STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

LAURIE A STARKS, Applicant

AMERITECH SERVICES INC, Employer

AMERITECH SERVICE INC, Insurer

WORKER'S COMPENSATION DECISION
Claim No. 1997-059957

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 makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

On July 29, 1999, the department sent the employer a WC80 form stating:

"Your report on the first payment of compensation indicates that the first payment was made more than 14 days after the injury. The Worker's Compensation law provides that, where there is an inexcusable delay, a ten (10) percent penalty is due.

Please respond, in writing, regarding the reason for the delay in payment. You response is due within 30 days and should include the WC claim number.

If you decide to pay the penalty, please make payment of $253.20 to the employee and provide us with proof of payment. In the event you disagree with this assessment, you must provide the written explanation requested above.

Failure to respond timely to this letter with an explanation for the delay or proof of payment will result in the issuance of an order of default, without hearing or further notice, requiring payment of the penalty for the delay and any other amounts due. A default order may also be issued without hearing or further notice, if the explanation provided is inadequate as a matter of law. An order issued in this matter, when final, may be reduced to judgment in court.

Your prompt attention to this matter is appreciated."

The employer responded on or about October 6, 1999 stating:

"Dear DWD: I was not the adjuster at the time. In reviewing our computer file notes I do not discern a good reason for the delay other than work load at the time.

The Ameritech Disability Service Center agrees to pay the 10% penalty. The amount quoted above is, I believe, incorrect. The first payment amount was made on 11/26/97 = $1446.85. (See attached payment screen print). A check for $144.69 will be mailed to Ms. Starks tomorrow, 10/7/99."

On November 9, 1999, the department acknowledged receipt of the employer's correspondence and the fact that it was going to pay $144.69 as a 10% penalty for compensation of $1,446.85 from October 31, 1997 to November 23, 1997. The department, specifically Abby Butler, went on to state:

"We have received your reply to our letter asking for the reason the first payment of compensation was delayed. Your letter states that you have paid the delay payment in the amount of $144.69. This represents a 10 percent penalty for compensation paid from October 31, 1997 to November 23, 1997 in the amount of $1,446.85.

The WKC-13 we received in July of 1999 shows a first compensation payment of $2,532.00 and a payment date of May 5, 1998. This amount appears to be the second payment of permanent disability listed on your payment record. We do not have a record of lost time from October 31 to November 23, 1997. Please file a revised WKC-13 showing all dates and total amount of compensation paid for Ms. Starks' injury of October 30, 1997."

The next correspondence in this case is from Ms. Butler to the employer dated March 15, 2000 which states "may we please have a reply to our November 9, 1999 letter requesting a revised WKC-13 showing all dates of lost time and total amount of compensation paid for Ms. Starks' injury of October 30, 1997." A copy of the department's original November 9, 1999 letter was included with that correspondence. No correspondence from the employer is contained in the file.

On June 13, 2000 ALJ O'Malley issued an order finding that the applicant sustained an injury on October 30, 1997 and the first workers compensation payment was not made until May 5, 1998. The ALJ found that the insurance carrier or self-insured employer failed to make timely payment and "after a request by the department to explain the delay or pay the penalty, the insurance carrier or self-insured employer failed to provide an explanation for the delay or pay the penalty." The ALJ therefore found that the employer inexcusably delayed in making payments. The primary compensation being $2,532.00 the 10% penalty entitled the applicant to $253.20 in increased compensation.

In the petition dated June 29, 2000 the employer states:

"Supplemental report of accident and industrial disease (WKC-13) was completed incorrectly. Ms. Starks, as any other Ameritech employee is eligible for a salary continuance disability program. Therefore, Ms. Starks had no interruption of her pay. Her weekly gross pay at the time of the incident was $633.00, which is greater than her temporary total disability rate of $422.00. This would pertain to both periods of time that Ms. Starks was absent following the injury.

Although, we previously paid the penalty, for purposes of this appeal, we contend that we are not liable for any late payment penalty, and that $144.69 should be returned to us."

