Eastern Alliance Insurance Group, Chubb Insurance Group, and Total Interior Systems America, LLC v. Elizabeth Howell
Indiana Court of Appeals
July 14, 2010
Monica Gilmore: Plaintiff counsel
Michael Schoening.: Defense counsel
Najam, Judge.
Facts & Procedural History:
Elizabeth Howell suffered a compensable injury in June 2005. At this time, her employer was insured by Eastern. In February 2007, she suffered an aggravation of her injury. At that time, the employer was insured by Chubb. Both carriers asserted that the other was responsible to pay for the treatment. In March 2007, Eastern offered to split the cost of the treatment with Chubb and resolve later the ultimate obligation to pay, but Chubb refused. Howell went 2 ½ years without treatment due to the dispute.
The Board ultimately found that Chubb was the responsible carrier. The Board assessed a lack of diligence penalty against Chubb for $10,000 and against Eastern for $5,000. Eastern appealed.
Judgment: Reversed and remanded with instructions.
Issue: Whether sufficient evidence supports the Board’s conclusion that Eastern acted with a lack of diligence.
Holding & Rationale:
The Court of Appeals first rejected Eastern’s argument that a carrier cannot be assessed penalties for a lack of diligence if it is not ultimately found to be responsible for the underlying claim. The court has previously held that Section 12.1(a) penalties for bad faith may not be assessed if the employer, or its carrier, is ultimately found not to be responsible for the underlying claim. However, unlike a bad faith claim, a lack of diligence requires no conscious wrongdoing by the actor. To act with “diligence” is to act with “caution or care” or “the attention and care required of a person.” A “lack of diligence” is a failure to exercise the degree of attention and care required that a prudent person would exercise or to act negligently.
In the instant case, the Court finds that Eastern did not act with a lack of diligence as it timely responded to the employer and Howell, reasonably investigated her claim and offered to split the costs of treatment with Chubb.
