses late payments of Workers’ Compensation benefits. When the payment of an award is not made within 10 days, the claimant may seek certification of the award. Once an order for monetary benefits has been certified, a claimant has a choice of two remedies: (1) Seek enforcement in District Court, or (2) file a Bad Faith claim. The Court notes that the Legislature never intended § 42 be exclusive because it is not adequate to deter insurance companies from refusing to pay.

Therefore, when a claimant has followed the mechanism for certifying an award pursuant to § 42(A) of the Workers’ Compensation Act, and the insurer fails to pay the award, the failure to act in good faith and fair dealing gives rise to a common law action for Bad Faith in tort. Sizemore is significant in that it overruled Kuykendall and DeAnda, cases which were at odds with a long line of cases that, at the very least, implied the Supreme Court would recognize the tort of Bad Faith in the context of a Workers’ Compensation claim.

Both sides filed Petitions for Rehearing to clarify the certification process. In response, the Supreme Court issued a supplemental order to the opinion. This paragraph created confusion as to whether certification was required to establish a Bad Faith claim. The order is difficult to reconcile with the language of the opinion and the language in the order itself. The opinion made clear that certification was required. The order first stated that the parties’ argument that an award must first be certified for enforcement was without merit. However, the final sentence held that the Bad Faith claim could be maintained regardless of whether the claimant had sought enforcement in District Court. This language provided the opportunity for clarification as to certification requirements addressed in Summers v. Zurich American Insurance Company.

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