In 1995, the Nevada legislature passed a law, NRS 616D.030, that injured workers could no longer sue workers' compensation insurers or the third-party administrators who handle comp claims. Injured workers had been filing lawsuits for money damages against insurer's or TPA's for their "bad faith" or negligence in denying or delaying medical care and compensation benefits, The large employers and their insurers were successful in convincing state legislators to do away with these lawsuits entirely. The lawmakers replaced the injured workers' right to sue with a law that only allows injured workers to file complaints with the DIR.
The Division of Industrial Relations is the state agency responsible for ensuring insurers, self-insured employers, and TPA's compliance with the laws and regulations governing work accidents and occupational diseases. If an injured worker thinks that the adjuster handling her claim is not following the law in handling her claim, she may file a written complaint with the DIR. The complaint does not have to be on any particular form, but this form can be used.
DIR is supposed to investigate any complaints for violations of the law. If DIR finds a violation, it may then hit the insurer or TPA with an administrative fine and a benefit penalty to punish the insurer or TPA. Administrative fines can range from $3,000 to $15,000 depending on whether this is a first, second or subsequent violation. In addition, the DIR may also order the insurer or TPA to pay a sum of money, called a benefit penalty (up to $50,000), to an injured worker. The benefit penalty amount depends on how much harm was caused to the injury worker by the adjuster's violation of the compensation laws.
Attorneys who represent injured workers generally believe that this system of fines and penalties does not adequately compensate injured workers who are harmed by an adjuster's failure to handle claims according to the law. Attorneys would prefer to bring a lawsuit against the insurer or TPA to recover money damages awarded by a jury. Attorneys argue that the administrative fines and benefit penalties don't sufficiently deter insurers and TPA's from trying to shirk their duties under the law to pay legitimate claims on time and to provide appropriate medical care.
DIR's Research and Analyst Supervisor kindly provided me statistical information regarding DIR Complaints. She said that DIR receives about 1,400 complaints every year, including all written complaints, phone calls, and emails from injured workers. Many informal complaints are quickly resolved with a single phone call by a DIR investigator.
As I have filed many formal, written DIR complaints on behalf of my clients over the years, I was curious as to how many formal complaints were filed every year, and in how many cases were violations found. I was told that DIR cannot determine from its current computer program how many formal complaints last year resulted in violations. DIR could only tell me that in calendar year 2011, there were 31 benefit penalties issued. That tells me that injured workers are awarded money through the DIR complaint process for harm caused by insurers or TPA's in only 2% of the cases involving alleged DIR complaints of some sort.
Unfortunately, the Nevada legislature said that filing a DIR complaint is the injured worker's exclusive remedy for harm by adjusters handling cases. Is it a sufficient remedy if an injured worker goes without necessary medical care and suffers additional injury? Is it a sufficient remedy if an injured worker loses her home because the adjuster can't manage to send compensation checks on time, and to the right address, over and over again? I don't think so. I think that a lawsuit is more apt to get the attention of the industrial insurer.
While filing a DIR complaint is not likely to result in an administrative fine or benefit penalty, it still helps to file a complaint. Adjusters dislike having to respond to an investigator's request for information. Additionally,insurers and TPA's can have their licenses suspended or revoked if DIR finds repeated violations.