Injured workers covered by the Nebraska Workers’ Compensation Act can’t sue their insurers/claims administrators for bad faith handling and denials of workers’ compensation claims. Injured workers are stuck with the fee and penalty provisions under Neb. Rev. Stat. 48-125 which one former judge referred to as an ineffectual “yipping porch dog.”

But I participated in some discussion with other Nebraska lawyers about another way to discourage bad faith handling of workers’ compensation claims: Neb. Rev. Stat. 48-146.02.

Neb. Rev. Stat. 48-146.02

48-146.02 allows a three judge panel of the Nebraska Workers Compensation Court to revoke self-insurance for privileges for employers or recommend to the Department of Insurance that they revoke the ability of a workers’ compensation insurer to do business in Nebraska. The three judge panel can act if they hold a hearing and find that an insurer/claims administrator fails to comply with their obligations under the Nebraska Workers’ Compensation with such frequency that it finds it to be a general business practice.

But even if a party succeeds in a claim there is no mention of any way for a successful claimant to be paid anything in the way of a penalty, attorney fees or a liquidated damage. The language of 48-146.02 would also indicate that a case under 48-146.02 would probably have to involve multiple parties alleging similar conduct by an insurer or claims administrator.

Could a group of plaintiffs bring what amounts to collective or class action case in the Nebraska Workers’ Compensation Court against an insurer for bad faith under 48-146.02? Yes, I think there is a path.

Neb. Rev. Stat. 48-162.03 give parties broad ability to file motions with the court. The language of 48-146.02 refers to making a motion to a three judge panel rather than filing a petition.

NWCC Rule 3(k) allows the court to consolidate similar causes of action. So sure, I think a group of plaintiffs could bring a case under 48-146.02, but there would be no financial benefit to the parties bringing those claims under current law.

48-146.02 allows the Nebraska Workers’ Compensation Court administrator to request the Attorney General file a motion with a three Judge panel. But that means a group of wronged plaintiff’s need to persuade the 1) the court administrator and 2) the Attorney General to pursue the case just to get a hearing.

In my mind, a simple bad faith tort action filed by an individual plaintiff wronged by an insurer or claims administrator is a more effective deterrent against bad faith insurance practices in workers’ compensation than either a multi-layered administrative process or what amounts to a pro bono class or collective action claim.