France v. Ariz. Counties Ins. Pool – 10/21/2022

January 5, 2023

Arizona Court of Appeals Division Two holds that an insurance bad faith claim accrues for notice of claim purposes in the workers compensation context when the insurer denies coverage.

A police officer engaged in a shooting incident that occurred while he was employed at a municipality. He suffered post-traumatic stress disorder but was forced to return to work. He filed a workers’ compensation claim, which his employer’s insurer (a state entity) denied. The police officer contested that denial with the state industrial commission, which also denied his claim. The officer then appealed the decision to state court. The parties eventually stipulated that the police officer’s claim was compensable, and he was entitled to benefits.

While his appeal was pending in state court, the police officer sued the insurer, claiming that it had acted in bad faith by denying his claim for benefits.  The insurer filed a motion dismiss, arguing that the claim was time barred because the police officer had failed to timely serve a notice of claim on the insurer. The superior court granted the motion to dismiss, and the police officer appealed, arguing that the pending case in state court should have told the notice-of-claim statute.

The Court of Appeals affirmed the decision of the superior court. The Court held that, in this context, a bad faith claim accrues when the insurer denies coverage, not when an appeal of the coverage determination is resolved. It therefore found that the police officer failed to timely notify the insurer of his claim.

Chief Judge Vásquez authored the opinion of the Court; Judge Eckerstrom and Judge Cattani concurred.

Posted by: John Bullock