De Dios v. Indemnity Insurance Co. of North AmericaAnnotate this Case
The Supreme Court answered a certified question of Iowa law by holding that, under Iowa law, a common law cause of action for bad faith failure to pay workers' compensation benefits is not available against a third-party claims administrator of a worker's compensation insurance carrier.
Plaintiff, who suffered a work-related injury, filed a claim for benefits with the workers compensation commissioner. Plaintiff was denied benefits. Plaintiff later filed a bad faith action against his employer's workers' compensation carrier and its third-party administrator. The action was removed to the federal district court, and the court certified the following question to the Supreme Court: “In what circumstances, if any, can an injured employee hold a third-party claims administrator liable for the tort of bad faith for failure to pay workers’ compensation benefits?” The Supreme Court held that a third-party administrator cannot be sued for bad faith as if it were an insurer.