The reasonableness of a denial turns on the existence of “legitimate doubt as to liability” and is measured based on the available information at the time the denial issues. (Continuation of a denial may also be deemed unreasonable if the legitimate doubt is later destroyed.) If a denial is deemed unreasonable, a 25% penalty and an attorney fee will be assessed.
What seems obvious to you at the time you issued a denial may be hard to demonstrate at a later hearing. Establishing reasonableness requires two things: 1) information that casts doubt on some aspect of liability, and 2) ability to show what information you had when you issued the denial. When considering whether a denial is reasonable, consider the various aspects that must be proven for a claim. Information that casts doubt on compensability may include the following:
recorded statement from claimant that identifies an off work incident/exposure
information that claimant was not in the course of employment at the time of injury
witness statements contradicting that an injury occurred
witness statements that claimant had pre-injury complaints about the same body part
tests (noise surveys, air quality surveys) that contradict an exposure at work
lack of any medical records (but be ready to reconsider the denial if these are later received)
medical records casting doubt on the existence of a new or omitted condition
medical records of prior treatment or preexisting conditions that might explain the complaints, particularly if there was no acute injury
expansion request for something that is not a condition (e.g. please accept right arm)
expert statements against work causation
expert statements that express uncertainty or are contradictory
expert statements that only support material cause in the context of an occupational disease
The best practice is to gather as much information as possible before issuing the denial. For example, if there is suggestion of prior injury or treatment to the body part, obtaining an IME or doctor’s opinion that indicates the preexisting condition is or could be the cause will make the basis for a denial stronger.
To establish your “legitimate doubt” and the evidence you based your decision on, create a document trail. If you spoke to a doctor over the phone, make a note of the time and content of the conversation. If you talk to an employer or witness who has information casting doubt on an injury, make a separate note of this conversation or even consider a recorded statement from the witness. Then, if the reasonableness of your decision is later challenged, you will have concurrent notes to back up your memory of why you doubted the claim. And remember that if the basis for your doubt (e.g. no medical records at all) evaporates, you will need to accept the claim or gather other information that supports an ongoing denial.
If you have a difficult scenario, please call your SBH attorney for input on whether a denial can be supported.