MICHAEL SCHUH, Applicant

CONAGRA GROCERY PRODUCTS CO, Employer

CONAGRA GROCERY PRODUCTS CO, Insurer
c/o GALLAGHER BASSETT SERVICES INC

By order dated January 7, 2000, administrative law judge (ALJ) Joseph P. Schaeve of the Worker's Compensation Division of the Department of Workforce Development found that the applicant suffered a compensable shoulder injury as a result of occupational exposure, with an October 23, 1998 date of injury. ALJ Schaeve's order was not appealed.

At issue now is the applicant's additional claim that the self-insured employer unreasonably refused to rehire him before he had surgery for the condition. The applicant also claims that the self-insured employer delayed paying his underlying disability claim in bad faith, based on a substantial period of denying his claim on medical causation grounds without a supporting medical opinion.

ALJ Andrew J. Roberts heard the refusal to rehire and inexcusable delay/bad faith issues on February 7, 2001. By order dated March 19, 2001, ALJ Roberts denied the refusal to rehire claim and the bad faith claim, but assessed ten percent for inexcusable delay. Both parties filed timely petitions for review.

The commission has considered the petitions and the positions of the parties, consulted with presiding ALJ Roberts, and reviewed the evidence submitted at the hearing. Based on its review, the commission makes the following:

1. Facts.

The applicant was born in 1956. He began working for the self-insured employer in 1989. He worked as a loader during the eight years ending in October 1998. The job description for that position states: "100 percent standing when working on tramway, 85% sitting when driving forklift. Pushing and lifting 66 lb. cases." In his January 7, 2000 order on primary compensation issues in this case, ALJ Schaeve described the work as "highly strenuous and repetitive motion type work."

On October 26, 1998, the applicant had his right shoulder evaluated by Amy Thorpe-Swenson, M.D. Dr. Thorpe-Swenson noted the applicant's complaints of chronic shoulder pain for five or six months with periodic exacerbations. The applicant told the doctor his most recent exacerbation had been the prior weekend, though he denied any strain or trauma. The doctor did, however, note that the applicant worked on a line where he did repetitive lifting of cases and boxes.

The doctor's diagnosis was right shoulder pain, probable rotator cuff tendinitis. She suspected it was an overuse-type syndrome related to work. She ordered physical therapy, and set work restrictions against lifting more than 25 pounds, particularly with outstretched arms above chest level. See December 1999 Exhibit 1.

When the applicant brought in these restrictions to the self-insured employer, he was asked if his injury was work-related. He said he did not know. The self- insured employer's practice was not to accommodate restrictions from non-work injuries; consequently he went off work on non-industrial disability.

The applicant followed with Dr. Thorpe-Swenson on November 10, 1998. Although he was better since the last visit, she wanted him to see an orthopedist. Consequently, he began treating with James O'Connor, M.D., in November 1998. On December 15, 1998, the doctor noted continued discomfort and tenderness over the AC joint with good strength and range of motion. He thought, given the applicant's history, that his problem was work related. Noting that it was "reasonable to pursue this," Dr. O'Connor wanted the applicant to be seen by an occupational medicine specialist. Exhibit A from December 1999 hearing.

The applicant then saw Tuenis D. Zondag, M.D., on January 21, 1999. Dr. Zondag diagnosed a right shoulder impingement syndrome with acromioclavicular process. He opined the condition was caused by work exposure. Thereafter, the applicant reported a work injury to the self-insured employer.

After Dr. Zondag opined the applicant had a work injury, the self-insured employer provided him with restricted duty work, and the applicant returned to work in late- January 1999. According to human resources manager Boraas, the self-insured employer provided the work because the self-insured employer thought he had a work injury.

On or about April 10, 1999, however, the self-insured employer laid him off again, and told him he could not return until he had no restrictions. Transcript, page 13. This was because the employer's worker's compensation administrator (WC administrator) had concluded the applicant's injury was, in fact, not work-related. Consequently, the self-insured employer considered him no longer eligible for "customized" or limited duty work.