Under Wis. Stat. § 102.22(1) if an employer's or insurance carrier's inexcusable delay results in late payment of compensation, the delayed benefits are increased by 10%. Generally, the department expects that in a conceded case requiring little investigation the applicant will receive the first payment of compensation no later than 14 days after disability commences. See Wis. Admin. Code § DWD 80.02(3)(a). The department will investigate delays in payment of compensation, and if no reasonable excuse is provided, the department will insist on payment of the 10% penalty. See John D. Neal & Joseph Danas, Jr., Worker's Compensation Handbook, § 7.24 (4th ed. 1997). "Inexcusable delay" means "without bona fide justification or motivation." Whether there has been inexcusable delay is determined by looking at the facts at the time of the alleged delay, and not by hindsight. Milwaukee County v. DILHR, 48 Wis. 2d 392 (1970). The commission requires that certain standards must be met before a default order is issued finding inexcusable delay based on failure to respond, or inadequate response, to department correspondence. The commission's requirements were set forth in Brown v. Select Staff, WC Claim No. 89-043390 (LIRC July 2, 1990). In Brown the commission stated:

"The commission concludes that, in cases in which an order awarding compensation is issued against a respondent on the basis of that party's failure to respond to correspondence from the Department, it will be necessary before such an order can be affirmed that materials in the file of the case on review before the Commission adequately demonstrate that the party against whom the order was issued:

"(1) Was provided written notice by the Department that it was required, unless certain action was earlier taken, to provide certain information or explanation to the Department within a certain stated period of time;

(2) Was warned that failure to do so could result in the issuance, without notice or hearing, of an order by an Administrative Law Judge which would, in the case of an order awarding compensation, be reduced to a court judgment upon becoming final; and

(3) Did not in fact respond within the required time period.

"The Commission further concludes that, in a case in which an order awarding or denying compensation is issued against a party based on a conclusion by the Department that an explanation provided by the party in response to a request by the Department is in some respect "inadequate", the materials in the file of the case before the Commission on review must, in order to support affirmance of the order, disclose that the party against whom the order is issued:

"(1) Was provided written notice by the Department that it was required, unless certain action was earlier taken, to provide certain information or explanation to the Department within a certain stated period of time;

(2) Was warned that upon receipt of such information or explanation an order might be issued by an Administrative Law Judge without further notice or hearing, determining whether the information or explanation provided by the party was adequate as a matter of law, and potentially ordering payment of compensation which order could, upon being final, become reduced to a judgment in court; and

(3) Provided information or explanation which, even if all factual representations made by the party were assumed to be true, was no adequate as a matter of law to justify its actions or failures to act."

"As a general matter, it will not be possible, consistent with requirements of minimal due process, to make a finding that a party has been guilty of an inexcusable delay in payment of benefits (or is liable to pay some other type of compensation or penalty) based on a conclusion that, although the representations as to the party's conduct might be adequate if true, the explanation was not in fact true. Generally, factual issues are not capable of resolution without hearing, consistent with due process."

The employer failed to respond to the department's request for information within the thirty-day deadline set forth in the WC80. However, the employer did respond after that deadline and before the default order was issued. The department's reply clearly indicated that it found the employer's response inadequate and requested additional information. The employer failed to respond. The requirements set forth in Brown are satisfied. The employer was warned that it must provide an adequate explanation and if it did not a default order might be issued without further notice. The question for the commission is whether the employer's explanation for the delay, assuming all factual representations were true, was inadequate as a matter of law. Basically, the employer's explanation in the October 6, 1999 correspondence was that it did not have a good explanation for why payment was not made. Clearly this was inadequate. Therefore, the department had a right to request more information. The department requested that information by letters dated November 9, 1999, and March 15, 2000. The employer failed to provide additional information.

The issue is not whether the employer has set forth a reasonable excuse in its petition for failing to pay compensation timely. The employer's opportunity to deny or explain the delay in payment of compensation was by responding to the department's requests for information.

ORDER

The findings and order of the administrative law judge are modified to conform to the foregoing findings and, as modified, are affirmed.

Dated and mailed July 25, 2000
starkla.wrr : 132 : 6   ND § 7.24 § 8.9

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

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