SIGNIFICANT CASE SUMMARIES
DC CASE SUMMARY
Helen Reese v. Stonebridge Hospitality
DC Court of Appeals
No. 20-AA-0523
Decided: August 1, 2022
In order to secure penalties after a delay of benefits through temporary controversion, a Claimant must produce some pretext or bad faith, and it is not simply enough to show that the Employer lacked good faith.
Background
Claimant was a housekeeper who ceased working for the Employer due to a shoulder injury. The Employer controverted the benefits on the bases that 1) the injuries did not arise out of or occur in the course of employment; and 2) Claimant had a pre-existing shoulder ailment. Six months later, upon receiving further information from the treating physician and an IME doctor, the Employer conceded and began paying disability benefits. Claimant sought penalties for the delay in paying benefits for the first 6 months, which she alleged was in bad faith.
The ALJ awarded penalties, and the CRB reversed. Claimant appealed, specifically challenging that the CRB’s decision that penalties were not owed was arbitrary and capricious.
Holding
The DC Court of Appeals affirmed. They cited the burden-shifting test to determine if the benefits were in bad faith. A Claimant who proves “1) entitlement to benefits; and 2) knowledge by the Employer that Claimant is entitled to those benefits” shifts the burden to the Employer to produce evidence of its good-faith basis.
First, Claimant disputed the Employer’s assertion that she did not provide notice of the accident. Even while the Court found the Employer’s assertion “questionable,” the CRB did not abuse its discretion in agreeing with the Employer. Second, Claimant argued there was no documentation of a pre-existing shoulder ailment. To rely on this, however, would have flipped Claimant’s burden; she had to provide evidence of pretext, not require Employer to show why it believed it had good faith. Finally, the Court rejected Claimant’s argument that this interpretation allowed any conceivable reason for denial to suffice for good faith.
Takeaway
Even when the basis for denial was “questionable,” provided you have good faith in your denial, you can avoid penalties.
Any questions regarding this case can be addressed to Mike Bliley, Esquire, at (571) 464-0435 or mbliley@tthlaw.com.