On July 1, 2024, a new workers’ compensation law went into effect (SHB-1521) titled Duty of Good Faith and Fair Dealing. This rulemaking establishes a “good faith and fair dealing” standard for self-insured employers (SIE’s) and their third-party administrators (TPA’s). The rules seek to protect the best interest of impacted workers by ensuring that they are free from coercion or other unfair practices regarding industrial insurance benefits that may be due to them.

Self-insured employers and their third-party administrators must act in good faith when handling claims. This means that school districts must engage honestly and transparently with employees and claimants, ensuring fair treatment throughout the claims process.

New WACs originated from SHB –1521. These rules include repeat violations of minor requirements (WAC 296-15-270) and single violations of more serious requirements (WAC 296-15-272).

Some examples of violations of repeat behavior are:

• Manages the workers’ compensation claim in a manner which demonstrates a greater concern for the self-insured employer’s interest than the worker’s interest.
• Fails to notify the worker or beneficiary of their rights and obligations pursuant to WAC 296-15-400, RCW 28.010 or 51.28.030.
• Denies medical coverage without a factual, legal, or medical basis.
• Fails to provide a worker or beneficiary a SIF-2 or ability to file a claim pursuant to WAC 296-15-320 and 296-15-405.
• Fails to forward an application to reopen a claim within five working days of receipt pursuant to WAC 296-15-470.
• Fails to forward a protest or appeal to the department within five working days of receipt pursuant to RCW 14.120(2) and WAC 296-15-480.

The law also authorizes the Department of Labor and Industries to revoke the certification of a self-insured municipal employer (or the SW Washington Workers Compensation Trust) if the self-insurer is found to have violated their duty of good faith and fair dealing three times within a three-year period.

What you can do:

Ensure that all staff involved in employee incident reporting and claims management are trained in the principles of good faith and fair dealing and communicate the new law to all employees. Do not hide any incidents. It will be everybody’s responsibility to make sure these violations do not occur. Together we can ensure employees receive the benefits they are entitled to and preserve our ability to self-administer school district workers’ compensation claims. For more information, please contact Trista Greenwood at 360-952-3585 or trista.greenwood@esd112.org.