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Eckhardt v. Village Inn3/10/1992
t to settlement before settling a third-party claim as mandated by section 8-52-108(2) forfeits his or her right to receive all future benefits from that carrier. While the rule of forfeiture is not expressly existent in the provision, it is implied by the mandatory language of section 8-52-108(2). The provision states that " compromise . . . shall be made only with the written approval of the . . . carrier liable to pay the same." (Emphasis added.) The rule of forfeiture that we adopted in Peterkin was the result of not only policy considerations (see infra section I B) but also was derived from the nondiscretionary nature of the requirement to obtain consent. The obligation to obtain consent is placed on the claimant. Consequently, failure to comply with the mandate results in a disadvantage to the noncompliant party. Conversely, section 8-52-108(2) does not impose any obligation at all on carriers. Therefore, to now impose an obligation on these parties would be to overstep the bounds of our judicial power.
B
Since the obligation does not arise from the language of the statute itself, I examine whether the judicially imposed duty of good faith and fair dealing that workers' compensation carriers owe claimants requires carriers to act other than in their own self interest in determining whether to consent to third-party settlement offers.
Recently, we found that independent claims adjusting companies acting on behalf of self-insured employers owe a duty of good faith and fair dealing to claimants of workers' compensation benefits. Scott Wetzel Services v. Johnson, 821 P.2d 804, 813 (Colo. 1991). Our rationale for imposing the duty in Wetzel was twofold. We sought both to protect the employee from the disparity of wealth and resources heavily favoring the insurance carrier and to serve the purposes of the Act, which include assisting injured workers and their families and promoting the speedy resolution of claims arising out of employment-related activities. See Wetzel at 810, 812.
Our decision in Wetzel was based in part on our earlier decision in Travelers Insurance Co. v. Savio, 706 P.2d 1258, 1273 (Colo. 1985), where we found that an insurance carrier who provides workers' compensation benefits to an employee owes the employee a duty of good faith and fair dealing. Similar to Wetzel, our purpose in imposing the duty in Savio was to remedy the bargaining disadvantage suffered by injured workers in relation to the financially secure insurance carriers. We noted that this discrepancy in bargaining power could result in the claimant being coerced to accept a lower settlement amount than that provided for by an insurance contract.
No such disparity of bargaining power exists here. In fact, here, a claimant who accepts a settlement offer for an amount lower than the amount for which the carrier is liable jeopardizes the carrier's interest and it is the carrier who is disadvantaged because it remains liable for the deficiency. The majority contends that only the interests of carriers that are unaware of a third-party suit are at jeopardy. See maj. op. at 8-9. I do not find this distinction meritorious. Even the interests of carriers that are aware of third-party suits are jeopardized when the insured settles a third-party claim without first obtaining the carrier's consent. Pursuant to section 8-52-108(1), the third-party cause of action is assigned to the carrier that has already paid workers' compensation benefits. Regardless of whether the carrier is notified of the initiation and prospects of recovery under the third-party suit, the carrier is "subrogated to the rights of the injured employee" under section 8-52-
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