Industrial Commission Orders a Respondent to Pay Attorneys’ Fees and Penalties for Failure to Authorize Medical Treatment - Back to Table of Contents - Back to WC Index
Author: John D. Flodstrom, Urbana

There has been a proliferation of section 8(a) petitions seeking authorization for prospective medical treatment since the ruling in Plantation Mfg. Co. v. Industrial Comm’n (Razo), 294 Ill. App. 3d 705, 691 N.E.2d 13, 229 Ill. Dec. 77 (2d Dist. 1997). The Plantation court held the Industrial Commission has the authority to order a respondent to authorize medical treatment recommended by a physician. Employers should be aware there has been a recent Industrial Commission decision, Morgan v. Vermont Foundry Co., 03 IIC 0494, 2003 Ill. Wrk. Comp. LEXIS 495 (July 25, 2003) which appears to have unjustifiably expanded the relief that can be awarded against a respondent in a section 8(a) proceeding.

Morgan was a Galesburg case heard by Arbitrator Neva Neal. The petitioner was diagnosed with a condition of cubital tunnel syndrome which, according to her treating physician, was causally related to her work activities with the employer and required surgical intervention. For reasons not explained in the opinion, the employer refused to authorize the cubital tunnel surgery despite receiving a report from an IME physician stating the petitioner had a work-related medical condition and was an appropriate candidate for surgery.

Not surprisingly, Arbitrator Neal found the employee had a work-related condition of cubital tunnel syndrome and ordered the employer to authorize the surgery. Arbitrator Neal went a step further and made a monetary award of $5,000.00, which represented the projected cost of the surgical procedure. The employer filed a review with the Industrial Commission.

Arbitrator Neal’s decision was affirmed in an opinion written by Commissioner Sherman, the employee’s representative on Panel B, and Commissioner Serkland, a former petitioner’s attorney. However, the award of $5,000.00 for future surgical expenses was reversed because the Commission concluded there is no legal basis to award a specific dollar amount for medical treatment which has not yet been incurred. While it is encouraging to see the Industrial Commission feels constrained by the scope of the Workers’ Compensation Act, Commissioners Sherman and Serkland then went on to contradict themselves when they turned their attention to the employee’s request for attorneys’ fees and penalties.

At the original section 8(a) hearing, the employee filed petitions asking for an award of attorneys’ fees and penalties related to the employer’s refusal to authorize surgery. The request for attorneys’ fees was based on section 16 of the Workers’ Compensation Act (820 ILCS 305/1, et. seq.), which provides that an employer and its insurance carrier can be liable for attorneys’ fees if they have “been guilty of unreasonable or vexatious delay, intentional under-payment of compensation benefits, or has engaged in frivolous defenses which do not present a real controversy . . . .”

The request for penalties was made pursuant to section 19(k), which allows for penalties of up to 50% of an award in matters where “there has been any unreasonable or vexatious delay of payment or intentional underpayment of compensation, or proceedings have been instituted or carried on by the one liable to pay the compensation, which do not present a real controversy, but are merely frivolous or for delay . . . .”

The employee’s claim for attorneys’ fees and penalties was denied by Arbitrator Neal. The Industrial Commission reversed Arbitrator Neal on that issue, finding the employer was liable for attorneys’ fees and penalties for refusing to authorize medical treatment recommended by a treating physician with the concurrence of an IME physician. The employer was assessed attorneys’ fees of 20% of any surgical charges plus penalties representing 50% of the cost of the proposed surgery. The Commission noted the assessment of attorneys’ fees and penalties was based on the employer’s “wrongful refusal to timely provide and pay for such treatment.” Assuming the surgery would have cost $5,000.00 as projected by the treating physician, the employer would then be liable for attorneys’ fees and penalties in the amount of $3,500.00.

The decision in Morgan seems to be at odds with the language in sections 16 and 19 of the Workers’ Compensation Act. These provisions allow the Commission to assess attorneys’ fees and penalties for failure to make timely payments, but do not speak to the denial of prospective medical treatment. If anything, these provisions might provide some support for awarding attorneys’ fees and penalties for raising a frivolous defense which did not present a real controversy. After all, the employer had participated in both section 8(a) hearing and a subsequent review despite having no evidence to offer in opposition to the employee’s request for prospective medical treatment. However, the Commission’s award in Morgan is tied to the employer’s failure to timely authorize medical treatment rather than engaging in a frivolous defense.

