KENNETH T. RICE, Applicant
SELJAN TOOL COMPANY INC, Employer
MIDDLESEX INSURANCE COMPANY, Insurer
At issue is the liability of the employer for increased compensation under Wis. Stat. § 102.57. No hearing was held. Administrative law judge (ALJ) Janine Smiley of the Worker's Compensation Division of the Department of Workforce Development issued a decision in this matter on September 30, 2010.
The employer filed a timely petition for review. The commission has considered the petition and the positions of the parties, and it has reviewed the record. Based on its review, the commission makes the following:
The applicant lost four fingers on his left hand in an industrial accident. The employer conceded and paid:
1. 46.5 weeks of temporary total disability totaling $16,861.10.
2. Permanent partial disability for a scheduled injury in the total amount of
$29,434.46; and
The employer and the applicant settled a related disfigurement claim for $20,000.00 by a limited compromise. The employer and the applicant also entered into a second limited compromise agreement which settled a claim for loss of earning capacity for an unscheduled injury and a claim for certain medical expenses for $55,000.00. This second limited compromise agreement was executed by the parties' attorneys in June 2008, and approved by the department by order dated July 7, 2008.
Thereafter, the department ordered the employer to pay increased compensation under Wis. Stat. § 102.57 because the applicant's injury was caused by a safety violation. Specifically, the department ordered the employer to pay the amount of $9,926.17, which represented 15 percent of the total paid for the conceded temporary disability, the conceded functional permanent partial disability for the scheduled injury, and the compromised award for the disfigurement claim.1(1) The employer has paid that amount.
The applicant now seeks an additional $5,073.83 award for increased compensation under Wis. Stat. § 102.57. This would bring the total for increased compensation up to $15,000.00, the maximum that may be paid under the statute. The basis for the additional claim for increased compensation is the amount paid under the second limited compromise agreement of the loss of earning capacity claim.
On September 16, 2010, ALJ Janell Knutson sent the parties a letter citing a commission decision, Merkes v. Hamel Ralph Forest Products, Inc., WC Claim No. 1998-033594 (LIRC, Sept. 25, 2003), which holds that "the statutes do not contemplate applying increased or decreased compensation assessments against compromise amounts independently negotiated between the parties." ALJ Knutson's letter suggested that it might be unnecessary to have a hearing and requested the applicant to clarify his position about the necessity of a hearing.
Thereafter, the applicant's attorney sent a letter to ALJ Knutson asking that the matter remain scheduled for hearing. He suggested the commission's decision in Merkes was wrong, as it discouraged the settlement of primary compensation claims where there is an underlying safety violation issue.
On September 27, 2010, ALJ Janine Smiley then sent the parties a letter stating she believed she could resolve the matter without a hearing. She described the issue as one solely of law. She noted not only the Merkes decision described above, but also a more recent commission decision in Chason v. National Realty Management, WC Claim No. 1986-057112 (LIRC, August 24, 2005). ALJ Smiley suggested that Chason was in conflict with the earlier Merkes decision, and opined that she could base a Wis. Stat. § 102.57 award on the proceeds from a compromise.
Accordingly, on September 30, 2010, ALJ Smiley issued an order requiring the employer to pay $5,073.87 (again, the difference between what it had paid previously in increased compensation and the $15,000.00 maximum award for increased compensation under Wis. Stat. § 102.57).
The statute at issue, Wis. Stat. § 102.57, and its analytical companion, Wis. Stat. § 102.58, provide:
102.57 Violations of safety provisions, penalty. If injury is caused by the failure of the employer to comply with any statute, rule, or order of the department, compensation and death benefits provided in this chapter shall be increased 15% but the total increase may not exceed $15,000. Failure of an employer reasonably to enforce compliance by employees with any statute, rule, or order of the department constitutes failure by the employer to comply with that statute, rule, or order.
