ERIN MCCOMISH, Applicant

SORRENTO INC, Employer

AMERICAN PROTECTION INSURANCE COMPANY, Insurer

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 agrees with the decision of the ALJ, and it adopts the findings and order in that decision as its own.

The findings and order of the administrative law judge are affirmed.

Dated and mailed July 2, 2002
mccomie . wsd : 101 : 3  ND § 8.8

David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

/s/ Laurie R. McCallum, Commissioner

This case arises from a default order issued by ALJ Janell M. Knutson on the failure of the employers and insurer (collectively, the respondent) to answer the hearing application. ALJ Knutson's order accurately sets out the procedural posture of this case. To summarize:

The applicant filed an application for hearing on September 11, 2001, seeking compensation for permanent partial disability, loss of earning capacity, and medical expense. The department, in turn, served the application by mail on the respondent on September 20, 2001. However, the respondent failed to file an answer within 20 days, as required by Wis. Adm. Code § 80.05(2). (1)   Nor were the documents served by mail returned to the department by the U.S. Postal Service.

On November 29, 2001, a Notice of Hearing was sent to the parties, including both the employer and the insurer. The hearing was set for March 20, 2002.

On December 4, 2001, the applicant's attorney, Helen Schott, wrote to the department seeking a default order. On December 7, 2001, chief ALJ James O'Malley responded by letter to the parties stating that he would not issue a default order at that time, but that the respondent should answer promptly, and that "[i]f an answer were not received within 20 days of the date of this letter an order may be issued by default without hearing in accordance with the application as requested by Attorney Schott."

The respondent did not file an answer in response to ALJ O'Malley's letter.  Ms. Schott renewed her request for a default order by letter dated January 2, 2002. On January 9, 2002, the department cancelled the hearing scheduled for March 20, 2002. On January 18, 2002, the respondent's attorney, Andrew J. Quartaro, wrote a letter, which the department received on January 22, 2002, entering an appearance and informing the department an answer was forthcoming.

On January 24, 2002, ALJ Knutson issued her default order in favor of the applicant under Wis. Stat. § 102.18(1)(a). (2) By letter dated January 25, 2002, Mr. Quartaro filed the answer from the respondent of the same date.

On appeal, the respondent asks the commission to set aside the ALJ's default order, citing Verhaagh v. LIRC, 204 Wis. 2d 154 (Ct. App. 1996). In that case, Mr. Verhaagh, an injured worker, filed an application on May 26, 1993. On July 12, 1993, about four weeks after the 20-day filing deadline, the employer filed its answer. Thereafter, the matter was scheduled for a hearing, and the injured worker sought a default order. Both the ALJ and this commission denied the request for a default order. Mr. Verhaagh appealed to court, claiming that this commission erred by not finding "surprise, inadvertence, or excusable neglect" -- the standard used in determining whether to extend time deadlines in a civil lawsuit -- as a basis for its denial of the default order. The court rejected this argument, stating:

"Section 102.18(1)(a), STATS., provides: 'All parties shall be afforded opportunity for a full, fair, public hearing after reasonable notice, but disposition of application may be made by a compromise, stipulation, agreement, or default without hearing.'

"The use of the term 'may' in the foregoing statute clearly submits the issue of default orders to the LIRC's discretion.

"Verhaagh contends that the surprise, mistake or excusable neglect standard enunciated in Hedtcke v. Sentry Ins. Co., 109 Wis. 2d 461, 326 N.W.2d 727 (1982), is the standard that must be applied by LIRC. Hedtcke, however, in enunciating the standard to be applied to courts was interpreting § 801.01(2), STATS., which is contained within the rules of civil procedure. In general, with exceptions not applicable here, the rules of civil procedure apply to the courts of this state but are not applicable to administrative agency proceedings. State ex rel. Thompson v. Nash,
27 Wis. 2d 183, 189-90, 133 N.W.2d 769, 773 (1965); see Layton School of Art & Design v. WERC, 82 Wis. 2d 324, 262 N.W.2d 218 (1978).

"Because of the limited application of the rules of civil procedure to the administrative agencies of this state, we reject Verhaagh's contention that the appropriate legal standard to be applied by LIRC in determining whether to grant his motion for a default order is based upon a finding of surprise, mistake, or excusable neglect. Rather, the agency is entitled to exercise its discretion based upon its interpretation of its own rules of procedure, the period of time elapsing before the answer was filed, the extent to which the applicant has been prejudiced by the employer's tardiness and the reasons, if any, advanced for the tardiness. [Underlining supplied.]"

