A bill that would impose a “duty of good faith and fair dealing” between self-insured employers and their injured employees in their self-insured workers’ compensation systems is scheduled for a hearing this week. Many larger cities are self-insured employers for workers compensation claims.

HB 1521, sponsored by Rep. Dan Bronoske (D–Lakewood), requires self-insured employers and self-insured employers’ lay representative third-party administrators to have a duty of good faith and fair dealing with workers in self-insured workers compensation programs. An employer or administrator violates this duty if they wrongfully induce a worker to accept less than the compensation due under self-insured employers law, or otherwise fails to act in good faith regarding its obligations under law. The bill also requires the Department of Labor & Industries (L&I) to adopt rules on good faith dealing, criteria for penalties for violations, and must consider recognized claims processing practices when drafting rules. It also requires L&I to investigate violations and permits penalties of up to $3000 per violation.

There is a Senate companion, SB 5524, that has not yet been scheduled for a hearing, though one is expected in the near future.

Some self-insured employer advocates have indicated that HB 1521 goes beyond a compromise made in 2020 to increase various penalties for self-insurers and require licensing of third-party administrators. Those advocates have indicated that L&I has not yet fully implemented the 2020 changes and argue that this year’s bills send the message that self-insured employers and third-party administrators can’t be trusted despite strong regulatory oversight by L&I.

Dates to remember

HB 1521 is scheduled for public hearing in the House Labor & Workplace Standards Committee on Wednesday, February 1 at 8 am.