While the concept of good faith and fair dealing isn’t new, recent changes to Washington State law (RCW 51.14.180) impact how self-insured employers must handle workers’ compensation claims. They’re designed to ensure your workers’ comp claim is handled fairly by your self-insured employer and give the Department of Labor and Industries more authority to sanction repeat offenders who don’t act in good faith.
Self-Insured Employers vs. Labor and Industries
With rare exceptions, every employer in Washington State must legally provide workers’ compensation insurance for their employees. A majority of employers use the Department of Labor Industries (L&I) workers’ comp program. However, some employers opt out and are certified by L&I as a self-insured employer. These companies are generally large and have significant assets. Most self-insured employers hire third-party administrators, such as Sedgwick or Gallagher Bassett, to manage workers’ comp claims on their behalf, including claim handling, benefit administration, and communication with workers.
What Is Good Faith and Fair Dealing in Workers’ Comp in Washington State?
Good faith and fair dealing in workers’ comp claims means that self-insured employers or the third-party administrator they hire to handle their workers’ comp claims must handle all claims honestly and fairly. They cannot put their interests above yours and have an obligation to act in good faith.
But what does that look like in practice? The self-insured employer or third-party administrator must:
- Investigate your claim objectively
- Pay the benefits you’re owed under the law
- Provide you with accurate and timely information
- Decide your claim based on medical facts and information
- Support their decision with factual, objective evidence
As an example, if you have the right to time-loss benefits, the self-insured employer must inform you of that decision and pay you those benefits as quickly as possible. They cannot drag out the investigation, notification, or payment in hopes that you’ll settle for less than you deserve. Likewise, if the self-insured employer rules against you and decides you are not entitled to time-loss benefits, they must inform you of that decision as quickly as possible and explain their reasoning.
What Changed and Why It Matters to Your Workers’ Comp Claim
The most recent version of the law made several impactful changes that expanded L&I’s ability to take action against self-insured employers who don’t act in good faith, as well as which employers it applies to. The more important changes are:
- The law now applies to all self-insured employers. Previously, it only applied to municipal workers (cities, counties, school districts) and some private-sector firefighters.
- Labor and Industries has more power to define when a self-insured employer is violating the law and the ability to quickly punish violators with a pattern of repeated misconduct.
- There’s more emphasis on punishing repeat offenders. The law now clarifies that minor or occasional errors are not considered good-faith violations. It’s more concerned with self-insured employers that repeatedly violated good faith and fair dealing.
Here’s what all of that means to your workers’ comp claim.
Good Faith and Fair Dealing Violations
The updates to the law provide additional guidance on handling good faith and fair dealing violations and give L&I greater authority to enforce violations. It expands the definition to include when an employer pressures or coerces a worker to accept less compensation than they’re legally entitled to or otherwise fails to act in good faith while administering the claim.
This expansion matters because it recognizes that self-insured employers usually have far more resources than their employees. Employers who aren’t acting in good faith are, essentially, taking advantage of this power imbalance for their benefit, and the law seeks to end that.
New Enforcement Powers and Penalties
The law also grants L&I the ability to define additional examples of good faith and fair dealing violations through administrative rule-making.
In simpler terms, the legislators realized it would be impossible to list every single possible good-faith and fair-dealing violation in the law. And, even if they could, what they list in the law today could easily change in a few weeks or months, but changing the law could take far, far longer. The update grants L&I the ability to define new violations of good faith and fair dealing based on how self-insured employers handle workers’ comp claims.
It also gives L&I the ability to penalize self-insured employers who repeatedly violate the good faith and fair dealing law.
Penalties can start as monetary fines and are paid by the employer to the employee. Depending on the severity of the violation, the employer can be fined anywhere from one to 52 weeks of the state’s average weekly wage.
Repeated violations can trigger additional actions by L&I. The employer could be placed on probation, making them subject to far stricter oversight in how they handle future workers’ comp claims. They could also lose the right to certify as a self-insured employer and be forced into using the traditional L&I system.
What These Updates Mean to You
The changes expand the duties and obligations under the law to all self-insured employers in the state and give L&I more power to define what constitutes a violation. But it does not give workers the right to sue a self-insured employer privately if they aren’t acting in good faith. You’ll still have to go through L&I for those claims.
That said, the changes give injured workers stronger protections against unfair claim handling by a self-insured employer and expand L&I’s authority to sanction employers that repeatedly violate their obligations.
Get Help With Your Worker’s Comp Claim
In some cases, identifying when a self-insured employer isn’t acting in good faith is easy. They aren’t communicating, making decisions based on opinions, or outright pressuring you into accepting less compensation than you’re entitled to. But other times, it’s less obvious. Your self-insured employer may be communicating with you but delaying paying the benefits. Or they say they’re investigating your claim, but it never seems to go anywhere.
If you believe your self-insured employer isn’t handling your workers’ comp claim fairly, you can report them to L&I. The changes to the law give the Department more authority to investigate these claims and impose penalties when warranted.
But if you’re not sure what’s going on or want an outside opinion, we can help. The experienced team of workers’ compensation attorneys at Walthew Law Firm has over 90 years of experience advocating on behalf of injured workers. We know how the system works and can put our knowledge to work on your behalf, protecting your rights and fighting for the compensation you’re entitled to. Contact us today for a free, no-obligation consultation to see what we can do for you.