The Morgan case is a good example of how bad facts can create bad law. The employer did not have any evidence to support its position and provided the Industrial Commission with a ripe opportunity to assess attorneys’ fees and penalties. The scope of the Morgan decision remains to be seen. It is not known at this time whether there will be an appeal to the circuit court or beyond. Hopefully, a reviewing court will determine that the Industrial Commission did not have the statutory authority to award attorneys’ fees and penalties for the denial of prospective medical treatment. In the meantime, all employers and carriers should be aware the denial of prospective medical treatment might create exposure for an award of attorneys’ fees and penalties.

Further Refinement of Temporary Total Disability Exposure - Back to Table of Contents - Back to WC Index
Author: Kevin J. Luther, Rockford

Many claims representatives who handle workers’ compensation claims in other jurisdictions express frustration that the workers’ compensation system in Illinois is not “black and white.” Such comments are very accurate because the Illinois system does have many “gray areas,” such as liability for temporary total disability benefits.

In Illinois, temporary total disability liability is factually based, which was underscored recently in the appellate court decision of Mech. Devices v. Industrial Comm’n, 2003 Ill. App. LEXIS 1325, 800 N.E.2d 819, 279 Ill. Dec. 531 (4th Dist. 2003). In that decision, the Fourth District Appellate Court considered a cross-appeal by both parties of an Industrial Commission decision that considered the issue of liability for temporary total disability claims for prospective medical benefits, and also, penalties and attorneys’ fees.

In Mechanical Devices, the claimant alleged an injury to his right shoulder and low back. Prior to the accident, the claimant also worked as a shuttle bus driver for a YWCA, averaging between 20 and 25 hours per week. In July 1999, the claimant returned to his part-time work at the YWCA but was given partial and temporary restrictions with respect to his position with Mechanical Devices. That same month, the claimant also enrolled full-time in cosmetology school, which required attending classes six hours per day, four days per week. After July 1999, the claimant continued to work part-time for the YWCA, attended cosmetology school, and turned down job offers from Federal Express and Hertz. The claimant’s treating physician, as well as the examining physicians of both parties, agreed the claimant was not at a level of maximum medical improvement in July 1999.

The claimant requested TTD benefits from July 1999 (when he returned to driving a shuttle bus for the YWCA, but had not yet returned to regular work duties for Mechanical Devices), through February 2000 (the date of the arbitration hearing). The arbitrator found the claimant was not entitled to TTD benefits after July 6, 1999, when he resumed driving for the YWCA. On review, the Industrial Commission modified the TTD award and extended the employer’s TTD obligation through February 2, 2000, the day of the arbitration hearing. However, the Industrial Commission further concluded the employer should be awarded a credit for the wages earned by the petitioner at the YWCA after he returned to work for the YWCA in July 1999. The Industrial Commission also denied the claimant’s request for penalties and attorneys’ fees and did not order prospective medical treatment.

The appellate court began its analysis of the temporary total disability issue by stating that the duration of TTD benefits is a question of fact. Archer Daniels Midland Co. v. Industrial Comm’n, 138 Ill. 2d 107, 118-19, 561 N.E.2d 623, 149 Ill. Dec. 253 (1990). To establish entitlement to TTD benefits, a claimant must demonstrate not only that he or she did not work, but also was unable to work. City of Granite City v. Industrial Comm’n (Reader), 279 Ill. App. 3d 1087, 1090, 666 N.E.2d 827, 217 Ill. Dec. 158 (5th Dist. 1996). The Industrial Commission emphasized that the “dispositive test” as to whether the claimant’s condition has stabilized is whether the claimant has reached a maximum level of medical improvement. Freeman United Coal Mining Co. v. Industrial Comm’n, 318 Ill. App. 3d 170, 177, 741 N.E.2d 1144, 251 Ill. Dec. 966 (5th Dist. 2000). Once an injured employee’s physical condition has stabilized, the employee is no longer eligible for TTD benefits because the disabling condition has become permanent. Manis v. Industrial Comm’n, 230 Ill. App. 3d 657, 660, 595 N.E.2d 158, 172 Ill. Dec. 95 (1st Dist. 1992). Temporary total disability benefits are to be awarded for the period from an employee’s injury until he or she has recovered as much as the character of the injury will permit. Presson v. Industrial Comm’n, 200 Ill. App. 3d 876, 880, 558 N.E.2d 127, 146 Ill. Dec. 164 (5th Dist. 1990).

