KURT THORESON, Applicant

GANTON TECHNOLOGIES INC Employer

KANSAS CITY FIRE & MARINE INS CO,

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 May 7, 2004
thoresk . wsd : 101 : 8   ND § 8.8

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner

The ALJ decided this matter by default under Wis. Stat. § 102.18(1)(a). On appeal, the employer and insurer (collectively, the respondent) raise two issues: that the department inappropriately issued a default order, and that a miscarriage of justice will result if the order is allowed to stand.

The applicant filed an application for hearing in May 2002, which was subsequently served on the insurer by mail to a post office box in Downers Grove, Illinois. The insurer did not file an answer as required by Wis. Admin. Code § DWD 80.05(2). Thereafter, hearing notices were sent to the insurer, care of RSKCO, P.O. Box 7061, Downers Grove IL 60515, on February 11 and March 11, 2003. Also on March 11, 2003, Janell Knutson, a section chief for the Worker's Compensation Division, sent the insurer a letter, informing the insurer that it had the duty to file an answer, that no answer had been received, and that "failure to file an answer may result in the Department issuing an order by default, without further notice, as provided in s. 102.18(1)(a)." Chief Knutson's letter was also sent to the insurer, care of RSKCO, P.O. Box 7061, Downers Grove IL 60515.

The insurer did not respond to Chief Knutson's letter, though the department's records indicate that neither that letter or the hearing notices were returned by the U.S. Postal Service as undeliverable. Accordingly, on April 18, 2003, the department sent the insurer -- again care of RSKCO, P.O. Box 7061, Downers Grove IL 60515 -- a notice informing it the hearing scheduled for May 12, 2003, had been cancelled. Again, the insurer did not respond to this notice, nor was it returned by the Postal Service.

Finally, on April 29, 2003, an ALJ for the department issued a default order, awarding approximately $18,000 in disability compensation and over $57,000 in medical expenses. The ALJ's order was sent, yet again, to the insurer, care of RSKCO, P.O. Box 7061, Downers Grove IL 60515. The insurer then filed a timely petition for commission review of the ALJ's order, raising the issues set out above.

In its petition, the insurer asserts that all of the correspondence sent to the insurer by the department was sent to the wrong location. Specifically, the insurer contends its correct address since July 2001 was PO Box 1236, Brookfield WI, while all of the correspondence sent to the insurer was sent to PO Box 7061, Downers Grove IL.

The insurer points out that in July 2001, or well before the hearing application in this case was filed, the insurer sent the department a form "Insurance Carrier's Claims Handling Address Change Request" that listed as a designated claims handling mailing name and address:

CNA Insurance
PO Box 1236
Brookfield WI 53201

However, the CNA Insurance address in Brookfield was not the only "claims handling name and address" listed by the insurer on the form. Specifically, the insurer requested a second claims handling address. That second address is the very address:

C/O RSKCO
PO Box 7061
Downers Grover IL 60515

to which DWD mailed the two hearing notices, the hearing cancellation notice, Chief Knutson's letter, and ALJ Schiavoni's decision.

Further, the insurer explained the multiple addresses in the "Insurance Carrier's Claims Handling Address Change Request" form as follows:

Commercial customer with premium levels below $1M are handled by the Commercial Claims operation in Milwaukee. RSKCO is the preferred TPA for the carrier's Risk Management customer. Risk Management claims are defined in excess of $1M in premium.

On appeal, the insurer has not shown the Downers Grove IL address is incorrect, even under the terms of the designation in its July 2001 "Insurance Carrier's Claims Handling Address Change Request." However, even if it were shown that the notice should have been sent to CNA in Milwaukee rather than RSKCO in Downers Grove under the insurer's designation, the fact would remain that the notices as well as Chief Knutson's letter were sent to an agent of the insurer whom the insurer had designated to handle at least some of its claims.

Under the facts of this case, the department could reasonably conclude that RSCKO received the correspondence the department mailed to it. (1)   RSKCO is an agent of the insurer for at least some of its workers compensation claims. The commission concludes that the insurer thus had notice of the application, and that a default order could result from its failure to file an answer, well before the ALJ issued her default order on April 29, 2003.

In determining whether a default order was appropriate under these facts, the commission exercises its discretion. In so doing, the commission may consider 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. Verhaagh v. LIRC, 204 Wis. 2d 154 (Ct. App. 1996). See also McComish v. Sorrento Inc, WC Claim No. 2001-036164 (LIRC, July 2, 2002).

Applying this standard, the commission upholds the ALJ's decision to issue a default order. In particular, the commission concludes the insurer's explanation of its default -- that the department mailed its correspondence to the "wrong address" is unpersuasive. On this point, the commission must observe that designated agent RSKCO was able to forward the ALJ's April 29, 2003, order to its principal, insurer Kansas City Fire & Marine Insurance Company, in sufficient time for the latter to file a timely appeal.

Finally, the insurer points out that it has a defense by virtue of a report of its medical examiner, Dr. Aschliman, and that a miscarriage of justice will result if it is held liable. Of course, insurers should always have valid defenses whenever applications for hearing are filed in worker's compensation cases -- if the insurer has no defense it must directly pay the claim. Nonetheless, the statutes and case law give ALJs and the commission the discretion to issue default orders in cases like this where an insurer fails persuasively to explain its failure to respond to an application for hearing and correspondence from the department. Moreover, the ALJ's award is supported by the material submitted by the applicant; no miscarriage of justice has resulted.

cc: 
Attorney John A. Becker
Attorney Mark H. Miller

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(1)( Back ) There is an established presumption that mailing a letter will result in delivery and receipt. State ex rel. Flores v. State, 183 Wis. 2d 587, 612 (1994).

uploaded 2004/05/12