8 N.M. Ct. App. 679
N.M. Ct. App.2015Background
- Worker (Henry Romero) was injured on the job and received temporary total then permanent partial disability (PPD) benefits; parties settled in August 2012 with Insurer to continue PPD until the settlement order was filed.
- The WCJ approved the settlement on August 10, 2012; the order was filed August 30, 2012, but Insurer stopped PPD payments on August 10 and did not pay PPD for Aug 10–30.
- Worker requested payment, then obtained a WCJ order (March 7, 2013) directing Insurer to pay missed PPD plus interest; a hearing followed on penalty, bad faith, and attorney fees.
- The WCJ found Insurer willfully disregarded Worker’s rights, violated WCJ orders, and acted in bad faith/unfair claim processing; ordered $864.76 PPD + $216.19 (25% penalty) = $1,080.95, and awarded $2,500 in attorney fees to be shared equally per statute.
- Worker appealed, arguing the bad-faith remedy under NMSA §52-1-28.1 is inadequate and that he should not bear half the attorney fees; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §52-1-28.1 provides an adequate and exclusive remedy for bad faith/unfair claim processing | Cruz should be overruled; the 25% benefit penalty is inadequate and discourages suits | Legislative scheme (§52-1-28.1) is the exclusive remedy and provides adequate deterrence | Court declines to reexamine Cruz; §52-1-28.1 is exclusive and adequate per precedent |
| Whether Insurer’s conduct constituted bad faith/unfair claim processing | Worker asserted Insurer unreasonably refused/delayed payment and ignored requests/orders | Insurer offered no justification at hearing (no defense shown) | WCJ’s factual finding of bad faith/unfair claim processing upheld (supported by record) |
| Proper allocation of attorney fees under §52-1-54 and related regulations | Worker argued WCJ should assess 100% of fees to Insurer per NMAC regulation | Statute §52-1-54(J) requires fees be shared equally; regulations cannot override statute | Court affirms WCJ’s allocation (worker pays 50%) — regulation cannot conflict with statute |
| Applicability of 2013 statutory amendment (100% fee shift) | Worker sought full-fee-shift under newer statute | Amendment cannot apply to pending claims (constitutional restriction on retrospective changes) | New amendment does not apply to this pending case; prior statute governs |
Key Cases Cited
- Cruz v. Liberty Mut. Ins. Co., 119 N.M. 301, 889 P.2d 1223 (N.M. 1995) (holding §52-1-28.1 brings bad-faith claims under the Act and supplies an exclusive remedy)
- Russell v. Protective Ins. Co., 107 N.M. 9, 751 P.2d 693 (N.M. 1988) (pre-statute rule allowing district-court bad-faith suits in workers’ compensation context)
- DeWitt v. Rent-A-Ctr., Inc., 146 N.M. 453, 212 P.3d 341 (N.M. 2009) (appellate deference to WCJ factual findings supported by substantial evidence)
- Cordova v. Taos Ski Valley, Inc., 121 N.M. 258, 910 P.2d 334 (N.M. Ct. App. 1996) (attorney-fee awards reviewed for abuse of discretion)
- Alexander v. Delgado, 84 N.M. 717, 507 P.2d 778 (N.M. 1973) (appellate courts must follow Supreme Court precedent)