I've already blogged about the background and law allowing unreasonable contest attorneys fees. You can see that May 2008 post here. As I stated in that post:
The awarding of attorney’s fees in workers’ compensation cases is the rule
not the exception. See Section 440(a) of the Workers’ Compensation Act (Act). Thus, the employer has the burden of presenting sufficient evidence to establish a reasonable basis for contesting a claim petition in order for the employer not to have to pay the claimant attorney’s fees.
Despite the fact that the awarding of fees should be the norm, the courts generally think differently, as in the above cited Costa case. There, the court noted that the insurance company doctor had a different opinion as to the extent of the work injury as compared to the claimant's treating doctor (a neck strain vs. a herniated disc that require surgery). The court held that because of this difference, that was enough to demonstrate a reasonable contest by the insurance company. It did not matter that the defense doctor clearly indicated a work injury. However, in this case, the insurance company denied the entire claim from day one. It didn't accept the claim of a work related neck strain. It just issued a notice of denial from the start.
This decision is completely wrong and unfair to claimants. If an insurance company denies a claim totally and right in the beginning, it should not have the ability to come back later, during litigation, with new evidence to "boot strap" a reasonable contest. If their medical expert gives the opinion that a work injury occurred, then that's the ball game and claim should be accepted and unreasonable contest attorneys fees should be issued. Only then should the parties litigate the issue of what type of work injury occurred.
The court in this case basically gave the insurance company a "get out of jail free" card.