11-28-11; IL WC insurance-defense industry beware! Our IL Appellate Court, Workers’ Compensation Division issues a painful (and hefty) penalty/fee award for non-payment of TTD and TPD benefits...

Editor’s Comment: In Jacobo v. Illinois Workers’ Compensation Commission, 2011 IL App (3d) 100807WC (Nov. 16, 2011) the Workers’ Compensation Division of our Appellate Court reversed the Circuit Court’s denial of penalties/fees and asserted a new and very strict rule regarding the timely payment of benefits when there is no longer a pending dispute regarding the entitlement to such benefits.

This case involved a serious back injury whereupon 203 weeks of TTD was awarded, along with total and permanent disability benefits. The employer initially disputed the TTD, based on an IME. The Arbitrator awarded benefits. On the employer’s appeal, the Commission affirmed and adopted the Arbitrator's decision concerning the substantive award, except the Commission panel awarded the employer section 8(j) credit. The Commission also reversed the Arbitrator’s award of penalties/fees.

What is significant to this case thereafter is that, once the Commission decision was rendered, the employer did not file any further factual or legal challenges to the Commission's decision concerning medical expense, TTD, and PTD benefits. While the claimant appealed the Commission's decision, the only issue she contested on appeal was the Commission's denial of penalties/fees.

Therefore, all of the proceedings in the case moving forward concerned the separate issue of penalties/fees and did not concern the Commission's benefit award. After April 10, 2007, the amount of benefits to which the claimant was entitled was no longer contested. The undisputed nature of the benefits awarded was evidence by emails to and from the respective attorneys after the Commission award as well. The employer, however, did not pay the claimant’s award until June 24, 2009, asserting the claimant’s further appeal (in pursuit of penalties/fees only on the original case) meant the decision was not yet “final” and therefore, not due and owing while the claimant’s appeal proceeded.

The Appellate Court strongly disagreed with the employer’s position on this issue, citing its own prior ruling from 2002. In Zitzka v. Industrial Comm'n, the employer argued that it was not obligated "to pay any part of an award where there is a legitimate dispute over some portion thereof, in order to avoid 'piecemeal' payment of awards." The Commission rejected the employer's argument and granted the claimant's penalty petition. In upholding the penalty award, the Appellate Court found Respondent had “no legitimate reason to withhold payment of the undisputed awards." Likewise, in the present case, the Appellate Court found the employer had improperly withheld payment of the undisputed portion of the arbitrator's award, explaining Zitzka plainly established claimant's appeal of an issue unrelated to the substantive awards is not a "legitimate reason to withhold payment of the undisputed awards."

As further justification for its delay, the employer also argued claimant's appeal from the Commission's award did not specify the only issue on appeal concerned the Commission's denial of penalties. However, the record establishes the employer knew the penalties were the only issue on appeal at least by April 28, 2008, when claimant filed her brief in the Circuit Court, raising only the issue of penalties. Furthermore, the claimant never contested the award amount before the Commission, and that portion of the arbitrator's decision was affirmed and adopted by the Commission. It is a well-settled rule failure to raise an issue before the Commission results in its waiver following Greaney v. Industrial Comm'n. Therefore, the Appellate Court reckoned the employer knew full well the claimant could not seek any review of the substantive awards and the only issue she could raise on appeal was the issue of penalties/fees since she did not raise any issues with respect to the substantive awards before the Commission. Upon issuance of this ruling, the Appellate Court offered a sharply-worded criticism of the employer’s argument, asserting “the employer's feigned ignorance of what issues were contested in the claimant's appeal is not a reasonable justification to delay the payment of undisputed benefits.”

In an effort to leave no doubt about the rule, the Court concluded with these mildly chilling words; We want to be clear on this point. Any portion of a claimant's benefits which are undisputed must be promptly paid or the employer will be subject to penalties and attorney fees under the Act. It is our strong suggestion this statement be repeated during training, used as screen-savers, put on office posters—whatever it takes to indelibly highlight these important words from our esteemed justices for all members of your Illinois WC claims-handling staff, risk managers and defense attorneys, lest they suffer the same fate as the employer in this case. Even where appeals continue to be taken on one or more issues of a claim, the employer must make timely payment of any benefits that are no longer in dispute after each stage of litigation.

If you want the cite for the ruling on the web, send a reply. If you want to listen to oral arguments before the Appellate Court, they are on the web on October 19, 2011 here: http://www.state.il.us/court/Media/Appellate/Workers_Comp.asp

This article was researched and written by John P. Campbell, Jr. J.D. Please forward your thoughts and comments to John at jcampbell@keefe-law.com.