The appellate court’s analysis of the temporary total disability issue focused first and foremost on whether or not the claimant had reached a maximum level of medical improvement. Factors to be considered in determining whether a claimant has reached maximum medical improvement include: (1) a release to return to work; (2) the medical testimony concerning the claimant’s injuries; (3) the extent of the injury; and (4) “most importantly,” whether the injury is stabilized. See, Beuse v. Industrial Comm’n (Village of Franklin Park), 299 Ill. App. 3d 180, 183, 701 N.E.2d 96, 233 Ill. Dec. 453 (1st Dist. 1998). In addition, compliance with a prescribed rehabilitation program may be evidence of whether a claimant has reached maximum medical improvement. See also, Freeman, 318 Ill. App. 3d at 178-179.

In Mechanical Devices, the employer first argued that the claimant’s return to part-time work at the YWCA indicated his ability to work in a stable market and in an unlimited capacity, which therefore precludes a finding of temporary total disability liability. The appellate court noted a claimant’s earning of occasional wages does not necessarily preclude a finding of temporary total disability. See, e.g., E. R. Moore Co. v. Industrial Comm’n, 71 Ill. 2d 353, 361, 376 N.E.2d 206, 17 Ill. Dec. 207 (1978); Zenith Co. v. Industrial Comm’n, 91 Ill. 2d 278, 282, 286, 437 N.E.2d 628, 62 Ill. Dec. 940 (1982); J. M. Jones Co. v. Industrial Comm’n, 71 Ill. 2d 368, 372-73, 375 N.E.2d 1306, 17 Ill. Dec. 22 (1978). In the above cases, the claimants’ return to work was considered to be “occasional income,” which did not preclude TTD liability. The employer emphasized Dolce v. Industrial Comm’n (Southwest Beer Distribs.), 286 Ill. App. 3d 117, 675 N.E.2d 175, 221 Ill. Dec. 268 (1st Dist. 1996) for the proposition that the claimant would not be entitled to TTD benefits because in Dolce, the claimant had returned to work as a real estate sales associate for a real estate agency. In Dolce, the appellate court denied additional TTD benefits because the claimant worked consistently in a stable, competitive labor market selling real estate. On a factual basis, the appellate court in Mechanical Devices determined the claimant’s work pattern was closer to the “occasional income” analysis in Zenith and J. M. Jones than it was to the claimant in Dolce (800 N.E.2d at 827).

The employer in Mechanical Devices also argued that because the claimant rejected two job offers (Federal Express and Hertz), there should be no additional obligation to pay temporary total disability benefits. Again, the appellate court rejected this argument, noting that “the dispositive question is whether the claimant’s condition has ‘stabilized.’” See, Freeman, 318 Ill. App. 3d at 177-178. Because the Industrial Commission determined the claimant’s condition had not “stabilized,” the appellate court reasoned the claimant was still entitled to TTD benefits, notwithstanding two job offers.

The employer next asserted the claimant’s attendance at cosmetology school, which did include some physical activities as a part of the coursework, was incompatible with the claimant’s inability to work and claim for temporary total disability benefits. The appellate court noted that school attendance, in and of itself, does not disqualify an injured worker from receiving TTD benefits. See, Mobil Oil Corp. v. Industrial Comm’n (Clodi), 309 Ill. App. 3d 616, 627-628, 722 N.E.2d 703, 242 Ill. Dec. 919 (3d Dist. 2000). Once again, the appellate court noted that no physician stated the petitioner reached maximum medical improvement, and, therefore, TTD benefits were warranted, notwithstanding full-time school attendance.

After finding the claimant was entitled to temporary total disability benefits, the appellate court considered the employer’s argument that the Industrial Commission improperly legislated a “partial temporary wage differential award” by granting the employer credit against its TTD benefit obligation for wages earned by the claimant at the YWCA. Mechanical Devices, 800 N.E.2d at 825. The appellate court noted that in Illinois, a “temporary partial” disability benefit is not contemplated under the Act. See, 820 ILCS 305/8 (West 2000). Accordingly, the appellate court determined the Industrial Commission erred when it effectively awarded a temporary partial disability benefit by reducing the claimant’s TTD award by wages he earned at the YWCA. While this part of the court’s decision benefits Illinois employers because it reaffirms the absence of a temporary partial disability benefit, it actually increased the dollar amount of the employer’s liability by eliminating the YWCA credit.

On the issue of penalties and attorneys’ fees, the claimant sought a section 19(l) penalty based on the employer’s failure to pay TTD benefits after June 2, 1999. The appellate court noted a section 19(l) penalty is “in the nature of a late fee.” Mechanical Devices, 800 N.E.2d at 829; McMahan v. Industrial Comm’n (Farmer’s Elevator), 183 Ill. 2d 499, 515, 702 N.E.2d 545, 234 Ill. Dec. 205 (1998). Because the employer relied on one doctor’s opinions that the claimant’s back condition was congenital and not causally related to the accident, the appellate court concluded the employer did have a good-faith basis to terminate the claimant’s TTD benefits before the claimant was declared to have reached maximum medical improvement. The appellate court rejected the claimant’s argument that the employer had no reasonable basis to terminate TTD benefits, and affirmed the Industrial Commission’s denial of section 19(l) penalties.

