Delay in Claim Processing

An insurance company contracted with a claim adjuster to process and pay workers’ compensation claims. The adjuster was not properly staffed to handle the volume of incoming claims, and many of them were not handled within the required time frame stated in the local insurance regulations. Fifty injured workers filed a class-action lawsuit against the insurance company alleging negligence for failing to properly administer their claims. The insurance company quickly settled the workers’ compensation claims, but the administrative costs associated with notifying all potential plaintiffs of the class action exceeded $1 million. The insurance company sued the claim adjuster, alleging negligence in processing the claims. The lawsuit sought compensatory damages to cover the costs of the class action. Total Cost: $1,300,000.