News

April 01, 2012

Gill Vierickl-Iverson was injured while working for Hollywood Casino and received an award which Hollywood did not appeal.  The decision became final on November 19, 2004.  Gill remained under the care of Dr. Lubenow who wrote the claims office on December 22, 2006, explaining that a spinal cord stimulator battery would need replacement “within the first quarter of 2007.”  The letter set forth the cost of the replacement.  The claims examiner testified later that the letter caused her to believe that the procedure would be scheduled in the future, but was not imminent.

As predicted, the stimulator ceased to function in May 2007 when the procedure was scheduled.  The claims adjuster then requested a report explaining the medical necessity for the procedure.  Dr. Lubenow provided this and records covering the period from September 2005 through 2006 on June 18, 2007, and requested authorization to perform the surgery on July 9^th.

Gill’s attorney filed a petition on August 2, 2007, requesting penalties and fees for failure to authorize the battery replacement procedure.  During this proceeding, the claims handler admitted that she was in possession of everything she needed to authorize the battery replacement procedure as of June 18, 2007.  Authorization was not extended until August 15, 2007—two weeks after Gill filed her petition—and surgery was performed on August 27.   Medical bills associated with this care were timely paid.  The Commission subsequently awarded $40,750.00 (50% of the medical costs) in Section 19(k) penalties; attorneys’ fees under Section 16 were denied.

Upon review, the Circuit Court reversed the Commission, finding no legal basis in Section 19(k) for awarding penalties for a delay in authorizing treatment.  The Appellate Court agreed.  The court looked to the language of Section 19(k) which provides that:

“In a case where there has been any unreasonable delay or vexatious delay of payment, or intentional underpayment of compensation…then the Commission may award compensation additional to that otherwise payable under this Act…”  (emphasis in original)

The court reasoned that the phrases “delay of payment” and “underpayment” of compensation do not refer to delay in authorizing treatment, even if there is an obligation to authorize treatment in advance.  The Court felt that the wording of the statute was clear and unambiguous, and should be given its ordinary meaning – the meaning of “payment” in Webster’s does not include giving authorization for a service.

There had been no delay in payment.  The sole reason for imposing penalties was the unreasonable delay in authorizing the replacement surgery, which the court held that the Commission had no statutory authority to do.  The court conceded that the Act is sufficiently broad to require that an employer authorize medical treatment in advance of the services being rendered, but there is no provision in the Act authorizing the assessment of penalties for delay in granting authorization.  Therefore, the Court reversed and denied the penalty award.

Two justices dissented.  Justice Stewart would have affirmed the Commission based on the employer’s obligation to “provide and pay” for all necessary medical:  Section 8(a) is clear that an employer is obligated to “provide” medical services as well as to “pay” for those services when rendered.  He cited Plantation Manufacturing, the case wherein it was held that an employer is obligated to provide prospective medical care, an obligation which for Justice Stewart includes giving authorization in advance of treatment.  Presuming the obligation to “provide” includes giving authorization, Section 19(k) is broad enough to permit an award for penalties for an unreasonable, vexatious delay in authorizing care.

Justice Holdridge joined Justice Stewart.  He added that the concept of “authorization” was not initially contemplated by the legislature but has now become such an integral part of “payment” that a delay in authorization is equivalent to a delay in payment.  Justice Holdridge also felt that the delay was not unreasonable or vexatious until the claims handler admitted she had everything she needed to authorize treatment effective June 18, 2007.  Yet, authorization was not granted until August 15th, after the penalty petition was filed.

COMMENT:

Should there be no further appeal, Hollywood Casino will represent a significant development.  The process required for authorizing treatment can be lengthy, as it was here.  Thus, even a minimal breakdown in due diligence in obtaining the information necessary to authorize treatment could be considered unreasonable or vexatious.  How the court will handle a case involving an unjustified refusal to authorize treatment and payment will be the test of the holding in Hollywood Casino.  Should the Supreme Court agree to hear this matter we will follow its progress.