The Emerging Bad Faith Cause of Action Takes on the Exclusive Remedy Doctrine - Robert R. Potter and Joan T.a. Gabel
| Publication year | 1996 |
The Emerging Bad Faith Cause of Action Takes on the Exclusive Remedy Doctrineby Robert R. Potter* and Joan T.A. Gabel**
No perfect rule is possible, so the decisive question is what rule has the fewest flaws. From this it follows that the great secret for success of the workers' compensation system lay not in its vaunted, coercive original compulsion, but in the fact that it followed the very pattern of risk distribution that both historical experience and general theory of contract law indicated would best minimize the risks in question.1
I. Introduction
The Georgia Workers' Compensation Act ("the Act")2 and the related regulations establish a system of comprehensive medical coverage and income benefits for employees who suffer work-related injuries. Workers' compensation is a statutory scheme that grants the injured employee a sure remedy of scheduled income benefits and medical coverage without regard to fault; in exchange, the employer and insurer escape the high costs of litigation and the threat of compensatory and punitive damages.3 Under this quid pro quo, employees injured at work have as their exclusive remedy the workers' compensation system, thereby giving rise to the "exclusive remedy doctrine."4 The integrity of the exclusive remedy doctrine is the key to maintaining a fundamentally sound and equitable workers' compensation system.5 The exclusive remedy doctrine, however, is facing a formidable challenge in Georgia. In Zurich American Insurance Co. v. Dicks,6 the Georgia Court of Appeals held that a physical injury caused by willful and wanton cessation of workers' compensation benefits circumvents the exclusive remedy doctrine and gives rise to a tort action.7 The court found that a new or exacerbated physical injury that arises from the actions of the insurer is outside the scope of the Workers' Compensation Act.8 This ruling enables similarly situated plaintiffs to pursue recovery through the workers' compensation system and through traditional civil litigation. The holding in Dicks exposes employers and insurers to the very risk the quid pro quo originally prevented: compensatory and punitive damages.9
The Georgia Supreme Court now has the opportunity to examine the Dicks ruling. The Eleventh Circuit Court of Appeals certified the following question in the case of Doss v. Food Lion, Inc.:10
Does Georgia law recognize an independent cause of action apart from any remedy available under the Georgia Workers' Compensation Act where an employer and/or insurer has intentionally delayed authorizing medical treatment to which an employee is entitled under the Act and where such delay has exacerbated a work-related physical injury?11
This Article explores the question presented in Doss by giving the historical context in which courts evaluate the exclusive remedy doctrine. That perspective is then used to evaluate the ruling in Dicks. The Article examines the justification for re-establishing the integrity of the exclusive remedy doctrine in light of the historic rationale for the workers' compensation system. After building a foundation in precedent and policy, the Article argues that the exclusive remedy doctrine should remain intact as the very cornerstone of the workers' compensation system.
