This is our last seminar (Seminar #9). This is our last seminar (Seminar #9).

Are you going to miss me?Are you going to miss me? TORT LAWTORT LAW

****StarringStarring: Sonya, Sandra, Charles B., Cheryl B., Jolie, Rachel, Tashara, : Sonya, Sandra, Charles B., Cheryl B., Jolie, Rachel, Tashara, Dawn, Susan, Andrea, Cynthia, Felicia, Susan, Megan, Vic, Tammy, Dawn, Susan, Andrea, Cynthia, Felicia, Susan, Megan, Vic, Tammy, Cheryl K., Amanda, Erin, Laurie, David, Wanda, Melissa, Charles W., Cheryl K., Amanda, Erin, Laurie, David, Wanda, Melissa, Charles W.,

Tamica, and Delendell!!Tamica, and Delendell!!

Guest starring: Adam Guest starring: Adam

What you need to do this week.What you need to do this week.

FINISH UP ON A HIGH NOTE!FINISH UP ON A HIGH NOTE! There are 3 assignments due in There are 3 assignments due in

Week #9. Week #9. AND there are also two AND there are also two

discussion questions this week.discussion questions this week.

Quick Overview of what you need to Quick Overview of what you need to do in Week #9….do in Week #9….

You need to complete part #4 of the Final You need to complete part #4 of the Final Draft. It is worth 100 points. Draft. It is worth 100 points.

Final Exam. It is 60 questions. Final Exam. It is 60 questions. Approximately 30 True/False and 30 Approximately 30 True/False and 30 Multiple Choice. AND you have 2 hours to Multiple Choice. AND you have 2 hours to complete it. It is worth 120 points. complete it. It is worth 120 points.

Final Exam Essay (Tex & Rex scenario). It Final Exam Essay (Tex & Rex scenario). It is worth 100 points. is worth 100 points.

Let’s do a quick review of what’s due this week….

Complete the Final Draft. (Complete the Final Draft. (100 points100 points). ). Take the Final Exam. It is 60 questions. 30 Take the Final Exam. It is 60 questions. 30

True/False and 30 Multiple Choice. 2 hours True/False and 30 Multiple Choice. 2 hours to complete it. (to complete it. (120 points120 points). ).

Final Exam Essay (Tex & Rex scenario). Final Exam Essay (Tex & Rex scenario). ((100 points100 points). ).

2 Discussion questions. (2 Discussion questions. (16 points16 points).).

TONIGHT we will discuss: TONIGHT we will discuss:

This final Unit covers bad faith and workers' compensation, two other important areas of law associated with torts.

Bad-Faith Claims There are two types of bad-faith claims. First-party claims involve only the insured

and the insurance company. Third-party claims involve a third party to

the insurance contract and the insurance company

HOW BAD FAITH IS COMMITTED Bad faith is considered an intentional tort; mere

negligence on the part of the insurance carrier is not actionable.

Bad faith can occur if: (1) the insurance carrier unreasonably delays payment on a policy, (2) the carrier acts unconscionably toward its insured, or (3) the carrier engages in unfair claims practices.

Overview of Bad Faith As can be seen from this brief historical review, the concept

of bad faith evolved as a means of providing relief to the insured. Bad faith is a question of fact for the jury. Only when the court determines that no reasonable person could conclude that bad faith has occurred can the court take the case from the jury.

Initially, bad faith applied only to third-party claims (claims in which the insured paid damages to a third party). Most jurisdictions now recognize the tort of bad faith in cases of first-party claims (claims in which an insured demands payment from his insurer in his own right).

Bad faith is an intentional tort…. Bad faith is an intentional tort that occurs when a

party to an insurance contract breaches its implied covenant of good faith and fair dealing. Most cases of bad faith involve allegations against the insurance carrier. Bad faith arises when the insurer (1) wrongly refuses to provide coverage for a client, (2) fails to adequately investigate a claim before making its decision to deny coverage or pay only a portion of the insured’s claim, or (3) unreasonably refuses to settle a third-party claim within the limits of the insured’s policy.

Standard of care owed to an insured…. In most jurisdictions the standard of care owed to an insured by the

insurer depends on whether the case is a first- or third-party claim. In first-party claims, some jurisdictions use the “fairly debatable”

standard. Under that standard, if a claim submitted by an insured is fairly debatable the insurer’s actions in refusing to pay the claim will not constitute bad faith.

For third-party claims, most courts impose a higher duty on the insurer. This higher duty, sometimes referred to as an “equality of consideration” standard, requires the insurer to give the same consideration to the insured’s interests as it does to its own. In most jurisdictions something more than mere negligence is required before the courts will find that the insurer has violated its implied covenant of good faith and fair dealing.

