Tortious Withholding of Insurance Benefits: Gibson v. National Ben Franklin Ins. Co.

The Maine Workers' Compensation Act provides that an employer's compensation carrier shares the employer's immunity from common law suit. If the carrier delays or withholds benefits owed an injured employee under an approved compensation agreement, the Act imposes a fine on the carrier and permits the employee to recover the overdue compensation payments by invoking the equity powers of the Superior Court. The Act makes no provision for redress when the carrier refuses to pay, a potential limitation recently confronted by the Maine Supreme Judicial Court in Gibson v. National Ben Franklin Insurance Company. In reversing the trial court's dismissal of a complaint that had alleged severe mental distress caused by the insurance carrier's intentional withholding of benefits due under an approved workers' compensation agreement, the Gibson court held that the Act's exclusive remedy and penalty provisions did not necessarily immunize the insurer from tort liability "in a case of intentional wrongdoing." Thus Gibson opened the door to the possibility of recovering consequential as well as punitive damages from a workers' compensation insurer. It will fall to subsequent decisions to flesh out Gibson's limited holding by defining the theory or theories of intentional tort liability that will shape this action. Gibson may reflect a general trend toward expanded liability of first party insurers.