At this point, the applicant had not yet seen an independent medical examiner. An adjuster for the WC administrator, Glenda Kojo, reviewed the matter, however, and concluded the applicant's condition did not arise from work because: (a) the applicant told Dr. Thorpe about an exacerbation over the weekend when the applicant did not work, and (b) the applicant delayed in claiming a work injury until January 1999. See Exhibits 3 and 4.

The applicant returned to Dr. Zondag on April 16, 1999. The doctor again assessed an impingement syndrome, occupational in nature. Dr. Zondag noted that the applicant could do the "major" portion of his job, forklifting and paper work, without restriction. Exhibit A from December 1999 hearing. Accordingly, he wrote a Follow-up Report/Work Release dated April 15, 1999 setting a plateau of healing with permanent partial disability 15 percent at the shoulder. Regarding restrictions, the doctor set a 50-pound lifting limit, prohibited above the shoulder lifting with the right arm, and wrote: "R[ight] arm-do competitive work close to body and not reach to shoulder level." He included a comment: "Can do load operator-no restrictions." December 1999 hearing, Exhibit 2. On the same day he wrote a release on a prescription sheet stating:

"Michael is released to full duty loader no restrictions as of 4/19/99. No trampway [sic] work."

February 2001 hearing, Exhibit 2.

The self-insured employer continued to keep the applicant off work on the WC administrator's theory that his condition was not work-related, so it need not provide restricted work. However, it was not until August 4, 1999, that the WC administrator received a report from an independent medical examiner (IME). Even then, the IME report did not say the applicant's injury was not work related. Rather, the IME found based on the applicant's history-six months of chronic right shoulder pain with an exacerbation over the weekend-that the applicant had sustained an injury from overuse syndrome. December 1999 hearing, Exhibit 4, report of Barrons, pages 1, 5 and 6. However, the IME opined the applicant had reached a healing plateau without disability as of December 1998.

Then, on September 3, 1999, after being provided with additional information supporting the adjuster Kojo's theory about the exacerbation over the weekend, the IME conditionally retracted his prior opinion and opined the applicant's complaints were not the result of any work injury or exposure. April 1999 hearing, Exhibit 5

Shortly thereafter, the applicant underwent surgery on September 14, 1999. Thereafter, he was released to work entirely without restriction in December 1999. He has since returned to work. As noted above, ALJ Schaeve's decision finding a compensable injury has not been appealed.

2. Refusal to rehire under Wis. Stat. § 102.35

The first issue is the self-insured employer's refusal to provide the applicant work within his restriction from April 1999 to the September 1999 surgery (when the applicant again became temporarily disabled.) Prior to this time the self-insured employer had been providing work within the applicant's restrictions on Dr. Zondag's opinion the applicant's condition was work-related, but then stopped in reliance on the WC administrator's assertion that the condition was not work- related.

Wisconsin Statutes § 102.35(3), provides as follows:

"102.35(3) Any employer who without reasonable cause refuses to rehire an employee who is injured in the course of employment, where suitable employment is available within the employee's physical and mental limitations, upon order of the department and in addition to other benefits, has exclusive liability to pay to the employee the wages lost during the period of such refusal, not exceeding one year's wages...."

The statute applies to unreasonable discharges after a return to work following a work injury, as well as simple failures to rehire; an employer cannot evade liability by showing a short-term pro forma rehire. A worker has the burden of proving he or she was an employee with a compensable injury who was denied rehire or discharged. The burden then is on the employer to show that the worker was discharged with good cause. Dielectric Corp. v. LIRC, 111 Wis. 2d 270, 278 (Ct. App. 1982). The "very correct standard" set out by the court in Dielectric was adopted by the supreme court in West Bend v. LIRC, 149 Wis. 2d 110, 121 (1989). In that case, the supreme court specifically stated that "after an employee shows that she has been injured in the course of employment and subsequently is denied rehire, it becomes the burden of the employer to show reasonable cause for not rehiring the employee." West Bend, at 149 Wis. 2d 123.

An employer's reasonable cause for the discharge or failure to rehire may be that the work injury prevents the worker from doing available work. In that event, the employer must provide evidence showing to a reasonable degree of medical certainty that the worker cannot perform his or her old job or other available work, if it refuses to rehire a worker for that reason. West Bend, supra, at 149 Wis. 2d 126.

