STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

SCOTT BERNDT, Applicant

ACUITY INSURANCE CO, Employer

WORKER'S COMPENSATION DECISION
, Claim No. 2001-024966

Acuity Insurance Company submitted a petition for commission review alleging error in the administrative law judge's Findings and Order issued in this matter on June 10, 2005. Briefs were submitted by Acuity and a letter brief was submitted by the applicant. At issue is whether Acuity is liable for increased payments for inexcusable delay (Wis. Stat. § 102.22(1)), and/or for bad faith (Wis. Stat. § 102.18(1)(bp)).

The commission has carefully reviewed the entire record in this matter and hereby affirms the administrative law judge's Findings and Order, except as herewith modified:

MODIFIED FINDINGS OF FACT


In the administrative law judge's FINDINGS OF FACT, substitute "Acuity Insurance Company" for each reference to "respondents."

In the administrative law judge's ORDER, substitute "Acuity Insurance Company" for "respondent and insurance carrier."

The rest and remainder of the administrative law judge's Findings and Order are affirmed and reiterated as if set forth herein.

NOW, THEREFORE, this

ORDER


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, Acuity Insurance Company shall pay to the applicant for inexcusable delay and bad faith the total amount of four thousand nine hundred fifty dollars ($4,950.00).

Dated and mailed December 13, 2005
berndsc . wpr : 185 : 8  ND § 7.22   § 7.24

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner


MEMORANDUM OPINION

The commission modified the administrative law judge's decision to reflect the fact that the actions and liability of Acuity Insurance Company, not the employer, were at issue in this inexcusable delay and bad faith proceeding.

In determining whether there has been an inexcusable delay within the meaning of Wis. Stat. § 102.22(1), the commission has adopted the standard of "absence of an acceptable excuse." See Keith Martin v. National Union Fire Insurance Company of Pittsburg, WC Claim No. 2003-005425 (LIRC February 28, 2005). On November 6, 2002, the department sent Acuity a copy of a hearing cancellation notice that referenced the applicant's new address. Of much greater importance, the department order approving the compromise was issued on December 18, 2002, and it also listed the applicant's new address. The applicant should have notified the insurance company of his new address, and the post office should have forwarded Acuity's check to that new address. However, it is Acuity's culpability that is at issue, and Acuity failed to provide an acceptable excuse for mailing the applicant's check to an address other than the one listed on the department's order. In the absence of any explanation for ignoring the address on the department order, it must be inferred that ordinary care and attention were not paid to that order, resulting in inexcusable delay.

The two-part test for bad faith under Wis. Stat. § 102.18(1)(bp), was set forth in North American Mechanical, Inc. v. LIRC, 157 Wis. 2d 801, 808, 460 N.W.2d 835 (Ct. App. 1990):

". . . in order to show bad faith a claimant must make a showing that the employer 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 a reasonable basis for the delay."

It is clear from the evidence that the original check that was cut on December 20, 2002, and mailed to the applicant's old address on that same date, was returned by the post office to Acuity. Acuity provided no evidence concerning when that check was returned, and the commission therefore inferred that most probably it was returned within a month of its mailing. The envelope in which the check was re-mailed to the applicant, this time to his correct address, was postmarked May 27, 2003. Accordingly, the commission infers that approximately four months passed between the date the post office returned the undelivered check to Acuity, and the date Acuity re-mailed the check. The only witness to testify on Acuity's behalf had no knowledge of Acuity's reasons for handling the payment as it did. The only evidence of record leads to the inference that Acuity lacked a reasonable basis for this four-month delay, and that it had knowledge or a reckless disregard of this lack of a reasonable basis. The administrative law judge appropriately assessed a 100 percent rather than a 200 percent bad faith penalty due to the applicant's failure to contact Acuity after timely payment had not been received.

In his letter brief the applicant indicated that if the ALJ's decision is affirmed, he would be willing to accept an additional check for $4,500.00, representing the compromise settlement amount. For reasons he did not explain, he refused to accept a check for this settlement amount at the hearing held on May 11, 2005. Acuity should immediately pay this original settlement amount of $4,500.00 to the applicant, in addition to the penalty amounts of $4,950.00. The applicant indicated in his letter brief that he was considering making a request to reopen the compromise agreement, but this would be impossible, because more than a year has passed since the compromise was approved by the department. Wis. Stat. § 102.16(1) only allows reopening of compromises for a one-year period after department approval.

cc: Attorney Jeffrey J. Strande

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