Texas Supreme Court Ends Bad Faith Claims for Workers

Texas Workers Compensation claimants took a big hit Friday when the Texas Supreme Court handed down a 5-4 decision in Texas Mutual Insurance Co. v. Timothy J. Ruttiger.   The Court held that Workers Comp claimants cannot seek damages for bad faith denials of claims outside the administrative Workers Comp regulatory framework. Justice Willett’s concurring opinion writes:

“The continued existence of bad-faith claims will subvert the Legislature’s meticulous soup-to-nuts system, one augmented by an immense regulatory and adjudicatory framework that, taken together, now regulates virtually every aspect of how a carrier handles a worker’s compensation matter,”

Of course, any ruling that upends over 23 years of settled law is likely to draw a dissenting opinion.  The dissenting opinion argues that the Court is substituting its judgment for the legislature’s judgment.   Justice Jefferson writes:

“Whether allowing extra-contractual claims makes sense is a different question than whether the laws, as written, permit their pursuit. The Court correctly observes that the Act carefully balances competing interests. The Legislature struck that balance by acknowledging and limiting the common law claims the Court abolishes today.”