Arizona Court of Appeals emphasizes third - party administrators have no direct liability to insureds for bad faith | Freeman Mathis & Gary
Case Summary
In this case, the Arizona Court of Appeals clarified the liability boundaries concerning third-party administrators in insurance claims. The court reaffirmed that third-party administrators cannot be held liable for bad faith claims by insured parties when there is no direct contractual relationship between the administrator and the insured. The dispute arose from a workers’ compensation claim involving an Arizona liability insurer and a third-party administrator managing the plaintiff’s claim, where the plaintiff alleged bad faith against both entities.
Stage
Appeal in progress
Timeline
1 event
Coverage
1 article
Sources
1
Key Issues
- • Third-party administrator liability
- • Bad faith claims
- • Contractual nexus requirement
- • Workers’ compensation claims
update What Changed This Week
Case Timeline
1 eventArizona Court of Appeals emphasizes third - party administrators have no direct liability to insureds for bad faith | Freeman Mathis & Gary
The Arizona Court of Appeals clarified that third-party administrators cannot be held directly responsible for bad faith claims by insured individuals if there is no contract between them. This case involved a worker's compensation claim where the plaintiff sued both the insurance company and the third-party administrator for bad faith, but the court dismissed the claim against the administrator due to the statute of limitations. This ruling reinforces the legal boundary limiting liability to parties with direct contractual relationships.