102.58 Decreased compensation. If injury is caused by the failure of the employee to use safety devices that are provided in accordance with any statute, rule, or order of the department and that are adequately maintained, and the use of which is reasonably enforced by the employer, if injury results from the employee's failure to obey any reasonable rule adopted and reasonably enforced by the employer for the safety of the employee and of which the employee has notice, or if injury results from the intoxication of the employee by alcohol beverages, as defined in s. 125.02 (1), or use of a controlled substance, as defined in s. 961.01 (4), or a controlled substance analog, as defined in s. 961.01 (4m), the compensation and death benefit provided in this chapter shall be reduced 15% but the total reduction may not exceed $15,000.
The term "compensation" is defined as "worker's compensation" under Wis. Stat. § 102.01(2)(am). Wisconsin Stat. § 102.01(intro.) provides in turn that "allowances, recoveries and liabilities under this chapter constitute 'Worker's Compensation'."
As ALJ Smiley and the employer both note, the commission previously held in the Merkes case that it would not award increased compensation on amounts settled by limited compromise. In Merkes, the commission stated:
... the administrative law judge erred by assessing the 15% penalty against the $25,000.00 received for the limited compromise. The commission long ago determined that the 15% penalty is not to be assessed against compromise amounts. Those amounts do not constitute compensation, and assessment of the 15% penalty against compromise amounts would necessitate assessment of the 15% deduction for decreased compensation when there was an employee violation of Wis. Stat. § 102.58 (employee's failure to use safety devices/procedures). James R. McCoy v. Fox Valley Construction Company and Employer's Insurance of Wausau, WC Claim No. 85-036974 (LIRC May 31, 1990). The statutes do not contemplate applying increased or decreased compensation assessments against compromise amounts independently negotiated between the parties.
The commission reached a similar result not only in the James R. McCoy case cited in the Merkes decision, but also in Donna K. Gretz v. Goetze Corporation of America, WC Claim No. 1990-037421 (LIRC, August 6, 1998).
The basis for the McCoy, Gretz, and Merkes decisions, then, is that amounts paid under limited compromises of worker's compensation cases are not "compensation" as that term is used in Wis. Stat. § 102.57. As noted above, the applicant and ALJ Smiley point to a subsequent decision by the commission in Chason v. National Realty Management, WC Claim No. 1986-057112 (LIRC, August 24, 2005) which they assert supports the contrary view.
In Chason, the commission faced the question of whether an amount paid under a limited compromise constituted "compensation" for the purposes of the 12-year statute of limitations under Wis. Stat. § 102.17(4) which begins to run "from the date of the injury or death or from the date that compensation, other than treatment or burial expenses, was last paid, or would have been last payable if no advancement had been made, whichever is latest." In Chason, the commission held that that an amount paid under a limited compromise agreement was "compensation," so that the statute of limitations had not run on the issues not settled by limited compromise.
Obviously, an argument may be made that it seems inconsistent to say that amounts paid under a limited compromise are compensation for the purposes of a statute of limitations under Wis. Stat. 102.17(4), but are not compensation for the purposes of increased compensation under Wis. Stat. 102.57. However, differences in statutory language and purpose require interpreting the term "compensation" more broadly with respect to preventing foreclosure of a claim under the statute of limitations, than with respect to awarding what is in effect a penalty(2) under the increased compensation statute.
Penal statutes are generally narrowly construed. Indeed, the supreme court has held that where a statute--like the worker's compensation statute--is "both penal and remedial, courts separate the penal provisions from the remedial, giving the provisions establishing penalties strict construction and the remainder of the act a liberal construction." Madison v. Highland, Hall & Co., 73 Wis. 2d 364, 373 (1976). See also, Bosco v. AT Polishing, Inc., WC Claim No. 1996-055448 (January 11, 2005).
