Good Faith and Fair Dealing in Washington Workers’ Compensation

Why the “Grand Compromise” isn’t So Grand Anymore

I’ve been chasing a problem ever since I began practicing law in the Washington State Labor and Industries (L&I) system. It’s an imbalance. A slant that gives Self-Insured Employers (SIEs) an immense advantage over injured workers when it comes time to pay for medical treatment, wage-loss compensation, or other benefits guaranteed by law.

The issue? It’s not one law, not one code section, not one bad policy. It’s a tangle of small, technical shifts that have piled up into a system that favors employers and sidelines workers.

The Hunt for the Real Problem

Our firm, Carlisle Byers Casey, has spent more than a decade chasing these threads, litigating before the Board of Industrial Insurance Appeals (BIIA), the Washington State Superior Courts, and various Courts of Appeal.

We’ve won for individual clients. But systemically? Nothing has changed.

That’s when my partners and I started asking a bigger question:

Why does an injured worker need an attorney just to get medical treatment that the State of Washington already promised them?

That question sent us back to the beginning, to the very roots of Washington’s workers’ compensation system.

The Grand Compromise: How Washington’s Workers’ Comp Began

When the Industrial Insurance Act was created in 1917, Washington made a deal with its workers and employers. It was called the Grand Compromise, and it was supposed to be a win-win:

• Workers gave up the right to sue employers for unsafe working conditions — even in cases of gross negligence.
• Employers paid into a state-run insurance fund that guaranteed medical treatment and wage replacement for any workplace injury, no matter who was at fault.

The Promise of No-Fault Coverage

This was Washington’s breakthrough idea: a no-fault workers’ compensation system.

It didn’t matter if the worker was careless or if the employer was negligent — if you were hurt on the job, you were covered. Period.

Employers who failed to maintain safe workplaces paid higher premiums, creating a built-in incentive to improve safety.

And for a time, the system worked.

When Big Businesses Got Involved: The Rise of Self-Insured Employers

By the early 1970s (around 1973), the system started to shift. Big corporations began to see an opportunity.

Their pitch was simple:

“We can take care of our own workers faster and more efficiently than the Department of Labor & Industries.”

What It Means to Be a Self-Insured Employer

To become self-insured, a company must prove it has the financial resources to pay for its workers’ medical care, lost wages, and disability benefits. These companies post a multi-million-dollar bond with the state and handle claims internally, while the Department of Labor and Industries oversees them to ensure compliance.

In theory, self-insured workers get the same benefits as those covered by the state fund.

In reality? That’s where the imbalance begins.

The Shift: When Fair Dealing Went Out the Window

Over time, self-insured employers realized they could leverage their power and resources to tilt the field in their favor. They hired armies of lawyers, claims managers, and medical consultants to minimize payouts and delay treatment approvals.

And here’s what we see now, every single day:

• Injured workers are waiting months, sometimes years, for medically necessary treatment.
• Doctors’ treatment plans are denied by people without medical credentials.
• Injured employees are forced to fight just to receive benefits that are legally guaranteed.

You Still Can’t Sue Your Employer, Even for Negligence

Even if your employer knowingly created unsafe working conditions, you still can’t sue them under Washington law. That protection for employers was the tradeoff workers made in 1917, but now, it’s being abused.

The result? The Grand Compromise has evolved into a Grand Imbalance, where corporations hold all the cards and injured workers often require legal assistance just to receive what they’re owed.

What “Good Faith and Fair Dealing” Should Mean

The principle of good faith and fair dealing is supposed to be simple: both sides act honestly, fairly, and with integrity.

That means employers process claims quickly, authorize treatment when medically necessary, and communicate transparently. Workers, in turn, report injuries truthfully and follow medical advice.

But when companies use delay tactics and denials to wear people down, the entire foundation of the system collapses.

Restoring Balance to Washington’s Workers’ Compensation System

So, what can we do about it?

Awareness

Workers deserve to know the difference between state-fund and self-insured claims — and how those differences affect their rights.

Accountability

We need stronger oversight from Washington State L&I and real consequences for employers who act in bad faith.

Advocacy

That’s where we come in. At Carlisle Byers Casey, we stand shoulder to shoulder with injured workers who are tired of fighting billion-dollar companies alone.

We return agency to our clients, holding insurers accountable, pushing back against unfair denials, and reminding the system what “good faith and fair dealing” actually means.

The Bottom Line: You Deserve Better

If you’re an injured worker tangled in Washington’s L&I system, you shouldn’t have to fight your employer and the state just to get better.

You deserve:

• Medical treatment without delay.
• Wage-loss compensation while you heal.
• Fair and honest dealing from those who hold your claim in their hands.

That’s what the law promised you in 1917, and it’s still the fight worth fighting. Set up a free legal consultation with us today.

— Carlisle Byers Casey

Your friends who just happen to know their way around the law.