TIMOTHY VERHEY, Applicant

H LORLEBERG COMPANY INC, Employer

HARTFORD UNDERWRITERS 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 October 27, 2004
verheyt . wsd : 101 : 1   ND § 8.8  § 8.9

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

The applicant filed an application for hearing in July 2003. The insurer (Hartford) did not file an answer within 20 days as provided for in Wis. Admin. Code § DWD 80.05 (2), nor did Hartford respond to subsequent correspondence from the Worker's Compensation Division. Accordingly, on November 10, 2003, ALJ Smiley issued a default order in the applicant's favor.

When an insurer fails to file a timely answer, the department and commission exercise their discretion in determining whether to issue a default order. In Verhaagh v. LIRC, 204 Wis. 2d 154 (Ct. App. 1996), the court of appeals, in affirming the commission's exercise of discretion, stated:

"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.

"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.

On appeal, Hartford makes four points:

1. The applicant's counsel did not provide a copy of his hearing application to the employer or Hartford, but rather to the wrong third party administrator.

2. The applicant's counsel did not send a copy of his "ex parte" September 18, 2003 letter asking for a default to the employer or Hartford, despite ALJ Smiley's request he do so.

3. When the applicant's counsel amended his hearing application by withdrawing his temporary disability, he did not copy Hartford or the employer, but sent it to the wrong third party administrator.

4. ALJ Smiley issued her default order sooner than 20 days after the applicant amended his default order.

However, before issuing its default order, the department sent notice (the Notice of Hearing Application dated July 16, 2003, the department's August 18, 2003 letter asking the insurer for an answer, and ALJ Smiley's October 2, 2003 letter asking the insurer for an answer) to Hartford at: "P.O. Box 3119, Naperville, Illinois 60566-3119." When Hartford submitted its answer after receiving ALJ Smiley's November 18, 2003 default order, Hartford listed that Naperville post office box as its correct address.

Further, two of the letters sent by the department, the department's August 18, 2003 letter and ALJ Smiley's October 2, 2003 letter, unequivocally demanded an answer. Neither letter was conditioned on Hartford's receipt of any information from the applicant's counsel. Yet Hartford only responded after ALJ Smiley sent her default order.

Thus, even if Hartford never received the original application for hearing, it received three separate notices that an application had been filed, including two demanding an answer. Its failure to file an answer under these circumstances is not reasonable. In this case, the department followed its procedure in sending Hartford letters warning it of its default. Hartford does not deny getting those letters nor does it explain why it did not act upon them. The Notice of Application was sent to Hartford on July 16, 2003, yet it filed no answer until over four months later on November 21, 2003.

Finally, the commission does not agree that the fact that the applicant filed an amended answer to withdraw one of his claims somehow retriggered the deadline to file an answer to the original application. Certainly, the rule providing for amendments does not so provide. Wis. Admin. Code § DWD 80.08. Hartford is in a weak position to argue that the deadline should be retriggered by the amendment, when it was done to remove a claim at the instance of an ALJ who in effect protected its rights in its absence.

cc:
Attorney Charles J. Graf
Attorney Richard T. Mueller

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