The claimant’s attorney also requested section 19(k) penalties and section 16 attorneys’ fees. Section 19(k) penalties are imposed when there is an unreasonable and vexatious delay of payment or intentional underpayment of compensation, and a section 16 award of penalties applies in the same circumstances. See, 820 ILCS 305/19(k) (West 2000); 820 ILCS 305/16 (West 2000); McMahan, 183 Ill. 2d at 515. The appellate court noted the imposition of section 19(k) penalties and section 16 attorneys’ fees is discretionary, and they require a higher standard of proof than the award of additional compensation under section 19(l). Because both the Industrial Commission and the appellate court determined the employer’s conduct did not meet the lower standard applicable for imposition of section 19(l) penalties, it concluded that it also did not meet the higher standard required for the imposition of section 19(k) penalties or section 16 attorneys’ fees. Therefore, all requests for penalties and attorneys’ fees were denied by the Industrial Commission and affirmed by the appellate court.

The Mechanical Devices decision is a “must read” because it lays out our appellate court’s current views on temporary total disability liability. Temporary total disability entitlement is a factual issue to be determined on a case-by-case basis, but it appears that our appellate court views the “maximum medical improvement” factor as the first factor to be analyzed in the TTD issue. If, in fact, the injury has “stabilized” and there is a medical opinion that the claimant has reached maximum medical improvement, then the employer’s position regarding the suspension and termination of TTD benefits will be stronger in situations where the claimant can not return to work for the employer.

Case Law Update - Back to Table of Contents
Author: James M. Voelker, Peoria

Corporate Officer’s Rejection of Insurance Ineffective - Back to Table of Contents - Back to WC Index

General Casualty Co. v. Carroll Tiling Services, 342 Ill. App. 3d 883, 796 N.E.2d 702, 277 Ill. Dec. 616 (2d Dist. 2003). In 1997, respondent sought to reduce its premium costs for workers’ compensation insurance by rejecting insurance coverage for a vice president. In 1997, General Casualty issued an endorsement excluding the vice president from coverage. No further premiums were paid to General Casualty for coverage of the vice president. In 1999, the vice president injured himself on the job and filed a workers’ compensation claim. General Casualty denied coverage, and the trial court granted summary judgment in its favor. The appellate court reversed, holding that the rejection of coverage signed by the vice president was ambiguous. It clearly waived coverage but did not withdraw the vice president from coverage of the Act. It further held that by choosing to purchase insurance, the employer sought to cover all employees including the vice president. The court rejected General Casualty’s contention that it was free to remove coverage for any employee at any time.

Arbitrator’s Refusal to Continue Case Upheld;
Overtime Included In Wage If It Is Required or Regularly Worked - Back to Table of Contents - Back to WC Index

Edward Don Co. v. Industrial Comm’n (Amato), 2003 Ill. App. LEXIS 1358, 801 N.E.2d 18, 279 Ill. Dec. 726 (1st Dist. 2003). Counsel for the employer sought a continuance of a trial because a witness failed to appear pursuant to subpoena. The arbitrator refused to continue the case. Since defense counsel failed to request enforcement of the subpoena by the arbitrator, the issue was waived. Further, the appellate court reversed the Industrial Commission’s inclusion of overtime in the average weekly wage when petitioner failed to offer any proof that petitioner was required to work overtime as a condition of his employment or that the overtime was part of his regular hours of employment.

Petition for Review of Corrected Decision Must be Filed to Perfect Review - Back to Table of Contents - Back to WC Index

Schulz v. Forest Preserve Dist., 2003 Ill. App. LEXIS 1366, 801 N.E.2d 73, 279 Ill. Dec. 781 (1st Dist. 2003). On June 29, 2001, the arbitrator issued a decision. On July 26, 2001, the employer filed a petition for review of that decision. The arbitrator, on motion of the claimant, issued a “corrected decision” on July 27, 2001. The employer failed to file a petition for review of the “corrected decision.” The appellate court held that strict compliance with section 19(f) of the Act is required. The employer was required to file a petition for review of the corrected decision so the appeal was properly dismissed for lack of jurisdiction.