Beyond that, the wording of the statutes themselves is materially different. Wisconsin Stat. § 102.57, the increased compensation statute now before the commission, states in part that "compensation and death benefits provided by this chapter shall be increased...." If "compensation" in Wis. Stat. § 102.57 is to be interpreted broadly to include every type of compensation under Wis. Stat. ch. 102, the statute would not have to be written to specifically include "and death benefits provided by this chapter" in addition to "compensation." In contrast, the statute of limitations statute, Wis. Stat. § 102.17(4), refers to "compensation, other than treatment or burial expenses." That statute seems to contemplate a broader reading of the term "compensation" except for the items it specifically excludes from that term.
The commission realizes it is interpreting the same term, "compensation," differently in different statutory sections included within the same statutory chapter. However, under the applicable rule of statutory construction, courts try to give the same word the same meaning when used in the same statute unless the context clearly requires otherwise. General Castings Corp. v. Winstead and LIRC, 156 Wis. 2d, 752, 759 (Ct. App. 1990). Here, the word "compensation" is used in two different statutes, one of which is penal in nature. Further, in ascribing meaning to the words of a statute, the words are to be construed in their context within the statutory section as a whole. General Castings Corp. at 156 Wis. 2d 758. Even when terms are defined by statute, the court may decline to apply the statutory definition if it would produce a result contrary to the manifest intent of the legislature. Industry to Industry v. Hillsman Modular Molding, 2002 WI 51, 252 Wis. 2d 544, 18. Here, the difference in the wording and purpose of the two statutes supports reading the term "compensation" narrowly in Wis. Stat. § 102.57 to exclude amounts paid on limited compromises, while reading the same term more broadly in Wis. Stat. § 102.17(4).
Finally, the commission has in the past said that the 15 percent reduction under Wis. Stat. § 102.58 does not apply to medical expenses. Mohr v. Claude W. Loppnow Builders, 1990 WI Wrk. Comp. LEXIS 183, WC claim no. 88-0067199 (LIRC, October 29, 1990). In other words, the commission has previously narrowly construed "compensation" in the analogous increased compensation statute (Wis. Stat. § 102.58) more narrowly than the term is defined in Wis. Stat. § 102.01.
The next issue is whether Merkes means there is no liability at all for increased compensation under Wis. Stat. § 102.57 on particular claims for compensation resolved by limited compromise, or whether Merkes simply means the amount awarded in compromise cannot be used to determine the amount of the increased compensation penalty. The applicant argues for the latter meaning.
On appeal, the employer's attorney does not argue that the commission should reverse ALJ Smiley's decision to hold that no increased compensation may be awarded on the compromised loss of earning capacity claim, but rather the commission should vacate--or set aside--her decision. The commission concludes that the parties may have agreed that there would be an increased compensation award on the loss of earning capacity claim resolved by the second limited compromise agreement. Certainly, that is one way to read part 7 of the limited compromise agreement, in which language specifically stating that the limited compromise barred liability for "safety violation penalties pursuant to sec. 102.57, Wis. Stats." was struck out.(3)
Because the parties may have agreed that that there would be an increased compensation award on the loss of earning capacity claim resolved by the second limited compromise agreement, the commission shall simply set aside ALJ Smiley's decision and remand for further appropriate action. At this point the commission holds only that if a claim for increased compensation on the loss of earning capacity claim resolved by the second limited compromise agreement is found to be viable, it may not be based on the dollar amount paid under the limited compromise as provided in Merkes.
NOW, THEREFORE, the Labor and Industry Review Commission makes this
The findings and order of the administrative law judge are set aside. This matter is remanded for further appropriate action.
Dated and mailed
May 31, 2011
riceke . wrr : 101:9 ND6
8.2; 8.16
BY THE COMMISSION:
/s/ Robert Glaser, Chairperson
/s/ Ann L. Crump, Commissioner
/s/ Laurie R. McCallum, Commissioner
cc:
Attorney John D. Neal
Attorney Stephen A. DiTullio
Attorney Daniel L. Zitzer
[ Search Decisions ] - [ WC Legal Resources ] - [ LIRC Home Page ]