KEITH MARTIN, Applicant
NATIONAL UNION FIRE INS CO OF PITTSB, Insurer
The applicant submitted a petition for commission review alleging error in the administrative law judge's Findings and Order issued in this matter on April 26, 2004. The insurance carrier submitted an answer to the petition and briefs were submitted by the parties. At issue is whether the amount payable to the applicant in the compromise order of August 28, 2003, should be increased by ten percent due to inexcusable delay in the insurance carrier's payment, within the meaning of Wis. Stat. § 102.22(1).
The commission has carefully reviewed the entire record in this matter and hereby reverses the administrative law judge's Findings and Order. The commission makes the following:
On August 28, 2003, the department issued an order implementing a compromise agreement between the parties. The order required payment of $19,857.52 to the applicant within 21 days, as well as $5,142.48 to the applicant's attorney, Greg Meyer. On August 5, 2003, Attorney Meyer had sent a letter to the department notifying it of the applicant's new address. The department received this letter on August 6, 2003, and Meyer's letter indicates that a copy of it was sent to the insurer's attorney, James Reardon. However, even though the department's order referenced the applicant's new address, the insurer sent the applicant's check to his old address. The 21st day after the order was September 18, 2003, and the insurer mailed the check to the applicant on September 12, 2003. On October 1, 2003, the check was returned to the insurer as undeliverable. This alerted the insurer to its mistake, and it remailed the check to the applicant's correct address that same day.
The applicant has filed a claim for a 10 percent inexcusable delay penalty under Wis. Stat. § 102.22, which provides in relevant part:
"If the employer or his or her insurer inexcusably delays for any length of time in making any other payment that is due an injured employee, the payments as to which the delay is found may be increased by 10 percent."
In Coleman v. American Universal Insurance Co., 86 Wis. 2d 615, 625, 273 N.W.2d 220 (1979), the court stated:
"Milwaukee County (1) points out that this provision [Wis. Stat. § 102.22] is designed to promote automatic payment of benefits without litigation and that, when there is no justification for delay, penalty provisions are applicable. This provision may be triggered in the absence of bad faith. If the delay is inexcusable because of poor management or deficient administrative practices of the insurance company, the penalty payments would still be applicable in the absence of an acceptable excuse. Conduct which is inexcusable is nevertheless in most cases far short of bad faith, which involves intent to deny payments without a bona fide reason. Conversely, the penalty payments would not be applicable when there is a good-faith basis for not making payments." (emphasis added).
The insurer has never disputed the fact that there was no good-faith basis for not making the payment as ordered by the department; rather, it asserts that its delay in making the payment was excusable, because it was merely the result of inadvertent error. The adjustor who mailed the check to the applicant's old address on September 12, 2003, used the address in the insurer's data base without cross checking it against the new address listed on the department order. The insurer mailed the check to the correct address as soon as it discovered its error.
There is no assertion of bad faith in this case. However, the delay in receipt was caused by poor management or deficient administrative practices, including either Attorney Reardon's failure to notify the insurer of the address change or the insurer's failure to timely implement that change. Contrary to the administrative law judge's finding, the commission infers that Attorney Reardon did receive a copy of Attorney Meyer's letter sent on August 5, 2003. First, it is well-settled law that the mailing of a document or letter creates a presumption that it was delivered to and received by the addressee. See State ex rel Flores v. State, 183 Wis. 2d 587, 612-13, 516 N.W.2d 362 (1994); Luedtke v. Shedivy, 51 Wis. 2d 110, 119 n.3, 186 N.W.2d 220 (1971); Mullen v. Braatz, 179 Wis.2d 749, 753, 508 N.W.2d 446 (Ct. App. 1993). Second, the stipulation of evidence contained no assertion from Attorney Reardon to the effect that he did not receive Attorney Meyer's letter. Even in its brief to the commission the insurer did not make such an assertion.
The insurer's delay was not deliberate nor was it lengthy, and thus the question of bad faith does not arise. However, there was no acceptable excuse for the delay. Ordinary care and attention to the matter would have resulted in the check being sent to the proper address, but ordinary care and attention were lacking. The delay was inexcusable. Accordingly, the payment of $19,857.52 shall be increased by 10 percent, or $1,985.75. A 20 percent attorney's fee is due.
Now, THEREFORE,
Within 30 days from this date, the insurance carrier shall pay to the applicant for inexcusable delay the sum of One thousand five hundred eighty-eight dollars and sixty cents ($1,588.60); and to applicant's attorney, Greg Meyer, fees in the amount of Three hundred ninety-seven dollars and fifteen cents ($397.15).
Dated and mailed February 28, 2005
martike . wrr : 185 : 1 ND § 7.24
/s/ James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
There was no hearing held in this matter and therefore the commission had no reason to consult with the administrative law judge regarding any witness demeanor.
The administrative law judge focused on the statement made by the court in Milwaukee County v. ILHR Department, 48 Wis. 2d 392, 399, 180 N.W.2d 513 (1970):
"Inexcusable delay means without a bona fide justification or motivation. This is not to be determined by hindsight but by a realistic appraisal of the facts at the time of the alleged delay."
The administrative law judge reasoned that the insurer acted with good faith motivation, and thus with bona fide motivation. The commission does not believe that inexcusable delay issues should be resolved by addressing the question of whether a party acted in good faith or bad faith. Milwaukee County involved the issue of whether the self-insured County had been guilty of inexcusable delay under sec. 102.22, when it withheld payment on a claim for permanent partial disability that the County asserted was attributable to a nonindustrial condition. At the time of that decision, there was no bad faith provision (2) in Ch. 102, and the court analyzed the County's behavior in terms of whether it had acted in good faith, stating:
"We think Milwaukee County acted in good faith and was justified in not paying permanent disability until the extent of the permanent disability caused by the 1964 accident was determined by the Department." Id. at 398.
A deliberate withholding of compensation in a disputed claim would today be properly analyzed as an issue of bad faith under Wis. Stat. § 102.18(1)(bp).(3) Accordingly, given the historical and factual context in which the phrase "without a bona fide justification or motivation" arose, the commission no longer considers that phrase to be helpful in determining whether an employer or insurer is guilty of inexcusable delay in payment. The word "inexcusable" is defined in Merriam-Webster's New International Dictionary, (3rd ed. 1993) as "being without excuse or justification." This definition is consistent with the court's language in the Coleman case, where the court referred to "the absence of an acceptable excuse." While Coleman was also decided prior to the enactment of the bad faith statute, and in fact prompted that enactment, the court dealt directly with what at that time was determined to be the tort of bad faith. The court specifically distinguished behavior constituting bad faith from behavior constituting only inexcusable delay. Thus, the description of inexcusable delay found in Coleman is useful because it addresses the meaning of Wis. Stat § 102.22, rather than the meaning of bad faith.
For the reasons noted in the commission's findings, it is evident that the insurer did not demonstrate that it had an acceptable excuse for the delay in payment. While it did not act in bad faith, it did not use ordinary care or pay ordinary attention to the matter, thus resulting in the inexcusable delay.
cc:
Attorney Bonnie D. Fredrick
Attorney Gregory Meyer
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