Iowa Supreme Court Ruling Provides Partial Relief to Comp Carrier
Toby Thornton filed a lawsuit against his employer’s insurer, American Interstate Insurance, alleging common law bad faith for denying his claim for permanent and total disability (PTD) and his request for partial commutation of benefits. The district court found that American Interstate acted in bad faith as a matter of law by opposing Thornton’s workers’ compensation claims. On appeal, the Supreme Court of Iowa agreed American Interstate had no basis to challenge Thornton’s PTD status and affirmed summary judgment on that issue. However, the Court held that the district court improperly found the insurer acted in bad faith as a matter of law on the commutation issue. Thus, the Court reversed part of the judgment and the damages awards and remanded the case for a new trial on the remaining bad-faith claims.