A Vermont appeals court Tuesday sided with a workers compensation claims administrator in an insurance bad faith lawsuit brought by a state trooper who was injured on the job in June 2021.
The Vermont Superior Court, in Andrew Leise v. Corvel Enterprise Comp. Inc., ruled that Corvel was correct to assert that there was no cause of action for bad faith against an insurer’s agent or third-party administrator.
Mr. Leise and Corvel, which handled the workers comp claim on behalf of the State of Vermont, reached a settlement in October 2022. Meanwhile, Mr. Leise filed a civil suit against the Vermont Human Rights Commission alleging civil rights violations. That case is still pending.
Mr. Leise said he still has not been paid his workers comp settlement because Corvel refused to agree to a settlement release that would preserve Mr. Leise’s ability to pursue the suit against the commission.
He alleged the bad faith conduct was “part of a scheme intended to leverage the nonpayment of his workers’ compensation settlement to economically intimidate him and force him to compromise the VHRC Suit,” according to the Vermont Superior Court ruling.
Corvel contended Vermont doesn’t recognize a cause of action for bad faith against an insurer’s third-party administrator and also that Mr. Leise failed to exhaust his administrative remedies under workers comp law.
Citing case law, the appeals court said an insured’s remedy in a bad faith claim would be to sue the insurer and not its third-party administrator.