News

February 03, 2012

Melinda Jacobo appealed a Commission decision awarding her compensation and benefits but denying penalties.  Her employer did not.  The claim for penalties was based on her employer having stopped paying benefits after an IME.  The employer ultimately prevailed on that issue, the appellate court finding that it was acting reasonably in denying benefits based on the IME.  However, her employer did not pay the underlying award until two years after the Commission decision and after the appellate court denied the original petition for penalties.

Before the first appeal wound its way through the courts, Jacobo filed a second penalty petition, the basis for which was the failure to pay the underlying award for two years.  The Commission denied the petition, but on appeal, based on the underlying award for benefits being “undisputed,” the Court awarded additional compensation under both Sections 19(k) and 19(l) and attorney fees under Section 16.

In evaluating the facts of Jacobo’s case, the Court believed that the Commission’s determination was contrary to the manifest weight of the evidence and that Section 19(l) sanctions were “clearly” the proper result.  Noting that the employer filed no challenges to the Commission decision regarding medical expenses, TTD, or PTD benefits, and the amount of benefits to which the claimant was entitled was no longer contested, delay in paying the award was unreasonable.

The employer argued that Jacobo appealed the entire Commission award, making the decision a non-final judgment that it was not obligated to pay, and that Jacobo did not specify that the only issue on appeal was penalties.  The court rejected these arguments, stating that a claimant’s appeal of an issue unrelated to the substantive award is not a “legitimate reason to withhold payment of the undisputed amounts” and that the record was clear that the employer knew penalties were the only issue on appeal.  Since Jacobo did not appeal the arbitrator’s decision, she waived the right to review the substantive award.  Thus, the only issue she could raise on appeal was penalties.  The Court considered the employer’s position “feigned ignorance” of the contested issues and imposed Section 19(l) penalties for the delay in paying the award without good and just cause.

Turning to the question of Section 19(k) penalties and Section 16 attorney’s fees, the Court held that the employer had no legitimate reason to delay payment of the undisputed award portions of the award, stating, “The employer simply refused to pay the undisputed portions of claimant’s award until all appeals on contested issues were exhausted.”  The Court called it a “gross abuse” of discretion not to award penalties and fees – more than simply a lack of good and just cause, the employer’s delay in payment of its “undisputed obligation” was intentional in this case.

COMMENT

Jacobo has a procedural history akin to Bleak House and teaches a Dickensian lesson for employers: do not fail to timely pay an IWCC award you do not intend to appeal.   The fact that the claimant appeals will not suspend the obligation to pay the award.  Here, the employer should have paid the award within a reasonable time after the April, 2007 Commission decision, or at least in 2008 when petitioner’s attorney demanded payment.  Instead, the award was not paid until June, 2009, over two years later.  During that time, the employer was not challenging the underlying award – there could have been no decision from the courts affecting the obligation to pay the Commission award.  Thus, the employer was sanctioned for taking a tenuous position on its obligation to pay.

Wiedner & McAuliffe advises prompt payment of all final Commission awards as the best practice, even if a claimant seeks appeal.  It is obvious that the courts will treat a decision not to take an appeal as a concession that the award is “undisputed” and subject to immediate payment.  But note, we do not consider that the holding inJacobo applies to an arbitration award reviewed only by the claimant.  An arbitration award is not final until the Commission rules.