The Illinois Workers’ Compensation Commission’s award of section 19(l) “late fee” penalties for a delay in payment of a final award of medical and permanent partial disability benefits was reversed by the Appellate Court in Theis v. Illinois Workers’ Compensation Commission, 2017 IL App (1st) 161237WC Google Scholar | Illinois Courts PDF.
Section 19(l) “Late Fee” Penalties
Section 19(l) of the Illinois Workers’ Compensation Act provides for “late fee” penalties of $30 per day that medical or disability benefits are unreasonably withheld:
If the employee has made written demand for payment of benefits under Section 8(a) or Section 8(b), the employer shall have 14 days after receipt of the demand to set forth in writing the reason for the delay.
In the case of demand for payment of medical benefits under Section 8(a), the time for the employer to respond shall not commence until the expiration of the allotted 30 days specified under Section 8.2(d).
In case the employer or his or her insurance carrier shall without good and just cause fail, neglect, refuse, or unreasonably delay the payment of benefits under Section 8(a) or Section 8(b), the Arbitrator or the Commission shall allow to the employee additional compensation in the sum of $30 per day for each day that the benefits under Section 8(a) or Section 8(b) have been so withheld or refused, not to exceed $10,000.
A delay in payment of 14 days or more shall create a rebuttable presumption of unreasonable delay.
Section 19(l) requires injured workers to first make a written demand for benefits under section 8(a), which includes medical treatment, temporary partial disability (TPD), vocational rehabilitation and maintenance benefits, or section 8(b), which includes temporary total disability (TTD) benefits.
“If the payment is late, for whatever reason, and the employer or its carrier cannot show an adequate justification for the delay, an award of the statutorily specified additional compensation is mandatory.” McMahan v. Industrial Comm’n, 183 Ill. 2d 499 (1998) (emphasis added) Google Scholar | Illinois Courts.
“The employer has the burden of justifying the delay, and the employer’s justification for the delay is sufficient only if a reasonable person in the employer’s position would have believed that the delay was justified.” Jacobo v. Illinois Workers’ Compensation Comm’n, 2011 IL App (3d) 100807WC Google Scholar | Illinois Courts PDF.
In this case, an arbitrator entered an award on May 23, 2014 for medical benefits for “all medical expenses contained in [claimant’s] Exhibits 1-9” and permanent partial disability (PPD) benefits in the amount of $19,481. The decision of the arbitrator was not appealed to the Commission and thus became final.
On October 3, 2014, the claimant filed a petition for penalties and attorneys’ fees pursuant to sections 19(l), 19(k), and 16 of the Illinois Workers’ Compensation Act, asserting that more than 130 days had passed and the employer had not paid either the medical benefits or PPD award.
The employer paid the PPD award on October 8, 2014, incredibly claiming that the filing of the penalties petition “was the first time they were made aware that there had been the nonpayment of the award.”
On December 4, 2014, the employer paid the claimant $55,997.04 for awarded medical benefits, claiming that it had not received a copy of the medical exhibits introduced at the arbitration hearing and accordingly could not calculate the amount due under the award.
Following a hearing on the claimant’s petition, the Commission denied the request for section 19(k) penalties and section 16 attorneys’ fees finding that claimant failed to prove that the employer acted unreasonably or vexatiously.
The Commission did, however, award section 19(l) penalties due to the employer’s failure to “timely pay the award or amounts otherwise due for medical bills and permanency upon the award becoming final and non-appealable.”
The employer appealed to the circuit court, which reversed the Commission’s award of 19(l) penalties. The claimant appealed.
Appellate Court Opinion
The Appellate Court confirmed the decision of the circuit court.
First, the Court found that section 19(l) penalties are not available for the delayed payment of the PPD award. This finding is clear from the language of section 19(l), which prescribes penalties only in the case of delayed payments of benefits under section 8(a), which includes medical treatment, temporary partial disability (TPD), vocational rehabilitation and maintenance benefits, or section 8(b), which includes temporary total disability (TTD) benefits.
Accordingly, the Court could only affirm the section 19(l) penalties award for the delayed payment of the medical benefits award.
The employer argued that the delay was caused by the fact that the claimant did not tender the medical bills until October 27, 2014 and that once received, the employer promptly calculated the amount due and issued payment.
The claimant, however, argued that her written demand for payment was included in her Request for Hearing form submitted before the arbitration hearing and that her medical bills were admitted into evidence:
According to claimant, she “had no duty to tender the medical bills admitted into evidence to [the employer] following the [a]rbitration hearing.” Rather, she contends the employer could have accessed her medical records by subpoenaing them directly from the medical providers, ordering them from the Record Copy Service identified on the subpoena for medical bills, or ordering a copy of the transcript of the proceedings and accompanying exhibits.
The Appellate Court rejected the claimant’s argument, finding that “[t]he act of submitting medical bills into evidence during arbitration is not the same as tendering them to the employer for payment.”
“In addition, claimant cites no authority, nor does our research reveal any, which stands for the proposition that an employer has a duty to actively seek out a claimant’s medical bills either through the use of a subpoena or some other method in order to comply with the requirements of section 19(l).”
The Appellate Court noted that even the Commission found that the delay in payment of the medical bills was due to the claimant’s failure to tender her medical bills to the employer. Accordingly, the employer had an adequate justification for the delay and the Appellate Court found that the claimant was not entitled to any penalties.
This is a strange case that raises so many questions that can’t be answered without reviewing the full appellate record.
First, it is incredible that the employer did not have copies of the claimant’s medical records and bills before the arbitration hearing. It is hard to believe that the employer had no idea what medical bills were awarded by the arbitration decision itself.
In fact, the Appellate Court has previously ruled that the Workers’ Compensation Act requires medical evidence from both employees and employers to be provided to the other party no later than 48 hours before the arbitration hearing. Ghere v. Industrial Commission, 278 Ill. App. 3d 840 (1996) Google Scholar.
Why didn’t the employer object to the admission of the records and bills if they weren’t provided within 48 hours before the hearing?
Did the employer seriously not obtain copies of at least the majority of unpaid bills long before the arbitration hearing?
Practically speaking, the parties at an arbitration hearing usually exchange copies of exhibits as a courtesy. Why didn’t the claimant’s attorney provide copies to the employer’s attorney?
How did the employer’s attorney write their proposed decision (basically, a legal brief written from the perspective of the arbitrator after the hearing) without copies of the medical records and bills?
Did the arbitration decision really not provide any more specific information about what medical bills were awarded beyond “all medical expenses contained in [claimant’s] Exhibits 1-9?” Were these exhibits not attached to the decision or otherwise discussed in detail?
Did the employer really have no idea which bills were awarded on May 23, 2014 until the October 27, 2014 tender by the claimant’s attorney?
Why didn’t the arbitrator actually calculate the amount of medical benefits due under the Fee Schedule? (This is actually a common problem that is long overdue for a solution by the Commission.)
Did the employer really have no idea the PPD award wasn’t paid?
Did the employer really have no idea which bills were awarded?
Ultimately, the claimant’s attorney probably should have more clearly demanded payment of the award sooner, but the employer’s excuse for delayed payment of the awarded benefits is difficult to believe.