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April 30, 2010
Did Employer Unreasonably Delay Payment?

An arbitrator at a workers’ compensation hearing found that an employer had “unreasonably and vexatiously delayed and refused payment” of temporary total disability (TTD) benefits and medical expenses to an injured employee and awarded penalties under the Illinois Workers’ Compensation Act. The case made its way to the state court of appeals.

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What happened. “Ron,” an employee of the Otto Baum Company, injured his neck while erecting scaffolding in July 2004. He returned to work but experienced increasing pain. Over the course of the next several months, Ron visited myriad doctors and underwent several medical tests, including an MRI. Test results left a few doctors wondering whether his pain was the result of the injury he sustained while at work or of preexisting medical conditions. In December, one doctor—“Saunders”— provided a report to the company stating that Ron’s symptoms were “likely related to the degenerative changes that he has in his cervical spine. None of those are the result of an injury.” In a subsequent report the next month, Dr. Saunders said his opinions had not changed.

Ron’s case was heard before an arbitrator in April 2005, who found that Ron had proved he’d sustained accidental injuries arising out of and in the course of his employment and awarded him TTD benefits of about $585 per week for 40 weeks and over $46,900 for incurred medical expenses. The arbitrator further awarded penalties under the Act, finding that the company “unreasonably relied” on Dr. Saunders’ opinions. The Illinois Workers’ Compensation Commission affirmed the arbitrator’s decision, but a state circuit court found that the employer hadn’t unreasonably delayed the payments. Ron appealed, asking the Illinois Court of Appeals to reinstate the penalties.

What the court said. The court explained that an employer bears the “burden of showing that it had a reasonable belief that the delay was justified.” The company’s representative said that its denial of benefits was reasonable because three different doctors provided medical opinions after reviewing the results of the MRI that had cast doubt as to whether Ron’s current condition was the result of his workplace injury. While the opinions of these doctors “did not ultimately persuade the Commission,” the court wrote, “no reasonable person could conclude that the employer was not entitled” to rely on them. The court concluded that the Commission abused its discretion in imposing penalties. Reynolds v. Illinois Workers’ Compensation Commission Division, Illinois Court of Appeals, No. 3-08-0759WC (2009).

Point to remember: Citing a previous ruling, the court explained that, generally, “[w]hen the employer acts in reliance upon reasonable medical opinion or when there are conflicting medical opinions, penalties ordinarily are not imposed.”

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