JUDY WAHLGREN, Applicant

UNITED HEALTH CARE, Employer

UNITED STATES FIDELITY &  GUARANTY CO, Insurer

CRAWFORD & COMPANY

The applicant submitted a petition for commission review alleging error in the administrative law judge's Findings and Interlocutory Order dated April 8, 2004. Briefs were submitted by both parties. At issue is whether the employer and Crawford & Company are liable for a bad faith penalty under Wis. Stat. § 102.18(1)(bp) and an additional noncompliance penalty under Wis. Stat. § 102.18(1)(b).

The commission has carefully reviewed the entire record in this matter and hereby affirms in part and reverses in part the Findings and Interlocutory Order of the administrative law judge. The commission makes the following:

An award pursuant to Wis. Stat. § 102.18(1)(b) is appropriate. The evidence indicates the employer and its insurer Crawford & Company failed to make payment in good faith pursuant to the initial interlocutory order in this case, and the applicant is entitled to an award not exceeding 25 percent of each amount that was not paid as directed. The applicant is entitled to 25 percent penalty on the award of $14,884.50 in the amount of $3,721.00, and also a 25 percent penalty of the medical expenses of $20,083.32 in the amount of $5,020.83. The total amount awarded for bad faith under Wis. Stat. § 102.18(1)(bp) and Wis. Stat. § 102.18(1)(b) is $16,665.50 less attorney's fees of 20 percent in the amount of $3,333.10 leaving a total due the applicant of $13,332.40.

NOW, THEREFORE, this

Dated and mailed April 28, 2005
wahlgju . wpr : 175 : 8  ND § 7.20

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

The applicant asserted in her petition for commission review that the administrative law judge erred in determining that the applicant was not entitled to an award for 25 percent noncompliance under Wis. Stat. § 102.18(1)(b). The commission agrees. Under Wis. Stat. § 102.18(1)(b) there is a separate basis for an award when an interlocutory order is entered and payment is not forthcoming. Under Wis. Stat. § 102.18(1)(b), if the department finds that the employer or insurer has not paid any amount that the employer or insurer was directed to pay in any interlocutory order, and the nonpayment was not in good faith, the department may include in its final award a penalty not exceeding 25 percent of each amount that was not paid as directed.

In this case, the underlying order was an interlocutory order, and the employer and its third party administrator, Crawford & Company failed to make payment timely in accordance with that order. The employer and Crawford & Company have failed to establish that it failed to make such payments in good faith. The employer states in its response to the petition for commission review that it can find no authority to support a finding that a single act of delay may be penalized twice for bad faith, once under Wis. Stat. § 102.18(1)(b), and again under Wis. Stat. § 102.18(1)(bp). However, in the commission decision in Vanden Bloomen v. Brillion Iron Works, Commission Decision dated July 5, 1991, involving the failure of an employer and its insurer to pay indemnity for vocational rehabilitation training pursuant to an administrative law judge's interlocutory order, the commission found a 10 percent penalty for inexcusable delay pursuant to Wis. Stat. § 102.22, as well as a bad faith award pursuant to Wis. Stat. § 102.18(1)(bp), and an award as a penalty for noncompliance pursuant to Wis. Stat. § 102.18(1)(b).

Given the language of Wis. Stat. § 102.18(1)(b), the commission finds that an award for noncompliance in good faith with the administrative law judge's interlocutory order is a basis for a separate award in this case. The evidence in this matter establishes that the employer and Crawford and Co. delayed payment for more than 30 days after the date for payment established in the administrative law judge's interlocutory order of January 9, 2003. Pursuant to the interlocutory order payment was due on January 30, 2003, but payment was not begun until March 7, 2003. The administrative law judge appropriately noted that the employer and Crawford and Co. had notice of the duty to pay by January 13 or 14, 2003, and provided no reasonable explanation for their failure to make timely payment. The employer and Crawford and Co. ignored two requests from the applicant's attorney in February 2003, and payment was not begun until March 7, 2003. The commission finds that the nonpayment pursuant to the interlocutory order on January 9, 2003, was not in good faith under Wis. Stat. sec.102.18(1)(b). Based upon the evidence of a lack of good faith to comply with the administrative law judge's interlocutory order and make payment by January 30, 2003, the commission finds that the employer and Crawford & Company are assessed an additional penalty of 25 percent of the indemnity award of $14,884.00 for a penalty of $3,721.00, as well as a penalty of 25 percent on the delayed payments of medical expenses in the amount of $20,083.32 for a penalty of $5,020.83. The applicant had every right to expect timely payment and the commission credits the applicant's assertion that she constantly got letters from healthcare providers for charges which remained unpaid during the period of delay.

The applicant contended in her petition for commission review that the administrative law judge erred in failing to award the maximum amount of $15,000.00 for bad faith. However, upon an independent review of the evidence in the record the commission finds that the administrative law judge's award of bad faith penalty was appropriate under the circumstances. The commission declines to increase the amount awarded for bad faith.

cc:
Attorney Thomas A. Siedow
Attorney Michael C. Frohman

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