The Colorado Court of Appeals held that facts and conclusions of law in a workers’ compensation proceeding concerning issues other than compensability and benefits are not binding on an insurer in the injured worker’s subsequent bad faith claim against the insurer.
Aaron Madalena was an installer for SunTalk Solar. He reported a back injury to his employer in October 2015. SunTalk reported the injury to its workers’ compensation insurer, Zurich American Insurance Co., which denied the claim after its investigation, according to Madalena v. Zurich American Insurance Co.submitted on Thursday.
An administrative law judge later found that the injury was compensable and an Industrial Claims Appeals Panel affirmed, after which Zurich accepted Mr. Madalena̵7;s claim.
After Zurich terminated his benefits, Madalena filed for a hearing, which resulted in a determination that he was entitled to permanent total disability benefits. Zurich did not appeal.
Mr. Madalena then sued Zurich in district court for acting in bad faith by unreasonably denying him salary benefits and delaying payment. The first bad faith case resulted in a mistrial, but the second trial resulted in a verdict for Zurich, which held that the insurer’s actions did not cause injury.
The Colorado Court of Appeals said the trial judge did not err, holding that “the legal issue underlying the insurance bad faith case—whether the Zurich defendants had breached their duty to deal with Madalena in good faith—was separate from the the legal issue underlying the workers’ compensation proceeding — whether Madalena’s injury was compensable.”
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