- Court: Oregon Court of Appeals
- Area(s) of Law: Disability Law
- Date Filed: 11-03-2021
- Case #: A171764
- Judge(s)/Court Below: Mooney, J. for the Court; DeVore, P.J.; & DeHoog, J.
- Full Text Opinion
SAIF Corporation sought judicial review of an order by the Workers’ Compensation Board (Board), which determined that SAIF was not authorized to terminate claimant’s benefits and was imposed a penalty for unreasonably doing so. SAIF assigned error to the court’s assessment of a penalty for unreasonably terminating Claimant’s benefits. SAIF argued that it had “legitimate doubt” about its obligation to pay claimant’s benefits, and thus the Board improperly imposed the penalty. Claimant responded by asserting he was not terminated for disciplinary reasons and thus SAIF acted unreasonably by terminating his benefits. Termination of benefits is reasonable if the insurer has “legitimate doubt” about its obligation to pay the claimant, and reasonableness is determined through the evidence accessible to the insurer at the time it terminated the benefits. The Court found that SAIF did not act unreasonably by terminating claimant’s benefits and rejected the imputed knowledge theory, that the insurer is liable for the insured's misconduct, because there was no evidence that claimant’s employer had acted improperly. Thus, SAIF had “legitimate doubt” that it owed an obligation to claimant to pay benefits, because SAIF reasonably thought claimant had been fired for disciplinary reasons, thus cutting off its liability to pay benefits. Award of penalty and legal fees reversed; otherwise affirmed.