YES!! It's so demoralizing when it happens. You're in a group with decent teamwork, you just have enough DPS to beat her with 4 seconds to spare, and then you get the "Tiamat Emerging" message instead of the victory cinematic. Please, if any devs are reading this, address this issue.
It's a defensive move. If I'm about to die or take a hit I can't roll out of, bloodbath teleports you, leaves you invincible, and if your lifesteal is high enough, you'll get a fair amount of health back. Thanks for the tip on looking up, I'll try it next time it happens.