A. Claims may be filed under the Workers' Compensation Act alleging unfair claim-processing practices or bad faith by an employer, insurer or claim-processing representative relating to any aspect of the Workers' Compensation Act. The director may also investigate allegations of unfair claim processing or bad faith on his own initiative.

B. If unfair claim processing or bad faith has occurred in the handling of a particular claim, the claimant shall be awarded, in addition to any benefits due and owing, a benefit penalty not to exceed twenty-five percent of the benefit amount ordered to be paid.

C. If an employer, insurer or claim-processing representative has a history or pattern of repeated unfair claim-processing practices or bad faith, the director or a workers' compensation judge may impose a civil penalty of up to one thousand dollars ($1,000) for each violation. The civil penalty shall be deposited in the workers' compensation administration fund.

D. Any person aggrieved by an order under this section may request a hearing pursuant to the Workers' Compensation Act.

E. The director shall adopt by regulation definitions of unfair claim-processing practices and bad faith.

F. This section shall not be construed as limiting or interfering with the authority of the superintendent of insurance as provided by law to regulate any insurer, including his jurisdiction over unfair claim settlement practices.

History: Laws 1990 (2nd S.S.), ch. 2, § 29.

Effective dates. — Laws 1990 (2nd S.S.), ch. 2, § 153 Laws 1990 (2nd S.S.), ch. 2, § 29 effective January 1, 1991.

Jurisdiction to order Indian employer to rehire a worker. — Where the worker filed a claim for an occupational injury against a casino that was owned and operated by a tribal corporation; the tribal corporation waived sovereign immunity; the workers' compensation judge filed an opinion which awarded benefits to the worker; after the opinion of the workers' compensation judge was filed, a separate tribal commission revoked the gaming license that the worker was required to possess to perform the worker's employment duties; the tribal commission was unwilling to reissue the gaming license resulting in the termination of the worker's employment with the casino; the tribal commission did not waive sovereign immunity; and the workers' compensation judge determined that the worker had been wrongfully terminated in retaliation for filing the occupational injury claim, the workers' compensation judge had authority to order the tribal corporation to rehire the worker at a position of employment that was substantially equivalent to the position the worker formerly held in terms of pay and benefits. Martinez v. Cities of Gold Casino, 2009-NMCA-087, 146 N.M. 735, 215 P.3d 44, cert. denied, 2009-NMCERT-007, 147 N.M. 361, 223 P.3d 358.

Section does not create new duty or right. — This section is not substantive in nature; it does not create a new duty, right, or obligation under the law. Instead, it proscribes a method of obtaining redress and is procedural or remedial; it should be applied retroactively to accrued cases not filed and pending at the time of enactment. Cruz v. Liberty Mut. Ins. Co., 1995-NMSC-006, 119 N.M. 301, 889 P.2d 1223.

Exclusivity of remedy. — This section's remedy for bad faith in processing a workers' compensation claim is exclusive. Martin-Martinez v. 6001, Inc., 1998-NMCA-179, 126 N.M. 319, 968 P.2d 1182, cert. denied, 126 N.M. 532, 972 P.2d 351.

Section provides adequate remedy. — This section provides an adequate remedy; although the penalty may not be a great amount when the amount of the claim is small, it provides sufficient deterrence to prevent an insurer from denying benefits in bad faith and enforces the public policy against the bad-faith handling of workers' compensation claims. Cruz v. Liberty Mut. Ins. Co., 1995-NMSC-006, 119 N.M. 301, 889 P.2d 1223.

Exclusive and adequate remedy. — By enacting 52-1-28.1 NMSA 1978, the legislature brought all workers' bad faith claims under the Workers' Compensation Act's exclusivity provision and abrogated workers' rights to file bad faith actions in district court, and the twenty-five percent penalty amount provides sufficient deterrence to prevent an insurer from denying benefits in bad faith and enforces the public policy against the bad faith handling of workers' compensation claims. Worker's claims were properly denied where he argued that he should be allowed a private right of action for bad faith in district court, that the benefit penalty allowed by this section is insufficient to deter bad faith, and that the cost of successfully pursuing such claims exceeds the available benefit penalty. Romero v. Laidlaw Transit Servs., Inc., 2015-NMCA-107, cert. granted, 2015-NMCERT-009.

The term "benefit amount" in Subsection B does not include the value of future medical benefits nor attorney fees. Meyers v. W. Auto, 2002-NMCA-089, 132 N.M. 675, 54 P.3d 79, cert. denied, 132 N.M. 551, 52 P.3d 411.

Claim for rehire. — There is no difference between a claim for benefits and a claim for rehire. Both are claims under the Workers' Compensation Act and both can be improperly handled, leading to a claim of unfair claims processing. Lucero v. City of Albuquerque, 2002-NMCA-034, 132 N.M. 1, 43 P.3d 352, cert. quashed, 133 N.M. 30, 59 P.3d 1262.

Law reviews. — For survey of 1990-91 workers' compensation law, see 22 N.M.L. Rev. 845 (1992).