DAVID VANDEN BLOOMEN, Applicant

BRILLION IRON WORKS, Employer

BRILLION IRON WORKS,
c/o GALLAGHER BASSET INSURANCE, Insurer

The applicant submitted a petition for Commission review alleging error in an Administrative Law Judge's Findings and Order issued on December 22, 1989. The employer/insurer submitted an answer to the petition. At issue are whether the employer/insurer are liable for a bad faith penalty under section 102.18 (1)(bp), Stats., ten percent increased compensation under section 102.22 (1), Stats., and/or a penalty for noncompliance pursuant to section 102.18 (1)(b), Stats.

The Commission has carefully reviewed the entire record in this matter, and after consultation with the Administrative Law Judge regarding the credibility and demeanor of the witnesses, hereby affirms his Findings and Order, except as herewith modified:

The first three paragraphs of the Administrative Law Judge's FINDINGS OF FACT are affirmed and reiterated as if set forth herein.

Delete the remaining paragraphs of the Administrative Law Judge's FINDINGS OF FACT and substitute the following paragraphs therefor:

"In order to substantiate a claim for bad faith in worker's compensation a claimant must make a showing that the employer/insurer acted with: (1) a lack of a reasonable basis for the delay which occurred and (2) knowledge or a reckless disregard of the lack of reasonable basis for the delay. North American Mechanical, Inc. v. LIRC and Halverson, 157 Wis. 2d 801, 808, 460 N.W.2d 835 (1990).

"In the case at hand, a vocational rehabilitation counselor from the Division of Vocational Rehabilitation (DVR) testified at the hearing held on April 19, 1983, that the applicant had been approved for his GED training which ran from October 11, 1982 until May 24, 1983. Accordingly, the employer was formally apprised of the fact that temporary disability under section 102.43 (5), Stats., as well as travel and maintenance expenses under section 102.61, Stats., for this period were due the applicant. The temporary disability benefits were timely paid subsequent to the issuance of the amended order by Administrative Law Judge (ALJ) Lawrence on June 17, 1983. However, the travel and maintenance expenses for this period were ignored by the employer until being paid on March 4, 1987, even though the employer was made aware of them by correspondence between counsel. There was no reasonable basis for this delay and the employer had knowledge of the lack of a reasonable basis. The applicant traveled 3,612 miles in obtaining his GED, which at 21.5 cents per mile equals $ 776.58. He also incurred $ 400 in meal expense, for total unpaid expenses of $ 1,176.58. The appropriate penalty for bad faith delay in payment is found to be 200 percent of this amount, or $ 2,353.16.

"In addition, delay in payment was without bona fide justification or motivation, and therefore a ten percent penalty for inexcusable delay is appropriate. This amounts to $ 235.31.

"The applicant completed his GED course on May 24, 1983, and began a marketing program with the approval of the DVR on May 31, 1983. However, the applicant failed to notify either the Worker's Compensation Division or any representative of the employer of the fact that this course had been approved by the DVR. The applicant has characterized this as a technicality, given the fact that he did inform counsel for the employer of the fact that he was enrolled in this course and satisfactorily pursuing it. However, under sections 102.61 and 102.43 (5), Stats., eligibility for temporary disability, travel and maintenance expense is contingent on approval of the vocational training program by the DVR. It was not demonstrated that prior to the prehearing conference held on August 8, 1984, the employer had knowledge of the DVR approval, or recklessly disregarded the question of approval. In the hearing held on April 19, 1983, the DVR rehabilitation counselor testified only that when the applicant finished his GED course, he would 'possibly' be able to pursue additional vocational training. In order to perfect his claim with the employer, the applicant merely needed to inform it that his training was DVR-approved training. He failed to do this prior to August 8, 1984.

"At the prehearing conference held on August 8, 1984, counsel for the employer conceded liability for past and future vocational rehabilitation training payments. Thereafter, timely payments of temporary disability benefits were made, but payment of travel and maintenance expense continued to be delayed until March 4, 1987. Counsel for the employer explained that this was 'an oversight.' The employer clearly had knowledge of its liability for immediate payment of these expenses, and at the very least, exhibited a reckless disregard in delaying their payment for such a long period. The combination of unpaid travel and meal expenses for the 43 weeks of instruction subsequent to August 8, 1984, was $ 1,730.32. The appropriate penalty for bad faith delay in payment is found to be 200 percent of this amount or $ 3,460.64.

"In addition, delay in payment was without bona fide justification or motivation, and therefore a ten percent penalty for inexcusable delay is appropriate. This amounts to $ 346.06.

"The applicant also requested a penalty for noncompliance pursuant to section 102.18 (1)(b), Stats., which provides a 25 percent penalty for noncompliance with an interlocutory order or award made after hearing. There is no question that the employer showed a lack of good faith by failing to timely comply with the payment of travel and maintenance expense pursuant to ALJ Lawrence's Interlocutory Order issued on May 31, 1983, amended on June 17, 1983, and affirmed by the Labor and Industry Review Commission on March 1, 1984. The same must be said concerning the travel and maintenance awards made pursuant to ALJ Cunningham's Interlocutory Order issued on December 3, 1986, and amended on December 23, 1986. Payment of these expenses should have been forthcoming by the expiration of the appeal periods for such orders. Given the extensive and unwarranted delay in payment of these expenses, the penalty for noncompliance is appropriately assessed. The amount of noncompliance pursuant to the 1983 order was $ 1,176.58, and pursuant to the 1986 order was $ 1,730.32. A 25 percent penalty levied against these amounts totals $ 726.72.

"The applicant's attorney is entitled to a 20 percent fee to be subtracted from each of the amounts awarded herein."

Delete the Administrative Law Judge's ORDER and substitute therefor all except the first sentence of the Commission's ORDER set forth below.

NOW, THEREFORE, this

The Findings and Order of the Administrative Law Judge are modified to conform with the foregoing, and as modified, are affirmed. Within 30 days from this date, the employer shall pay to the applicant the sum of Five thousand six hundred ninety-seven dollars and fifty-one cents ($ 5,697.51); and to applicant's attorney Randall A. Haak, the sum of One thousand four hundred twenty-four dollars and thirty-eight cents ($ 1,424.38).

Dated and mailed July 5, 1991
ND § 7.20

Kevin C. Potter, Chairman

Carl W. Thompson, Commissioner

Pamela I. Anderson, Commissioner

NOTE: In its consultation with the Administrative Law Judge, the Commission learned that its credibility impressions coincided with his impressions. The Commission modified the ALJ's decision based on the written record. The ALJ made no finding with regard to the issues under sections 102.18 (1)(b) and 102.22, Stats., but these issues were raised in the application for hearing and listed on the Notice of Hearing. Revelant evidence was presented concerning them.

cc:
Walter D. Thurow, Attorney
Steven J. Frassetto, Attorney
Attorney Randall A. Haak
Attorney Carlyle Whipple
 

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