- Louisiana Court Orders Out of State Workers' Compensation TPA to Retain Louisiana Claims Adjuster
- May 23, 2017 | Authors: Trenton J. Oubre; Alexandra Vozzella
- Law Firm: Breazeale, Sachse & Wilson, L.L.P. - Baton Rouge Office
Analysis of Broussard v. Dillard Department Stores, Inc.
The Louisiana Third Circuit recently issued a significant ruling affecting workers' compensation insurers, self-insured employers and out of state claim's adjusters. In Broussard v. Dillard Department Stores, Inc., 2017 WL 606769 (La. App. 3 Cir. 2/15/17), the claimant filed a motion to compel her employer and the employer's third party claim's adjuster to "retain a claim's adjuster in the state of Louisiana pursuant to La. R.S. 23:1161.1." Of note is that the employer, Dillard's, was a self-insured employer and its third party administrator, Gallagher Bassett, had a Louisiana office, even though the adjuster handling the workers' compensation claim was based in Tennessee. The Workers' Compensation judge denied the claimant's motion, concluding that it lacked subject matter jurisdiction to determine whether an employer or insurer has complied with La. R.S. 23:1161.1 because "such issues are regulated by the Louisiana Commissioner of Insurance."
On appeal, the Louisiana Third Circuit held that the "workers' compensation court was incorrect in denying [claimant's] motion to compel [defendants] to retain a claim's adjuster in Louisiana." However, this holding seems to be at odds with the plain language of La. R.S. 23:1161.1, which provides, in pertinent part:
A. Any insurer, authorized or unauthorized, domestic, foreign, or alien, who issues a policy for workers' compensation in this state shall either establish and maintain a claims office within the state or retain a licensed claims adjuster. (Emphasis added.)
(Please note that an insurer may obtain a waiver of the provisions of La. R.S. 23:1161.1 by following the procedure set forth in La. R.S. 23:1161.1(D).
Further, in support of its holding, the Third Circuit expressly relied on a prior holding by the Fifth Circuit, Duarte-Ortega v. Disaster Recovery Services, LLC, 118 So.3d 1126 (La. App. 5 Cir. 12/27/12), which held that La. R.S. 23:1161.1 "requires the relator-insurer to either establish and maintain a claims office within the state of Louisiana or retain a Louisiana licensed claims adjuster." (Emphasis added.) However, a plain reading of La. R.S. 23:1161.1 and the Duarte-Ortega holding indicates that an insurer has complied with the requirements of La. R.S. 23:1161.1 if the insurer either (1) maintains an office within Louisiana, or (2) retains a claims adjuster licensed in Louisiana. This was also the view taken by Judge Marc Amy in his dissenting opinion in Broussard, which was joined by Judge David Chatelain.
Although the claim's adjuster actually handling the claim in Broussard was neither licensed nor domiciled in Louisiana, the employer's third party administrator, Gallagher Bassett, maintained an office in Baton Rouge, Louisiana. Based on the plain language of La. R.S. 23:1161.1 and the Duarte-Ortega holding, the fact that the TPA maintained an office in Louisiana should have been sufficient to comply with La. R.S. 23:1161.1. However, despite quoting the "either-or" language several times, both from the statute itself and from the Duarte-Ortega decision, the Third Circuit held that the "[f]ailure to retain a Louisiana claims adjuster creates an undue burden on the [claimant]." Thus, it seems that the Third Circuit has interpreted La. R.S. 23:1161.1 to require that the self-insured employer's TPA both maintain a claim's office in Louisiana and retain a Louisiana licensed claim's adjuster. However, there does not seem to be any legal basis for such an interpretation.
Furthermore, the Broussard court did not determine what the penalty or damages were for failing to comply with La. R.S. 23:1161.1. Rather, it remanded the case back to the trial court "for further proceedings." The trial court has yet to reach a decision.
The Broussard holding will undoubtedly create confusion among self-insured employers and third party administrators on how to comply with La. R.S. 23:1161.1, especially when the claim is being handled by a non-Louisiana claim's adjuster, whether the third party administrator either does or does not maintain a claim's office in Louisiana.
Despite having had the opportunity to do so, the Third Circuit failed to clarify what constitutes an "insurer" and what constitutes a "claim's adjuster in Louisiana." Rather, the court simply rejected the argument that La. R.S. 23:1161.1 only applies to insurers, not to third party administrators, such as Gallagher Bassett; however, it provided no basis for such a rejection. The court also rejected the argument that the term "insurer" does not include self-insurers, such as Dillard's, for purposes of La. R.S. 23:1161.1. Although the term "insurer" is defined in La. R.S. 23:1176 and expressly excludes "individual self-insurers," the court found this definition to be inapplicable to La. R.S. 23:1161.1, solely because La. R.S. 23:1176 appears in a different subpart than La. R.S. 23:1161.1 (even though the term "insurer" does not appear to be defined anywhere else).
Finally, the court held that the workers' compensation court has subject matter jurisdiction to determine the issue of "whether an employer or TPA has complied with La. R.S. 23:1161.1," despite the fact that La. R.S. 23:1161.1, by its own terms, only applies to "insurers."
As it currently stands, the Broussard holding is only binding in the Third Circuit. However, it is unclear whether this decision will be overturned and/or whether other circuits will adopt the Third Circuit's interpretation of La. R.S. 23:1161.1.