Wis.LIRC WC Decision: Gahan - December 23, 1994 - ND � 7.24 - Delay in Payment � 8.8 - Insurer's Answer - default order not appropriate; � 8.9

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

MICHAEL T GAHAN, Applicant

SIMPLICITY MANUFACTURING COMPANY INCORPORATED, Employer

TRANSPORTATION INSURANCE COMPANY, Insurer

WORKER'S COMPENSATION DECISION
Claim No. 89021250

The Administrative Law Judge issued his Findings of Fact, Conclusions of Law and Order in this case on October 20, 1994. The issue before the Administrative Law Judge was whether the insurer was late in making payments which resulted in inexcusable delay. Citing the failure of the insurer to respond to letters from the division demanding payment or an explanation of the delay in making payment, the Administrative Law Judge issued a default order requiring payment of compensation owed and a penalty.

The employer and the insurer (collectively, the respondent) submitted a petition for review alleging error in the Administrative Law Judge's Findings and Order. The applicant responded to the petition by letter dated November 22, 1994.

Having carefully reviewed the entire record in this case, the commission hereby sets aside the Administrative Law Judge's Findings and Order for the reasons set forth in the Memorandum Opinion.

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

ORDER

The Findings of Fact, Conclusions of Law and Order of the Administrative Law Judge are set aside, and the matter is remanded to the division for further proceedings.

Dated and mailed December 23, 1994
ND � 7.24 � 8.8 � 8.9

Pamela I. Anderson, Chairman

Richard T. Kreul, Commissioner

James R. Meier, Commissioner

MEMORANDUM OPINION

This case arises from a conceded compensable injury on November 1, 1988. On May 19 and July 19, 1994, the division sent the insurer notices stating that its records showed that the insurer owed certain amounts of disability to the applicant. The division's notices requested either payment in full or an explanation about why the insurer disagreed with the division's computation. Because it had not received a response by August 5, 1994, the division sent the insurer a final letter demanding payment or an explanation of nonpayment within 30 days.

The respondent responded by handwriting an explanation on an earlier notice dated May 19, 1994. The handwritten note is difficult to read, but it indicates that the respondent believed it had paid all that was due under an agreement it had with the applicant. In fact, the division's file for claim nos. 890212250 and 91033956 indicates that the division issued two decisions dismissing the applications without prejudice based on unspecified agreements between the parties. The insurer's explanation is therefore sufficient to preclude a default order in this case, assuming it was received within 30 days of the August 5, 1994 demand letter.

The division's file contains the original copy of this handwritten response, so it was actually received by the division. Unfortunately, it is not clear exactly when the division received the letter. The person who prepared the response on behalf of the insurer dated it August 18, 1994. The response was never stamped received by the division, and the envelope in which it was sent is not in the file. The date "9-7-94" was handwritten on the response, apparently at some point after it was received by the division, but the commission cannot conclude that must have been the date it was first received. Any uncertainty on this point must be resolved in the insurer's favor.

Under these circumstances, the record establishes that the respondent provided a timely and adequate explanation for nonpayment (that it had paid in full according to agreement with the applicant). Thus, a default order may not be issued under the standard set out in Enus Brown v. Select Staff and Fireman's Fund Insurance Company, claim no. 90-043390 (LIRC, July 2, 1990).

It may be that the insurer has not complied with the parties' agreement concerning payment of disability, or that the agreement is not enforceable. Indeed, in response to the petition, the applicant states that he has been underpaid. If so, the respondent may yet be held liable for the disability payments and the penalty. However, this case may not be resolved on default without a hearing.

cc:
ATTORNEY MARK H MILLER
BROOKFIELD WI 53005

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