SHERRI L HENRY, Applicant
GENERAL MOTORS CORPORATION, Employer
GENERAL MOTORS CORPORATION, Insurer
The employer submitted a petition for commission review alleging error in the administrative law judge's Findings and Order issued in this matter on August 16, 2006. Letter briefs were submitted by the parties. At issue are whether the employer is liable for bad faith and/or inexcusable delay penalties relating to compensation, including medical expense, due for the applicant's conceded work injury of June 4, 2003.
The commission has carefully reviewed the entire record in this matter and hereby affirms in part and reverses in part the administrative law judge's Findings and Order. The commission makes the following:
On June 4, 2003, the applicant sustained an injury to her left ankle while working as an assembler for the self-insured employer, General Motors. She reported the injury and received treatment for it from the company nurse on a number of occasions through December 2003. On February 11, 2004, her personal physician, Dr. Guiano, took her off work due to continuing ankle difficulties. The employer did not begin payment of temporary total disability (TTD), but did authorize the payment of short-term disability payments, which continued until the applicant reached her healing plateau on July 19, 2004. The applicant's TTD rate for this period was $669.00 per week, and the short-term disability was paid at the gross rate of $625.00 per week.
The applicant filed an application with the department on April 19, 2004, claiming ongoing temporary total disability from February 11, 2004, as well as bad faith and inexcusable delay. The employer retained an attorney who answered the application with a generic denial on May 3, 2004. The employer had not obtained a medical opinion in response to Dr. Guiano's opinion that the applicant was unable to work due to ongoing treatment for the ankle. A hearing was scheduled for August 8, 2005, regarding the primary compensation and medical expense claims; and another hearing was scheduled for August 9, 2006, regarding the bad faith and inexcusable delay claims. It is unclear from the file whether or not a hearing was held on August 8, 2005, but on September 7, 2005, the department approved a limited compromise agreement authorizing payment of $1,562.00 to the applicant, $390.50 to her attorney, and $250.00 in medical expense.
A hearing was held on August 9, 2006, to address the bad faith and inexcusable delay claims. The only evidence submitted by the employer were copies of the applicant's leave records, evidence concerning the amount of short-term disability paid, and a letter written by the employer's attorney to an administrative law judge and dated November 30, 2004. The letter states in relevant part:
"The employer denied this claim based upon the claims adjuster's review of the medical records, which suggested an underlying, unrelated medical condition. Specifically, the adjuster's notes indicate that four months after the incident, Dr. Guiano diagnosed a left subtalar strain and superficial peroneal nerve injury. The adjuster's notes also indicate that this type of nerve injury is most commonly the result of trauma to the knee, a fracture of the fibula, or systemic conditions, not ankle strains. Due to the length of time that had passed and since claimant had been working with restrictions, it was thought that personal factors were at play. Further, claimant was offered sit down work, which she refused. It was only after the medical records were received and reviewed by the claims adjuster that the decision to deny was made.
Second, although claimant submitted a WKC-16-B with her hearing application on April 15, 2004, there was no assessment of permanency and it was even opined that further medical treatment, and possibly surgery, was expected. There was no assessment of PPD until September 20, 2004 - after this matter was scheduled for hearing.
The employer scheduled an independent medical examination at that point -- when claimant had submitted a report addressing both cause and permanency, in order to avoid duplication of medical examinations. The IME was conducted by Dr. Self on October 22, 2004, less than a month after the claimant received a permanency rating from her treater. We received and filed an unsigned draft of Dr. Self's report on October 25, 2004. Based on Dr. Self's findings, the employer prepared a WKC-13 and processed TTD and PPD payments the following day."
The standard for bad faith was clearly set forth in North American Mechanical v. LIRC, 157 Wis. 2d 801, 808, 460 N.W.2d 835 (Ct. App. 1990):
"We conclude ... in order to show bad faith a claimant must make a showing that the employer acted with: (1) a lack of reasonable basis for the delay which occurred and (2) knowledge or a reckless disregard of the lack of a reasonable basis for the delay."
