KELLY BROWN, Applicant
LINDENGROVE INC Employer
UNITED WISCONSIN, Insurer
An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and order in that decision as its own.
The findings and order of the administrative law judge are affirmed.
Dated and mailed August 3, 2006
brownke . wsd : 101 : 8 ND §
7.20 § 7.22
/s/ James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
The applicant had an earlier bad faith claim which he settled by compromise. The claim was compromised for $1,250. The order approving the compromise required the insurer to pay the $1,250 by February 24, 2005. In fact, the amounts were not paid until about March 13, 2005, because the insurer had changed the location from which it issued checks.
Also as part of the compromise, the applicant contends, the insurer stated that certain medical expenses at issue had been, or would be paid. The file contains a letter from the insurer's law firm's paralegal indicating the law firm directed the insurer to pay certain medical expenses. However, three of the medical expenses at issue were not immediately paid. One item was denied because the insurer disputed its necessity (evidently, the charge was for a sedative given prior to an injection) and the other two items because the provider had not submitted the correct code for the procedure involved. The provider resubmitted with the correct code for one of the procedures, and the insurer paid on that, albeit at a discounted rate. The provider has not objected to the discounted payment, or to the nonpayment of the first expense as not necessary.
With respect to the delay in paying the $1,250 settlement amount, the commission affirms the 10 percent inexcusable delay penalty under Wis. Stat. § 102.22. With respect to the bad faith statute, Wis. Stat. § 102.18(1)(bp) (1), the supreme court has recently stated:
¶17 Section 102.18(1)(bp) provides, in relevant part, that the Department of Workforce Development (DWD) may include a penalty in an award to an employee if the department determines that "the employer's or insurance carrier's . . . failure to make payments . . . resulted from malice or bad faith." Wis. Stat. § 102.18(1)(bp). A claimant seeking to impose penalties for bad faith failure to make payments under § 102.18(1)(bp) must prove two elements: 1) the employer or insurer did not have a reasonable basis for denying benefits; and 2) the employer or insurer knew it lacked a reasonable basis for denying benefits or recklessly disregarded a lack of a reasonable basis for denying payment. [Citation omitted.]
Bosco v. LIRC, 2004 WI 77, ¶17, 272 Wis. 2d 586.
The commission cannot conclude that the insurer's relatively brief delay in the payment of the $1,250 was done intentionally or recklessly. Not having a good excuse is different from a deliberate or reckless act.
The insurer cites a case where the commission found bad faith in a delay of payment by an insurer despite an assertion of an administrative mix-up. However, in that case, it was clear the ALJ and the commission did not believe the delay was caused simply by a mix-up. See Wenz Foods, Inc., v. LIRC, case no. 89-1108 (Wis. Ct. App., January 18, 1990), slip op., at 3 (holding "The ALJ rejected Wenz's explanation that the four month delay in payment was merely an administrative mix-up.") Because the ALJ's inference was supported by evidence in the record, the court of appeals held that the circuit court erroneously reversed the commission and the ALJ based on the circuit court's own conclusion that the delay was simply the result of a mix-up. Thus, Wenz does not hold -- and the commission has never held -- that a claim of administrative error or mix-up can never be credited or automatically establishes bad faith delay as a matter of law.
What of the delay in the payment of the medical expenses? In this case, the actual compromise agreement is not in the record. The commission cannot tell to what extent, the parties made any agreement about the disputed expenses. Nothing in the record clearly shows that the insurer was either ordered to pay, or agreed to pay, the disputed medical expenses in full without documentation from the providers, negotiation with the providers, or resort to the Wis. Stat. § 102.16 procedure. Since the applicant has the burden of proof in bad faith as discussed in Bosco, the commission affirms the ALJ's finding of no bad faith with respect to these bills.
cc:
Attorney James P. Maloney
Attorney Linda D. Kiemele
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