Verhaagh, at 204 Wis. 2d 160-61.

In this case, the application was served on the respondent on September 20, 2001, so that the last day for a timely answer was about October 10, 2001. The respondent did not file an answer until January 25, 2002, over fifteen weeks later. This is considerably longer than the four-week delay in Verhaagh. Also, in Verhaagh, the respondent had not received and failed to respond to a "second chance" letter, as was given in ALJ O'Malley's December 7, 2001, letter. Nor does Mr. Quartaro's notice of appearance received on January 22, 2002, prevent the department from issuing a default order under the facts of this case.

As the reason for the delay, the respondent asserts that the applicant had the report of its medical expert, Dr. Kagen, which, if accepted, would have resulted in no loss of earning capacity award. The respondent goes on to assert that

"Because the primary issue in dispute was loss of earning capacity and the applicant had a copy of Dr. Kagen's report (and it in fact had been used by her vocational expert), the reason for the delay lies, in part, on the fact the respondents thought it apparent that the applicant was aware of why her loss of earning capacity claim had been denied."

This explanation seems to acknowledge that the respondent had fully investigated the claim, and could have answered had it chosen to do so. Moreover, even if the applicant could have made a good guess about what defenses the respondent might raise at the hearing, that does not excuse the respondent's failure to file an answer as required by administrative rule, particularly after being reminded of that duty by ALJ O'Malley's December 7, 2001, letter.

The respondent also asserts that because the applicant did not request the default until after the notice of hearing was sent, and because the applicant continued to file documents as if the hearing were going forward, the respondent was justified in assuming the applicant and the department had somehow waived the requirement to answer. However, there is no basis in the law for assuming such a waiver. The applicant acted reasonably in continuing to file documents as if the hearing were going forward until she was assured of a default order, because if a default order was not issued, she might miss the time deadlines set out in Wis. Stat. § 102.17. Further, it is hard to see how the hearing notice could be viewed as the department's waiving the requirement the respondent answer, inasmuch as ALJ O'Malley thereafter sent a letter demanding an answer and warning that a default order could be issued.

The respondent also contends that the applicant was not prejudiced by its failure to answer. The respondent, of course, asserts that the applicant could have determined what defenses it would raise based on IME Kagen's report. However, the purpose of an answer is to make it clear what the issues will be at hearing, and the commission concludes that there would have been some prejudice to the applicant's ability to prepare her case had the hearing gone forward without a timely answer from respondent.

The final factor in Verhaagh is the commission's interpretation of the rules regarding the filing of answers. The commission has affirmed default orders in cases with similar facts, citing Wis. Stat. § 102.18(1)(a), Wis. Admin. Code § DWD 80.05, and Verhaagh. See Ludka v. Weather Shield Manufacturing, WC Claim no. 1998054671 (LIRC, September 28, 2001), and Lazcano v. Navistar Intl Trans Corp, WC claim no. 1998-020927 (LIRC, November 19, 2001).

In sum, given the lengthy delay in filing an answer, continuing after the issuance of a warning letter, and the lack of a convincing explanation as to why the respondent failed to comply with the rule requiring an answer, the commission affirms ALJ Knutson's decision to issue a default order in this case.

cc: 
Attorney Helen L. Schott
Attorney Andrew J. Quartaro

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(1)( Back ) DWD 80.05 Procedure on claim. (1) In cases of disputes in matters coming under the jurisdiction of ch. 102, s. 101.47, 56.21 or 40.65, Stats., any party to the dispute may apply to the department for relief and the department shall make such order or award as shall be lawful and just under the circumstances. (2) In all such cases under sub. (1), the party complaining shall file his or her application with the department, along with sufficient copies of the application for service on the adverse parties. The department shall thereupon serve the adverse parties with a copy of the application and the adverse parties shall file an answer to the application with the department within 20 days after the service and likewise serve a copy of the answer on the party making application. The department shall thereupon notify the parties of the time and place of hearing, at least 10 days prior to the hearing. If no answer is mailed by the respondent within 20 days of mailing by the department, the department may issue an order by default, without hearing, in accordance with the application, as provided by s. 102.18 (1) (a), Stats. (s. 102.17, Stats.)

(2)( Back ) 102.18 Findings, orders and awards. (1) (a) All parties shall be afforded opportunity for full, fair, public hearing after reasonable notice, but disposition of application may be made by compromise, stipulation, agreement, or default without hearing. 

uploaded 2002/07/15