The applicant documented that as of February 11, 2004, Dr. Guiano released her from work for what that physician concluded were the effects of the work-related left ankle injury. The employer never denied that the incident occurred at work. Accordingly, in order to deny the applicant's claim, it needed medical evidence contesting Dr. Guiano's opinion that the applicant was not disabled as a result of the injury. (1) No such evidence existed. The employer relied upon the claims adjuster's analysis, which certainly did not constitute a competent medical opinion, and incidentally was subsequently proven incorrect. The argument that no permanency had been assessed in April of 2004, is irrelevant to the issue of whether TTD was due from February 12, 2004 to July 19, 2004.
Accordingly, the employer lacked a reasonable basis for delay in payment of the TTD, and had knowledge of that lack of a reasonable basis. The full 200 percent penalty is appropriate given the unreasonableness of denying a medically determinable claim based on an insurance adjuster's opinion.
However, during the period of TTD the employer paid the applicant a total of $13,437.50 in sickness and accident benefits. The TTD period of 22 weeks and 5 days at the applicable rate of $669.00 per week entitled the applicant to compensation in the amount of $15,275.50. The difference was therefore $1,838.00. This was the amount untimely paid, and the amount against which the 200 percent bad faith penalty will be assessed, resulting in a penalty of $3,676.00. The 10 percent penalty for inexcusable delay will also be assessed in the amount of $183.80. A 20 percent attorney's fee will be subtracted from each of these penalty assessments.
Bad faith and inexcusable delay penalties are also assessed against untimely paid medical expenses. On January 5, 2007, the commission issued a remand order which included a directive that evidence of the applicant's claimed medical expenses be provided, as well as evidence of what date(s) these medical expenses were submitted to the employer, and what date(s) they were paid. The parties responded to this order with a stipulation that on October 26, 2004, the applicant submitted a WKC-3 listing $13,050.00 in medical expenses incurred from June 4, 2003 through October 26, 2004. The stipulation gives no indication concerning whether or not any or all of these medical expenses were submitted to the employer prior to October 26, 2004. The only additional information noted in the stipulation is that on October 29, 2004, the employer agreed to pay the outstanding medical expenses.
If the applicant submitted medical expenses to the employer prior to October 26, 2004, the employer may have lacked a reasonable basis for prompt payment of them, just as it lacked a reasonable basis for prompt payment of the TTD. The parties may have misunderstood the purpose of the commission's remand order with respect to the issues of bad faith and inexcusable delay as they might relate to the applicant's medical expenses. Accordingly, the department will be directed to allow opportunity for additional hearing, solely with respect to the issues of bad faith and inexcusable delay as they may relate to medical expenses that may not have been promptly paid.
NOW, THEREFORE, this
The Findings and Order of the administrative law judge are affirmed in part and reversed in part. Within 30 days from this date, the self-insured employer shall pay to the applicant the sum of Three thousand eighty-seven dollars and eighty-four cents ($3,087.84); and to applicant's attorney, William E. Parsons, fees in the amount of Seven hundred seventy-one dollars and ninety-six cents ($771.96). These sums represent bad faith and inexcusable delay penalties with regard to the temporary total disability untimely paid in this claim.
Jurisdiction is reserved with respect to the issues of bad faith and inexcusable delay as they may relate to timely payment of the applicant's medical expenses. Opportunity for a new hearing shall be allowed with respect to these reserved issues. The maximum penalty assessment for bad faith that could be found for untimely payment of medical expense would be $11,324.00 ($15,000.00 minus $3,676.00).
Dated and mailed February 28, 2007
henrysh . wrr : 185 : 9 ND
§ 7.21
/s/ James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
The commission's partial reversal of the administrative law judge's decision was based on the conceded fact that the applicant received $13,437.50 in sickness and accident benefits during the period temporary total disability was due in the amount of $15,275.50. Accordingly, no credibility determinations were involved.
cc:
Attorney William E. Parsons
Attorney Richard H. Porter
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