ANGELA M BRINKLEY, Applicant

STAT TEMPORARY SERVICES, Employer

H  I  H  INSURANCE, Insurer

The insurer, Wisconsin Insurance Security Fund, submitted a petition for commission review alleging error in the administrative law judge's findings and interlocutory order dated August 20, 2001. Both parties submitted briefs. At issue is whether the administrative law judge appropriately entered a default order in this case.

The commission has carefully reviewed the entire record in this matter and hereby sets aside the findings and interlocutory order of the administrative law judge and substitutes the following therefor:

Wisconsin Insurance Security Fund and the employer failed to appear at the hearing. At the hearing, the applicant's attorney indicated that he had been in contact with the Wisconsin Insurance Security Fund in June 2001, and that the fund had apparently directed the applicant to submit documents regarding the claim to a third party administrator, GAB. However, the Wisconsin Insurance Security Fund never informed the department that any documents or hearing notice was to be sent to a third party administrator, and the hearing notice was sent directly to the Wisconsin Insurance Security Fund. The administrative law judge noted that the insurer was given proper notice of the hearing, and it was the insurer's responsibility to notify its administrator or attorney of the scheduled hearing. The administrative law judge found that the Wisconsin Insurance Security Fund was in default without reasonable cause, and pursuant to Wis. Stat. § 102.18(1)(a) made findings based on the default of the insurer.

Wisconsin Insurance Security Fund contends in its petition for commission review that it never received a copy of the notice of hearing for August 2, 2001. It appears that the notice of hearing was sent to the correct address for both the employer and Wisconsin Insurance Security Fund. The issue in this case is whether the administrative law judge's interlocutory default order should be set aside. Wis. Stat. § 102.18(1)(a) authorizes the department to issue decisions in worker's compensation cases by default. A non-appearing party may be entitled to relief in the form of further hearing if his or her failure to appear was a result of excusable neglect. Auclair v. LIRC & Friendly Village Inc., Ct. of App. Case No. 83-836, Dist. 3 Unpublished Decision (May 22, 1984). Excusable neglect is that neglect that might have been the act of a reasonably prudent person under similar circumstances. Auclair, slip opinion at 3, and Hadtcke v. Sentry Insurance Co., 109 Wis. 2d 451, 468 (1982). Excusable neglect is not the same as neglect, carelessness, or inattentiveness.

For the purposes of determining whether to remand for hearing on the failure to appear issue the commission follows a procedure similar to that followed when acting on late petitions. First, the commission assumes that statements offered by the non-appearing party to explain its non-appearance are true, unless something in the record makes the statements appear inherently incredible. The next step is to consider whether, if believed, those statements establish that the failure to appear was from excusable neglect. If the statements, even if believed, do not meet that standard, remand is unnecessary. The commission simply denies further hearing. If the alleged facts do show excusable neglect, the commission may either remand for a hearing to attest whether the facts actually are as alleged or simply remand for testimony on the merits.

In this case, the applicant's attorney argues that three separate hearing notices were sent by the department and the applicant received all three, and the only individual who claims that he did not receive the notice of the hearing is Mr. McCartney. Mr. McCartney submitted an affidavit with the insurer's petition for commission review indicating that he was the claims manager for Wisconsin Insurance Security Fund, and was the person responsible for handling the funds filed in this case. Mr. McCartney indicated in his affidavit that after the initial hearing on May 23, 2001, was postponed, he had no recollection and no record of ever receiving a second notice of hearing. Mr. McCartney indicated that subsequent to the postponement of the hearing he transferred the case to GAB Robbins, a third party administrator, to handle and defend. However, there is nothing in the file to indicate that the department was ever notified of the transfer of the case to the third party administrator, and no notice of hearing was sent to that third party administrator.

Mr. McCartney indicated in his affidavit that he was surprised to learn that the second hearing proceeded on August 2, 2001, and that the department had issued a default order. Wisconsin Insurance Security Fund points to the commission's decision in Gestrich v. Dr. Detail, Commission Decision dated January 24, 2000. In the Gestrich case the department sent the parties a notice of pre-hearing which included a warning that failure to appear could result in a decision by default. The commission noted in the Gestrich decision that the notice was properly mailed to the employer and its insurer, and was not returned by the postal service, and therefore there was a presumption of due receipt of notice. In the Gestrich case the employer and insurer did not request a postponement of the pre-hearing, and offered no explanation prior to the issuance of a default order for their failure to appear at the pre-hearing, and contended in their petition that they had never received a copy of the pre-hearing notice. In the Gestrich case the commission found that the insurer's allegation that it did not receive a notice of pre-hearing demonstrated probable good cause for its failure to appear at the pre-hearing conference, and remanded the case for hearing to establish whether the facts supported setting aside the administrative law judge's default order, and provisionally on the merits of the case.

The commission agrees with Wisconsin Insurance Security Fund that the current case is similar to the Gestrich case in that the insurer is alleging that it has not received a notice of hearing mailed on June 27, 2001. The commission understands the applicant's frustration in failing to have this matter come to hearing in a timely manner. The applicant noted that subsequent to her application for hearing, Wisconsin Security Insurance Fund did nothing concerning the claim for three and one-half months from May 15, 2001 through August 30, 2001, when it finally retained counsel, even though WC-16-Bs and other materials were sent to its designated representative, and even though they knew this matter had been pending for over a year. However, there is nothing in the file in this case to reveal anything making Mr. McCartney's statement inherently incredible. The commission finds that the insurer's allegation that it did not receive a notice of a pre-hearing demonstrates a probability that its failure to appear at the hearing was due to excusable neglect.

However, the commission also agrees with the applicant that the affidavit of the claims administrator, Mr. McCartney, is bare bones at best, and that a hearing needs to be conducted to obtain details to supplement the matters contained in the affidavit to establish that in fact the insurer can establish excusable neglect for failing to appear at the hearing. As the commission noted in the Gestrich decision, the commission cannot exclude the possibility that the insurer and employer may have been aware at some point, prior to the hearing, that it had received notice sent to the correct address. In order to conclusively prove that the Wisconsin Insurance Security Fund has good cause for its failure to appear at the hearing before allowing relief from the default order, actual testimony from the insurer is necessary. Therefore, the commission remands the case for a hearing to establish whether the facts support setting aside the administrative law judge's interlocutory order in this case and provisionally on the merits of the case. If the administrative law judge finds probable good cause, she may proceed to the merits of the case, and if she does not, she may reinstate or reissue her default order. Now therefor this:

The commission hereby sets aside the administrative law judge's default order in this case, and remands it to the department for hearing to determine whether the employer and its insurer had actual good cause for failure to appear at the hearing in accordance with the commission's decision set forth above, and provisionally on the merits of the case.

Dated and mailed December 18, 2001
brinkan . wrr : 175 : 8   ND § 8.18

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

cc: 
Attorney James A. Meier
Attorney Joseph Danas, Jr.

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