Judicial Remand to Industrial Commission Not Final and Appealable - Back to Table of Contents - Back to WC Index

Trunek v. Industrial Comm’n (Wal-Mart Stores, Inc.), 2003 Ill. App. LEXIS 1583 (1st Dist. December 31, 2003). A judicial appeal of an order of the circuit court remanding the case back to the Industrial Commission is not allowed. It is well settled that the jurisdiction of the appellate court is limited to review of final judgments. The only exception is an appeal under Supreme Court Rule 306(a) which requires the movant to file a petitioner for leave to appeal.

Judicial Appeal Dismissed for Failure to File Bond Signed by Principal - Back to Table of Contents - Back to WC Index

Freedom Graphic Systems, Inc. v. Industrial Comm’n, 2003 Ill. App. LEXIS 1587 (1st Dist. December 31, 2003). The employer filed a judicial appeal of an award by the Industrial Commission. It filed with the circuit clerk a bond that was not signed by the principal but was accepted by the circuit clerk. The circuit court dismissed the appeal, and the appellate court upheld the dismissal. Strict compliance with section 19(f) of the Act is required. The court noted that the purpose of requiring a bond is to bind the principal. A bond without the signature of the principal does not further that purpose. In addition, the circuit clerk’s acceptance of the faulty bond is not dispositive of subject-matter jurisdiction.

Refusal to Reinstate Claim Dismissed for Want of Prosecution Upheld - Back to Table of Contents - Back to WC Index

Banks v. Industrial Comm’n (Mariah Boats), 2004 Ill. App. LEXIS 67 (5th Dist. January 28, 2004). Petitioner’s claim was dismissed for want of prosecution on 4-21-99, a timely petition to reinstate was filed on 6-28-99 but the motion was not set for hearing until 2-28-01. The appellate court upheld the Industrial Commission’s refusal to reinstate the case. It noted that Industrial Commission Rule 7020.90(a) requires a claimant to file a petition to reinstate within 60 days of its receipt of the order of dismissal, and the petition must set forth the date on which the petitioner will appear before the arbitrator to present the petition. In this case, petitioner failed to set forth the hearing date on the petition and failed to set the motion for hearing for almost three years. The refusal to reinstate was held to be within the sound discretion of the Industrial Commission which applied “standards of fairness and equity.”

TTD Payable Until Claimant Reaches MMI Unless Affirmatively Seeks Surgery;
Stipulation Contrary to MMI Finding Is Binding In the Employer - Back to Table of Contents - Back to WC Index

Walker v. Industrial Comm’n, 2004 Ill. App. LEXIS 87 (4th Dist. February 2, 2004). The Industrial Commission awarded 29 weeks of TTD up to the point where petitioner reached maximum medical improvement. Claimant appealed arguing that the MMI finding presumed petitioner would not have additional surgery. His treating physicians had recommended additional surgery but also opined that claimant was at MMI if he elected against surgery. Although claimant testified at trial that he wanted to proceed with the surgery, he had taken no affirmative steps to undergo the surgery prior to trial. The appellate court held that the Industrial Commission’s decision that the 19-month delay between the surgical recommendation and the testimony at trial was sufficient to deny additional TTD. Otherwise, a claimant could intentionally delay the process for the purpose of securing additional TTD. However, the Industrial Commission’s award of 29 weeks of TTD was increased to 84 weeks since that is what the employer stipulated to at trial. The court noted that stipulations on the Request for Hearing form are binding on the parties.

Fall On Ice On Employer’s Parking Lot Compensable - Back to Table of Contents - Back to WC Index

Mores-Harvey v. Industrial Comm’n (Bob Evans Rest.), 2004 Ill. App. LEXIS 100 (3d Dist. February 6, 2004). Petitioner worked as a waitress for respondent and slipped on ice as she was exiting her vehicle. The parking lot was public but petitioner was required to park in the rear of the lot. The Industrial Commission found the case not compensable but the appellate court reversed the Industrial Commission and found the fall compensable. It ruled that injuries sustained in a parking lot “provided by and under the control” of the employer are compensable. The court rejected any distinction between lots for the general public and lots used primarily by employees. It stated that the proper inquiry is whether the employer provides and maintains the lot for its employee’s use. The court distinguished Wal-Mart Stores v. Industrial Comm’n, 326 Ill. App. 3d 438, 761 N.E.2d 768, 260 Ill. Dec. 585 (4th Dist. 2001) on the basis that the employee in that case was being picked up by a friend. Thus, the employee was not acting under the employer’s control when she left the store to go on break.

We recommend the entire opinion be read and counsel consulted concerning the effect these decisions may have upon your claims.