Finally, the court in Link Industries, Inc. v. LIRC, 141 Wis. 2d 551, 555-556, 557 (Ct. App. 1987) stated:

"...[o]ur courts have stated that the plain words of sec. 102.35(3) reveal that the fundamental purpose of that section is to 'prevent discrimination against employees who have previously sustained work injuries and to see to it, if there are positions available and the injured employee can do the work, that the injured person goes to work with his former employer.' [Citation omitted.]"

Noting the liberal interpretation rule, (1) the court continued:

"We conclude that 'rehire' under sec. 102.35(3) means that if an employee is absent from work because of an injury suffered in the course of employment, the employee must be allowed an opportunity to return to work if there are positions available, and the employee can do the work."

Id., at 141 Wis. 2d 557.

In this case, the self-insured employer contends it had no work available for the applicant within the permanent restrictions set by Dr. Zondag in April 1999, and that it was not obligated to continue to provide light duty work thereafter.

The applicant contends that Dr. Zondag's April 15 1999, return-to-work release was essentially without restrictions because he was never required to perform tramway work. The tramway work includes lifting boxes. The applicant claims that, while the self-insured employer required tramway work, it was assigned on a seniority basis. He contended he no longer was required to perform tramway work because less senior employees were first called upon, and that he did tramway work only voluntarily to help out. The self-insured employer responds that tramway work was a required, regular part of his job.

The commission, like the presiding ALJ, rejects the applicant's contention. The contemporaneous job description mentioned tramway work. The application for hearing alleges a "repetitive motion injury from piling boxes off ...conveyor at work." In addition, the applicant told Dr. Thorpe-Swenson in October 1998 that he worked on a line where he did repetitive lifting of cases and boxes; at least, her October 26, 1998 treatment note so states. Further, the applicant's testimony at the December 1999 hearing led ALJ Schaeve to conclude that the applicant did highly strenuous repetitive motion type work of such magnitude, duration and frequency as to play a causal role in the applicant's right shoulder injury. ALJ Schaeve's detailed findings concerning the applicant's testimony about his job duties do not suggest that the tramway work was voluntary or optional. See ALJ Schaeve's decision dated January 7, 2000, at pages 3-4. Indeed, on cross- examination by the applicant's attorney, the applicant's supervisor testified before ALJ Schaeve that "each loader was expected to lift 300 cases an hour, which expectation was met" by the applicant.

The activities described in the hearing application, by Dr. Thorpe-Swenson, and by ALJ Schaeve's order are focused on the applicant's tramway work. Beyond that the commission cannot conclude that the applicant endured the level of physical stress, as described in Dr. Thorpe-Swenson's note and particularly ALJ Schaeve's order, to the point of injury as a result of occasional and voluntary job duties. In short, the commission cannot credit the testimony of the applicant and Ms. Wolbert that the loader duties would not have required the applicant to do tramway work. Rather, it appears from the record that tramway work was a significant part of the applicant's job as a loader and that, under Dr. Zondag's April 1999 work release, he was unable to do that job.

The commission therefore finds that the self-insured employer did not unreasonably refuse to rehire the applicant under Wis. Stat. 102.35(3) when it did not return him to work under Dr. Zondag's April 1999 work restrictions.

3. Delay penalties under Wis. Stats. § § 102.18(1)(bp) and 102.22(1).

Finally, the applicant seeks a penalty for bad faith and inexcusable delay to be assessed against the self-insured employer based on the denial of compensation beginning in April 1999. Wisconsin Statute § 102.22(1) provides for a ten percent penalty for inexcusable delay in making payments. Wis. Stat. § 102.18(1)(bp) provides for a penalty of up to 200 percent for a malicious or bad faith suspension, termination, or failure to make payments. Wis. Admin. Code § DWD 80.70(2) defines bad faith as a denial without credible evidence that the claim is "fairly debatable."