The position of an insured…. The position of an insured varies depending on whether the

insurer denies coverage or defends the insured under a reservation of rights. The insured is able to negotiate an agreement more freely with an injured party when coverage of the claim is denied. He may still be able to work out an agreement with the injured party when the insurer is defending him under a reservation of rights. The insured does, however, have greater obligations to the insurer, including a duty to advise the insurer of the agreement so that the insurer can withdraw its reservation of rights before the agreement becomes effective.

Example (from the discussion board):

You have been involved in an accident. Your insurance company tells you that they will defend you but will reserve the right to dispute coverage. What are your options? What do you do? Explain why you would take the actions you are suggesting.

Reservation of Rights Letter….

This is an important aspect when it comes to insurance coverage. If you are in an automobile accident and are being sued, your insurance company is your defense in many cases if the damages were covered by your insurance policy. However, the insurance company does not have to pay for all damages, thus you may have to pay for damages not covered. An auto insurance company will, in most cases, send a reservation of rights letter stating they reserve the right to deny a coverage at a later date based on the terms that are found in your policy. The letter may say something such as “we will provide a defense but will not pay for damages if the court finds you were negligent or caused the damages intentionally”.

Next - Workers’ Compensation…. Workers’ compensation is a relatively new concept conceived

to circumvent certain problems of the tort system and to protect workers who are injured, whether or not due to their own negligence. It also relieves employers from tort responsibility for on-the-job injuries to their employees. Workers’ compensation systems were intended to provide fast and efficient relief to injured workers without regard to fault.

In theory, an injured worker gave up her right to sue her employer (and the right to a jury) in return for the implied promise that her reasonable medical expenses would be taken care of and that she would be compensated for the wages she lost as a result of the injury.

Get back to work…. The goal of the system is to get workers

recovered and back to work without the need for litigation, so in order to take advantage of this system, an employee has to waive rights to litigate the matter in court. The system that has evolved from the workers' compensation legislation, however, has become just as cumbersome as the tort system.

Is it serious? In order to file a workers' compensation claim, an

employee must be injured on the job. Several factors must be reviewed to determine if the accident did, indeed, occur on the job. Then the employee must report the injury to his or her boss. The employer must in turn report the injury to the insurance carrier. The system will then react depending on the seriousness of the injury and the amount of time needed for recovery.

Mandatory vs. Voluntary: The two major types of workers’ compensation

are mandatory coverage and voluntary coverage. In mandatory-coverage jurisdictions, the employee has no alternative other than to accept the benefits and restrictions imposed by the statutory framework adopted in her state. In voluntary-coverage jurisdictions, the employee may opt out of the system and retain her right to sue the employer in state court.

Not so fast…. What appears to be a straightforward goal—compensation of

injured workers without regard to fault—has not been easily implemented.

To process disputed or questioned claims outside of the court system, an entire administrative hierarchy had to be created. Judges and juries were replaced with administrative law judges or hearing officers. The rules of civil procedure were replaced and/or supplemented by administrative rules and regulations. Exceptions to coverage for intentional or self-inflicted injuries and those caused by intoxication were grafted onto the framework.

FILING A WORKERS’COMPENSATION CLAIM The first requirement for filing a workers’

compensation claim is that the employee be injured “on the job.” Whether an employee was on the job is the subject of many of the reported cases. The answer is not as easy as it might first appear. For example, is an employee on the job when she is on her way to work? When she is parking her car in the employee parking lot? Leaving the parking lot to go home? On a personal errand but on company time? Dropping off a package for her boss on her way to lunch?

Did it happen “on the job?” Once an on-the-job accident has occurred, the

employer and employee have independent obligations to report it. The employee must report to the employer, and the employer must notify the agency overseeing the workers’ compensation system (and the employer’s insurance carrier). Depending on the nature of the accident and the amount of time lost by the injured employee, the system reacts in different ways.

Summary of Workers’ Comp. Workers’ compensation is a system that was

statutorily implemented in the early 1900s to protect injured workers from poverty. The employer agreed to be responsible for all work-related injuries and the employee gave up his right to sue and to a jury trial. Today’s systems are either mandatory or voluntary. Many of the reasons underlying establishment of workers’ compensation no longer exist.

http://www.comp.state.nc.us/ncic/pages/all50.htm.

Links to the Web pages of each of workers’ compensation departments of the fifty states and the District of Columbia, and for federal employees and American territories, as well as addresses and telephone numbers, are available at: http://www.comp.state.nc.us/ncic/pages/all50.htm.