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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0542.01 DHG HOUSE BILL 98­1196

STATE OF COLORADO

BY REPRESENTATIVE Arrington

BUSINESS AFFAIRS & LABOR

A BILL FOR AN ACT

CONCERNING ELIMINATION OF THE COMMON­LAW CAUSE OF ACTION FOR BAD­FAITH BREACH OF AN INSURANCE CONTRACT UNDER THE "WORKERS' COMPENSATION ACT OF COLORADO", AND, IN CONNECTION THEREWITH, ESTABLISHING ADMINISTRATIVE REMEDIES FOR FAILURE TO PAY BENEFITS WHEN DUE.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)

Explicitly precludes an injured worker from pursuing a tort claim against a workers' compensation insurer based on the common­law cause of action for bad­faith breach of an insurance contract. Legislatively overrules recent Colorado supreme court opinions that found such a cause of action is not precluded by the current workers' compensation statute.

Replaces the current 8% penalty for failure to make timely payment of medical benefits to a $500­per­day penalty, payable to the injured worker and applicable whenever such payments are more than 30 days past due.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  8­43­201, Colorado Revised Statutes, is amended to read:

8­43­201.  Disputes arising under "Workers' Compensation Act of Colorado" ­ statutory remedies exclusive. (1)  The director and administrative law judges employed by the division of administrative hearings in the department of personnel shall have original jurisdiction to hear and decide all matters arising under articles 40 to 47 of this title; except that the following principles shall apply: A claimant in a workers' compensation claim shall have the burden of proving entitlement to benefits by a preponderance of the evidence; the facts in a workers' compensation case shall not be interpreted liberally in favor of either the rights of the injured worker or the rights of the employer; and a workers' compensation case shall be decided on its merits.

(2)  THE STATUTORY REMEDIES PROVIDED IN ARTICLES 40 TO 47 OF THIS TITLE ARE HEREBY DECLARED TO BE THE EXCLUSIVE REMEDIES AVAILABLE TO INJURED WORKERS. THE COMMON­LAW TORT CAUSE OF ACTION FOR BAD­FAITH BREACH OF AN INSURANCE CONTRACT, IN THE CONTEXT OF WORKERS' COMPENSATION COVERAGE, IS HEREBY EXPLICITLY ABOLISHED.

SECTION 2.  8­43­401 (2) (a), Colorado Revised Statutes, is amended to read:

8­43­401.  Attorney general, district attorney, or attorney of division to act for director or office ­ penalties for failure of insurer to pay benefits. (2) (a)  After all appeals have been exhausted or in cases where there have been no appeals, all insurers and self­insured employers shall pay benefits within thirty days of when any benefits are due. If any insurer or self­insured employer willfully delays payment of medical benefits for more than thirty days or willfully stops payments, such insurer or self­insured employer shall pay a penalty to the division INJURED WORKER of eight percent of the amount of wrongfully withheld benefits FIVE HUNDRED DOLLARS PER DAY. If any insurer or self­insured employer willfully withholds permanent partial disability benefits within thirty days of when due, the insurer or self­insured employer shall pay a penalty to the division INJURED WORKER of ten percent of the amount of such benefits due.

SECTION 3.  Effective date ­ applicability. (1)  This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety­day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution; except that, if a referendum petition is filed against this act or an item, section, or part of this act within such period, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor.

(2)  The provisions of this act shall apply to cases of injuries occurring on or after the applicable effective date of this act.