Opinion ID: 1428002
Heading Depth: 1
Heading Rank: 5

Heading: C. 72-804 provides:

Text: Attorney's feesPunitive costs in certain cases.If the commission or any court before whom any proceedings are brought under this law determines that the employer or his surety contested a claim for compensation made by an injured employee or dependent of a deceased employee without reasonable ground, or that an employer or his surety neglected or refused within a reasonable time after receipt of a written claim for compensation to pay to the injured employee or his dependents the compensation provided by law, or without reasonable grounds discontinued payment of compensation as provided by law justly due and owing to the employee or his dependents, the employer shall pay reasonable attorney fees in addition to the compensation provided by this law. In all such cases the fees of attorneys employed by injured employees or their dependents shall be fixed by the commission. The Court concluded that because those first six allegations explicitly related to contested claims for compensation without reasonable ground, SIF's refusal to pay compensation within a reasonable time, and discontinued payment of compensation justly due and owing without reasonable ground, they arose under I.C. § 72-804 and the district court thus did not have jurisdiction. Van Tine I, 126 Idaho at 689, 889 P.2d at 718. With respect to Van Tine's three remaining allegations listed above, the Court in Van Tine I held that they implicitly related to the award of attorney fees pursuant to I.C. § 72-804 and thus the district court did not have jurisdiction to decide these allegations either. The basis for the Court's holding was that those allegations were made a part of Van Tine's request for damages for the SIF's breach of the duty of good faith and fair dealing. The Court noted that pursuant to White v. Unigard Mut. Ins. Co., 112 Idaho 94, 730 P.2d 1014 (1986), in order to have a claim for bad faith, a claimant must allege that the insurer intentionally and unreasonably denied or delayed payment on a claim, and in the process harmed the claimant in such a way that the claimant cannot be fully compensated at contract. Van Tine I, 126 Idaho at 690, 889 P.2d at 719. The Court then held: Based on this description in White, any claim the Van Tines have for breach of the duty of good faith and fair dealing must relate to SIF's intentional and unreasonable denial of or delay in paying workers' compensation benefits. To the extent that allegations 7, 8, and 9 above support a claim for breach of the duty of good faith and fair dealing, they must be considered to allege an intentional and unreasonable denial of or delay in paying benefits to Van Tine. Otherwise, they would not support a claim for breach of the duty of good faith and fair dealing. Id. In the present case, Count III of Van Tine's counterclaim provides as follows: The Fund has breached its duty of good faith and fair dealing owed to defendant in the following respects: (a) Continues to harass Van Tine with lawsuits even though plaintiff has lost its subrogation rights. (b) Authorized a suit to be filed against the Van Tines' attorney in an attempt to disrupt Van Tine's relationship with his attorney and apply pressure to Van Tine. (c) The Fund owes a duty of good faith and fair dealing to Van Tine and has deprived Van Tine the right to monies which are rightfully his. In his brief on appeal, Van Tine asserts that his counterclaim for breach of the duty of good faith and fair dealing relates to actions of the SIF after July 1992 (the date his lawsuit was filed in Van Tine I ), and that, therefore, it is a wholly different claim than that decided in Van Tine I and thus does not arise from I.C. § 72-804. We disagree. Subsection (c) of Count III states that the SIF deprived Van Tine of funds that were rightfully his. This allegation clearly falls under I.C. § 72-804 pursuant to our holding in Van Tine I, as Van Tine is essentially arguing that the SIF contested a claim for compensation without reasonable ground. According to Van Tine I, that type of allegation explicitly relates to the premises for an award of attorney fees under I.C. § 72-804. Van Tine I, 126 Idaho at 690, 889 P.2d at 719. Subsection (b) of Count III also clearly falls under I.C. § 72-804 pursuant to Van Tine I as it was a listed allegation in Van Tine's complaint in the Van Tine I suit. As stated above, the Court held in that case that this allegation implicitly related to the premises for the award of attorney fees pursuant to I.C. § 72-804, thus presenting a question arising under I.C. § 72-804. Id. Subsection (a) of Count III also implicitly falls under I.C. § 72-804 pursuant to Van Tine I based on the Court's analysis and discussion regarding White v. Unigard Mut. Ins. Co ., and the necessary underlying basis for bad faith claims. Pursuant to White, by definition there is no claim for bad faith unless it relates to an insurer intentionally and unreasonably failing to pay a claim or compensate the insured. Such a claim must relate to the failure to pay monies that the insured claims he is owed. If the allegation does not relate to the insurer's unreasonable failure to pay the insured, either explicitly or implicitly, the insured has not stated a claim for bad faith. Thus, in order for Van Tine to maintain the allegation that the SIF breached its duty of good faith and fair dealing by continuing to harass Van Tine with lawsuits even though the SIF has lost its subrogation rights, by definition under White v. Unigard , the claim must at least implicitly relate to an assertion that the SIF intentionally and unreasonably either denied or delayed compensation. If it does not, then there is no bad faith claim. If the claim does relate to the SIF's unreasonableness in failing to compensate Van Tine, then it falls under I.C. § 72-804 and the exclusive jurisdiction of the Commission and the worker's compensation law. We hold that this claim indeed falls under I.C. § 72-804. Further, pursuant to White v. Unigard , a claim against an insurer for breach of the duty of good faith and fair dealing is only available to first party insureds: The tort of bad faith breach of insurance contract, then, has its foundations in the common law covenant of good faith and fair dealing and is founded upon the unique relationship of the insurer and the insured, the adhesionary nature of the insurance contract including the potential for overreaching on the part of the insurer, and the unique, non-commercial aspect of the insurance contract. Accordingly, we hold that there exists a common law tort action, distinct from an action on the contract, for an insurer's bad faith in settling the first party claims of its insured. 112 Idaho at 100, 730 P.2d at 1020 (emphasis added). In the present case, the first party insured of the SIF is the Idaho Department of Transportation, not Van Tine. Thus, because Van Tine is a third party claimant, even out of the context of the worker's compensation law, he would not be able to maintain a bad faith action against the SIF. Thus, we hold that the district court properly dismissed Count III of Van Tine's counterclaim alleging breach of the duty of good faith and fair dealing on the basis that it lacked subject matter jurisdiction.