1. A. For purposes of A.R.S. § 23-930, an employer, self-insured employer, carrier, or claims processing representative commits “bad faith” if the employer, self-insured employer, carrier, or claims processing representative:

   1. 1. Institutes a proceeding or interposes a defense that is not:

      1. a. Well-grounded in fact;
      2. b. Warranted by existing law; or
      3. c. A good faith argument for the extension, modification, or reversal of existing law;

   2. 2. Unreasonably delays:

      1. a. Payment of benefits; or
      2. b. Authorization for, or receipt of, medical benefits or treatment;
   3. 3. Unreasonably underpays benefits;
   4. 4. Unreasonably terminates benefits;
   5. 5. Intentionally misleads a claimant as to applicable statutes of limitation, benefits, or remedies available to the claimant under the Act or under this Article; or
   6. 6. Unreasonably interferes with or obstructs the claimant’s right to choose the claimant’s attending physician, except in cases involving a self-insured employer under A.R.S. § 23-1070.

2. B. For purposes of A.R.S. § 23-930, an employer, self-insured employer, carrier, or claims processing representative commits “unfair claim processing practices” if the employer, self-insured employer, carrier, or claims processing representative:

   1. 1. Unreasonably issues a notice of claim status without adequate supporting information in its possession or available to it;
   2. 2. Unreasonably fails to acknowledge communications from the Commission, an unrepresented claimant, or a claimant’s attorney with respect to a claim;
   3. 3. Fails to act reasonably and promptly upon communications from the Commission, an unrepresented claimant, or a claimant’s attorney with respect to a claim;
   4. 4. Directly advises a claimant not to consult or obtain the services of an attorney; or
   5. 5. Communicates directly, for an improper purpose, with a claimant represented by an attorney.
3. C. A person alleging bad faith or unfair claim processing practices (“complainant”) shall file a written complaint with the claims manager of the Commission. The complainant, or the complainant’s authorized representative, shall sign the complaint.
4. D. The complaint shall describe the specific actions of the employer, self-insured employer, carrier, or claims processing representative, that are alleged to constitute bad faith or unfair claim processing practices. A complaint form is available upon request from the Commission.
5. E. Upon receipt of a complaint under this subsection, the claims manager of the Commission shall serve the complaint upon all parties.

6. F. If the Commission acts on its own motion under A.R.S. § 23-930(A), the claims manager shall mail a notice of alleged bad faith or unfair claim processing practices to the claimant or the claimant’s authorized representative and the:

   1. 1. Employer;
   2. 2. Self-insured employer;
   3. 3. Carrier; or
   4. 4. Claims processing representative.
7. G. The person or entity named in a complaint or notice served under A.R.S. § 23-930 and this Section shall file with the claims manager a written response to the complaint or notice, within 30 days after service by the Commission of the complaint or notice.
8. H. The person or entity filing a written response shall serve a copy of the response upon the complainant, or the complainant’s authorized representative, if represented.
9. I. If the person or entity named in a complaint or notice served under A.R.S. § 23-930 and this Section fails to file a written response, the Commission shall consider the absence of a response a denial of the allegations of the complaint or notice.
10. J. Upon receipt of a written response, or upon the expiration of 30 days if no response is filed, the Commission shall enter an award as it deems, in its discretion, appropriate under A.R.S. §§ 23-930(B) or (C).

Historical Note

Former Rule 28. Amended effective March 1, 1987, filed February 26, 1987 (Supp. 87-1). R20-5-128 recodified from R4-13-128 (Supp. 95-1). Section repealed; new Section made by final rulemaking at 7 A.A.R. 3966 and 7 A.A.R. 4995, effective August 17, 2001 (Supp. 01-3). Section R20-5-128 renumbered to R20-5-124; new Section R20-5-128 renumbered from R20-5-163 and amended by final rulemaking at 31 A.A.R. 4199 (October 31, 2025), effective December 6, 2025 (Supp. 25-4).