The court of appeals has previously discussed the interplay between the "inexcusable delay" penalty under Wis. Stat. § 102.22(1), and the "bad faith" penalty under Wis. Stat. § 102.18(1)(bp):

"Chapter 102 contemplates three types of conduct stemming from a delay in payments: (1) excusable delay; (2) inexcusable delay, though not in bad faith; and (3) bad faith delay.

"Section 102.22(1), Stats., provides that '[w]here the employer or his or her insurer is guilty of inexcusable delay in making payments, the payments as to which the delay is found shall be increased by 10 percent.' (Emphasis added.) The fact that only `inexcusable' delay is subject to the 10 percent penalty indicates that the legislature contemplated that some delay could be excusable. See Coleman v. American Universal Ins. Co., 86 Wis. 2d 615, 625-26, 273 N.W.2d 220, 224 (1979).

"The potential 200 percent penalty of sec. 102.18(1)(bp), Stats. is reserved only for cases where the employer or insurer acted in `bad faith.' Thus, the legislature contemplated that there could be a delay in payment that, while inexcusable, did not rise to the level of `bad faith.' We conclude that a finding of the `knowledge' element of the Anderson test is a prerequisite to imposition of `bad faith' penalties under sec. 102.18(1)(bp), Stats.
. . .
"LIRC should determine first if there was a reasonable basis for delay. See Anderson, 85 Wis. 2d at 691, 271 N.W.2d at 376. If LIRC concludes there was not a reasonable basis for the delay, it should next determine whether the employer had knowledge of the lack of a reasonable basis for delaying payments or if there was a reckless disregard of the lack of a reasonable basis. See Id. If LIRC determines from the record, after finding no reasonable basis for the delay, that the `knowledge' element is satisfied, it may then conclude that the employer's delay of payments was in bad faith."

North American Mechanical, Inc., v. LIRC, 157 Wis. 2d 801, 808-10 (Ct. App. 1990).

In addition, the court of appeals provided this summary of the law:

"In Kimberly Clark [Corp. v. LIRC, 138 Wis. 2d 58, 65 (Ct. App. 1987)], a worker's compensation case, the court adopted the criteria for a bad faith claim set forth in Anderson v. Continental Ins. Co., 85 Wis. 2d 675, 691, 271 N.W.2d 368, 376 (1978). .... In order to show a claim for bad faith, an employee must show the absence of a reasonable basis for denying benefits and the employer's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. ...

"The court in Kimberly-Clark went on to apply the Anderson criteria to sec 102.18(1)(bp), Stats.:

'[T]he issue of bad faith is reached only after a final award has been made to the claimant. A hearing examiner then examines the record to determine if there was any credible evidence which would demonstrate that the claim was fairly debatable. If the examiner finds that there is no credible evidence which the employer or insurer could rely upon to conclude that the claim was fairly debatable, the examiner then determines if the employer's or insurer's actions in denying payment were reasonable. This test is an objective one from the standpoint of the employer or insurer: Would a reasonable employer or insurer under like or similar circumstances have denied or delayed payment on the claim.

'When deciding whether the employer's actions were reasonable, it is necessary to determine if the claim was properly investigated and if the results of the investigation were subject to a reasonable evaluation and review. Kimberly-Clark, 138 Wis. 2d at 65.[Citations omitted.]'"

AMC v. LIRC and Michael Chamblee, case no. 94-2274 (Wis. Ct. App. July 19, 1995).

In this case, the self-insured employer's reasons for denying the applicant's underlying disability claim in April 1999 are set out at Exhibits 3 and 4, and the testimony of the adjuster, Glenda Kojo, beginning at page 89 of the transcript. Ms. Kojo explained that she concluded that there was nothing to support a work injury, based on a reference in Dr. Thorpe-Swenson's note of October 26, 1999. The note indicates an exacerbation over the prior weekend, when the applicant did not work. Concluding that this indicated some off-duty event had caused the problem, she denied the claim. Transcript, page 93.

