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Meyers v. Western Auto

6/6/2002

ions. The WCJ found that CNA had engaged in the following bad faith conduct:


46. . . . by terminating medical benefits when Insurer knew the failure to appear for an independent medical examination was for medical reasons barring travel.


47. . . . by refusing to investigate medical care claims in this cause, and by refusing to take reasonable steps to evaluate the new information.


48. . . . by refusing to consider the effects of newly presented information relating to alternatives to oxycontin and by attempting to delegate decision making to a physician, Dr. Scharf, who had not been retained for that purpose.


49. . . . by permitting the complete cessation of adjustment activity on this claim by its agents by mid-December, 1999 until February, 2000.


50. . . . by failing to inform Worker and his medical providers of a change of adjusters for two months after it occurred, resulting in unreasonable delay in payment of just claims.


51. . . . by unreasonably delaying payment of just claims relating to medical care.


52. . . . by the failure of its agent, Greg Ramirez, to adequately review and become familiar with the contents of Insurer's own files and records relevant to Worker's medical claims, prior to refusals to pay or not pay medical claims.


53. . . . by attempting to usurp control of medical care through the guise of an independent medical examination.


54. . . . by attempting to regulate medical care consistent with a one time IME, and without regard to new information or changed circumstances.


The WCJ additionally found that CNA "did not engage in bad faith in proceedings before the Workers' Compensation Administration to warrant further sanctions pursuant to 11 NMAC 4.4.13.2." The WCJ subsequently imposed the statutory twenty-five percent maximum sanction on CNA for its bad faith conduct, which amounted to $1674 of the roughly $6700 amount awarded for unpaid medical costs. The WCJ also awarded an attorney fee of $9000 plus tax. The WCJ found that the recovery could not be meaningfully compared to the offer because of materially different terms, and therefore refused to order CNA to pay all of Worker's attorney fees. This appeal ensued.


DISCUSSION


I. Interpreting the Bad Faith Statute


The central issue in this appeal concerns the interpretation of the following portion of the Act's bad faith statute, NMSA 1978, ยง 52-1-28.1 (1990) (effective January 1, 1991):


B. If unfair claim processing or bad faith has occurred in the handling of a particular claim, the claimant shall be awarded, in addition to any benefits due and owing, a benefit penalty not to exceed twenty-five percent of the benefit amount ordered to be paid.


Worker contends that the WCJ should have calculated the "benefit amount ordered to be paid" based on three components: the amount awarded for unpaid medical expenses; the value of Worker's future medical benefits; and Worker's attorney fees. In support of his reading of the statute, Worker argues that the benefit penalty must be sufficient to enforce the public policy against bad faith handling of workers' compensation claims and in this case, unless all three factors are included, the penalty is so small "it should shock the conscience of this Court."


Because we are construing the meaning of the statute, we apply a de novo standard of review. See Ramirez v. IBP Prepared Foods, 2001-NMCA-036, 10, 130 N.M. 559, 28 P.3d 1100 (stating that interpretation of a worker's compensation statute is a question of law to be reviewed de novo); Valdez v. Wal-Mart Stores, Inc., 1998-NMCA

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