In Ball v. Federal Ins. Co., 4:18-CV-04008-KES, 2019 WL 3393166 (D.S.D. July 26, 2019), the federal court applied a merger of insurance bad faith law with the handling of a worker’s compensation claim:
The first element of a bad faith claim requires an absence of a reasonable basis for denying the benefits of the policy. Hein, [2007 S.D. 40, 731 N.W.2d 231 (S.D. 2007], 731 N.W.2d at 236 (citing Champion, [399 N.W.2d 320 (S.D. 1987)], 399 N.W.2d at 324). “Insurers are entitled to challenge fairly debatable claims.” Id. at 237 (citing Zuke, [1999 S.D. 31, 589 N.W.2d 925 (S.D. 1999)], 589 N.W.2d at 930). “Because any injury in a workers’ compensation bad faith claim stems from the insurer’s denial, not the insurer’s conduct alone, a central element of the cause of action is whether there has been a wrongful denial of benefits.” Id. (citing Champion, 399 N.W.2d at 324).
Ball v. Federal Ins. Co., 4:18-CV-04008-KES, 2019 WL 3393166, at *4 (D.S.D. July 26, 2019). The federal court ultimately denied the worker’s compensation carrier’s motion for summary judgment in that case.
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