II. Historical Background
A. The American Workers' Compensation System
Generally, workers in nineteenth century America did not bring lawsuits against their employers for injuries sustained on the job.12 A prevailing fear of unemployment kept most employees from ever testifying against their employers.13 Also, during this time, employers' most reliable legal defenses—assumption of risk, contributory negligence, and negligence of a fellow employee—became strong precedent for insulating employers.14 By the end of the nineteenth century, employees' decreasing remedies in work-related tort litigation gained the attention of many state legislators.15 As industrial growth brought corresponding increases in industrial accidents,16 legislators searched for answers. The German compensation system enacted in 189317 and the English Employers' Liability Act of 1880 provided new frameworks for the compensation of employees.18 Despite the popularity of these foreign solutions, the first American compensation act, which was passed by Maryland in 1902, was struck down as unconstitutional.19 State courts struck down other state compensation laws on the same grounds:20 imposing liability on employers without fault amounted to a taking of property without due process of law under state and federal constitutions.21 The fear of a court finding of unconstitutionality caused state legislatures to pass less comprehensive and noncompulsory acts.22 But in a landmark decision in 1917, the United States Supreme Court upheld a New York compulsory workers' compensation statute.23 The explosion of American workers' compensation law began soon thereafter. In 1920 Georgia adopted its first workers' compensation legislation.24
Workers' compensation in the United States is a unique system that cannot be categorized under tort law or social insurance.25 The underlying premise of the quid pro quo is that the costs of industrial accidents and diseases "should, like other costs of doing business, be borne by the enterprise that engendered them,"26 and ultimately by the consumer.27 Workers' compensation creates a contractual relationship between employers and employees in which benefits are shared "in ways that maximize their joint profits and use price adjustments to match the residual risks assigned to each party."28 The combination of the employers' strict liability and the employees' limited damages acts as a prearranged settlement for future claims.29
The amount of compensation injured workers receive under the system certainly may leave employees in a worse position than if they had never been injured,30 but the benefits afforded under workers' compensation go beyond the actual dollar payments. Employees enjoy guaranteed recovery of benefits for injuries that fall within the statute regardless of fault.31 Additionally, the relatively low cost of the system to employers renders them able to hire and retain more workers.32 It is much more profitable for the employee to work than to not work and collect benefits.33 Although employees and employers enjoy independent benefits, the goal of the system is to benefit both parties by replacing uncertain remedies with certain ones and to avoid the expenses and risks of tort litigation.34
Accomplishing the goal of certainty of benefits depends squarely on the integrity of the exclusive remedy doctrine in workers' compensation statutes.35 The exclusive remedy doctrine limits the injured workers' recovery to that provided by the workers' compensation statute. The elimination of common law actions takes the guesswork out of remedies and "prevent[s] litigation from becoming a grotesque imitation of global war."36 If employees could bring their employer or their employer's insurance carrier into court claiming a separate tort action for every injury or subsequent delay in payments, the workers' compensation system would disintegrate.37
B. Workers' Compensation in Georgia
In Georgia, the exclusive remedy doctrine of the Georgia Workers' Compensation Act limits the rights and remedies afforded an employee injured on the job.38 The Act states that "[t]he rights and remedies granted to an employee by this chapter shall exclude all other rights and remedies of such employee ... at common law or otherwise, on account of such injury, loss of service, or death."39
Employees can avoid the exclusive remedy doctrine by proving their injury is not within the scope of the Workers' Compensation Act.40
Indeed, the bulk of workers' compensation litigation concerns determinations of whether injuries "arose out of employment, and were suffered in the course of employment."41 The difficult question confronting the Georgia courts is whether an employee whose original injury is clearly within the statute can nonetheless elude the doctrine of exclusivity in order to pursue tort benefits as well as receive workers' compensation benefits.
The seminal case in Georgia addressing this question is Bright v. Nimmo.42 In Bright, the employee suffered an on-the-job injury and received benefits by order of the Workers' Compensation Board. His employer and his employer's insurer filed an untimely controversion of the claim in violation of the Act. In the interim, the employee did not receive payments and ultimately suffered financial injury and foreclosure on his house. Pursuant to the remedy for delay provided in the Act,43 the Board awarded the employee attorney fees and a fifteen percent penalty. The employee subsequently brought suit in tort against the employer and insurer for willful and intentional delay in payment that resulted in his financial injury.44
The district court granted summary judgment to the employer and insurer on the grounds that the employee had his exclusive remedy under Georgia's Workers' Compensation Act.45 The plaintiff appealed to the Eleventh Circuit, which certified the question of whether Georgia law recognizes an independent cause of action for alleged intentional delay of workers' compensation payments. Noting that any delay in payment by a solvent payor is willful and intentional, the Georgia Supreme Court answered in the negative.46 The court held that "where the Workers' Compensation Act provides penalties for delay, such penalties exclude the employee's use of common law remedies."47
Bright controlled this issue until the Georgia Court of Appeals heard the unique case of Jim Walter Homes, Inc. v. Roberts.48 In Roberts the employee received workers' compensation benefits until she terminated her employment and moved to Florida. The employee returned to Georgia to obtain authorized treatment because the employer/insurer refused to authorize additional medical treatment in Florida. She then...
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