Brooks v. Tube Specialties - TSCO International

Under OAR 436-060-0140(1)(a), "[a] reasonable investigation is whatever steps are a reasonably prudent person with knowledge of the legal standards for determining compensability would take in a good faith effort to ascertain the facts underlying a claim, giving due consideration to the cost of the investigation and the likely value of the claim."

Claimant challenged the Workers' Compensation Board order.  Claimant assigned error to the Board's decision to not assess a penalty against insurer under ORS 656.262(11).  On appeal, Claimant argued that "insurer did not reasonably investigate his claim before denying it and that, consequently, insurer's denial was unreasonable and the board should have imposed a penalty;" and that the board erred in ruling that they were not entitled to a fee by finding his attorney was not instrumental to obtaining rescission in this case.  In response, Insurer argued that the error was unpreserved, that the Board used unchallenged facts to reach its decision, and that the Board implicitly determined that the investigation was reasonable.  Under OAR 436-060-0140(1)(a), "[a] reasonable investigation is whatever steps are a reasonably prudent person with knowledge of the legal standards for determining compensability would take in a good faith effort to ascertain the facts underlying a claim, giving due consideration to the cost of the investigation and the likely value of the claim."  The Court held that the Board committed legal error by failing to consider the reasonableness of insurer's investigation as part of its analysis. Further, the legislature limited pre-hearing attorney fees to "situations where the attorney is 'instrumental' in obtaining the rescission of a claim denial."  Reversed and remanded.