However, an "exacerbation" is an increase in the severity of a disease or its symptoms. Dorland's Illustrated Medical Dictionary (29th ed., 2000). The term is not synonymous with "a traumatic event." Indeed, Dr. Thorpe-Swenson's note specifically stated the applicant had no trauma or strain to account for the increased symptoms. Dr. Thorpe-Swenson was suspicious of a work injury on this history, and Drs. Zondag and O'Connor both found a work-related injury on the applicant's history.

From a lay view, insurance adjuster Kojo may have a plausible theory that the exacerbation must have been preceded by a recent event, and that that recent event must have happened off duty. However, the first prong of that theory -- that a recent traumatic event must have preceded the exacerbation in symptoms -- may only be shown by competent medical evidence. In this case, the only expert medical opinion in the self-insured employer's possession from April to August 1999 (the opinions of treating doctors Thorpe-Swenson, O'Connor and Zondag) supported paying the claim. It was not until August 1999 that the self-insured employer obtained a report from a medical expert that justified denying compensation. Consequently, the commission must conclude that the self-insured employer not only lacked a reasonable basis, but either knew or recklessly disregarded the lack of a reasonable basis, when it stopped paying the applicant's disability compensation from April to August 1999 without supporting medical evidence.

The final issue is the amount of the penalty to be assessed under Wis. Stat. § 102.18(1)(bp). The record in this case, particularly the approximately four month period in which the self-insured employer denied compensation without an adequate basis for doing so, warrants the imposition of a 25 percent penalty against the self-insured employer.

According to Wis. Stats. § § 102.18(1)(bp) and 102.22(1), the self- insured employer must pay a penalty for inexcusable delay and bad faith delay in payment totaling 35 percent on the primary compensation previously awarded by ALJ Schaeve. Since the primary compensation previously awarded totaled $8,882.97, the combined amount of the penalties equals $3,109.04.

The applicant approved an attorney fee set under Wis. Stat. § 102.26(1) at 20 percent of the amounts awarded under this order. The fee is thus $621.81, leaving the amount of $2,487.23 due the applicant.

ALJ Schaeve's January 7, 2000 order on primary compensation found that the medical evidence indicated the applicant might need additional treatment, and reserved jurisdiction on any and all future claims and issues. While the issues resolved by this order may not be relitigated, the general terms of ALJ Schaeve's interlocutory order remain in effect.

NOW, THEREFORE, the Labor and Industry Review Commission makes this

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

Within 30 days from the date of this order, the self-insured employer shall pay all of the following:

1. To the applicant, Michael Schuh, the sum of Two thousand four hundred eighty seven dollars and twenty-three cents ($2,487.23).

2. To the applicant's attorney, Steve M. Jackson, the sum of Six hundred twenty one dollars and eighty-one cents ($621.81) in attorney fees.

Jurisdiction is reserved for such further findings, orders and award as may be warranted.

Dated and mailed September 28, 2001
schuhmi . wrr : 101 : 9  ND � 7.20 � 7.32  � 7.33

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

The commission conferred with presiding ALJ Roberts concerning witness credibility, particularly with respect to the testimony of Ms. Kojo about the basis for the denial of the claim, and the testimonies of the applicant and Ms. Wolbert about the applicant's duties. The ALJ had the impression that all three witnesses were evasive and not straightforward. The ALJ explained quite persuasively that he did not believe the applicant was in fact doing the tramway work on a voluntary, "helping out" basis in the last couple of years preceding the work injury, as that type of duty seemed inconsistent with the claims made in support of the work injury itself. However, the ALJ also acknowledged that he could have found bad faith delay on the record before him.

For the reasons set out in the body of this decision, the commission adopts the credibility impressions of the ALJ. While the commission found that the record in fact warrants the imposition of a bad faith delay penalty under Wis. Stat. § 102.18(1)(bp), that was a matter of differing judgment rather than a different impression of witness credibility.

cc: 
Attorney Steve M. Jackson
Attorney Jeffrey J. Strande

Appealed to Circuit Court.  Affirmed April 3, 2002.

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(1)( Back ) See Great Northern Corp. v. LIRC, 189 Wis. 2d 313, 317 (Ct. App. 1994), citing West Allis School Dist. v. DILHR, 116 Wis. 2d 410, 422 (1984). 

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