Bosco v. LIRC

• Decision Date: 15 June 2004
• Docket Number: No. 03-0662.,03-0662.
• Citation: 2004 WI 77,272 Wis.2d 586,681 N.W.2d 157
• Court: Wisconsin Supreme Court
• Parties: Cesare Bosco, Plaintiff-Respondent, v. Labor & Industry Review Commission, Defendant, A.T. Polishing Company and Shelby Insurance Company, d/b/a Insura Property & Casualty Insurance Company, Defendants-Appellants-Petitioners.

272 Wis.2d 586

2004 WI 77

681 N.W.2d 157

Cesare Bosco, Plaintiff-Respondent, v. Labor & Industry Review Commission, Defendant, A.T. Polishing Company and Shelby Insurance Company, d/b/a Insura Property & Casualty Insurance Company, Defendants-Appellants-Petitioners.

No. 03-0662.

Supreme Court of Wisconsin.

Oral argument March 9, 2004.

Decided June 15, 2004.

For the defendants-appellants-petitioners there were briefs by Michael C. Frohman and Kasdorf, Lewis & Swietlik, S.C., Milwaukee, and oral argument by Michael C. Frohman.

For the plaintiff-respondent there was a brief by Gregory A. Pitts and Schoone, Leuck, Kelley, Pitts & Knurr, S.C., Racine, and oral argument by Gregory A. Pitts.

¶ 1. JON P. WILCOX, J.

This case is an action for bad faith penalties under Wisconsin's Worker's Compensation Act. See Wis. Stat. § 102.18(1)(bp) (2001-02).¹ The defendants, A.T. Polishing Company and its insurer, Shelby Insurance Company (Shelby),² appeal from a published court of appeals decision, Bosco v. LIRC, 2003 WI App 219, 267 Wis. 2d 293, 671 N.W.2d 331. The court of appeals affirmed a Kenosha County Circuit Court order, Bruce E. Schroeder, Judge, which reversed the conclusion of the Labor and Industry Review Commission (LIRC) that it was fairly debatable whether Wis. Stat. § 102.23(5) required Shelby and A.T. Polishing to make payments to A.T. Polishing's employee, Cesare Bosco, during the appeal on the merits of his worker's compensation claim, even though Shelby conceded that Bosco suffered permanent total disability caused by occupational exposure while he was employed at A.T. Polishing. For the reasons discussed below, we affirm the decision of the court of appeals.

I. FACTUAL BACKGROUND AND PROCEDURAL POSTURE

¶ 2. This case has an extremely lengthy and complex procedural history, which is set forth in full below in order to appreciate the issues involved in this appeal. Bosco was employed by A.T. Polishing from 1987 until November 5, 1996. In 1993 Bosco saw a doctor regarding breathing difficulties; however, Bosco continued working at A.T. Polishing until November 1996 when his doctor took him off work due to asthma. On April 4, 1997, Bosco filed an Application for Hearing with the Worker's Compensation Division of the Department of Industry, Labor and Human Relations (DILHR) regarding his lung disease.

¶ 3. In his application, Bosco identified the date of injury as "occupational; 7/22/96" and listed his last day of work before disability as "11/96." Bosco alleged that he developed pulmonary problems due to exposure to irritants while employed at A.T. Polishing. Further, Bosco claimed possible total disability as a result of this injury. Shelby, A.T. Polishing's insurer in 1996, filed an answer on June 5, 1997, wherein it admitted that "[t]he accident or occupational exposure alleged in the application actually occurred on or about the time claimed[,]" but denied that "[t]he accident or disease causing injury arose out of the alleged employment." Shelby also denied that Bosco was temporarily or permanently disabled. Shelby left blank the section of the answer that stated: "State exactly what matters are in dispute and your reason for denying liability."

¶ 4. On February 4, 1998, a hearing was held in front of Administrative Law Judge (ALJ) Thomas R. Jones. At the hearing, the ALJ noted that Shelby admitted it was on the risk from 1994 until Bosco's last day of work and stated: "The defense ... is the insurance carrier which has been variously known as Shelby Mutual and other names, and it now is willing to concede that an occupational illness exists, though it's not entirely sure that it's the right insurance company." Further, the ALJ noted:

Before we went on the record Mr. Frohman [counsel for Shelby] asked if he could delay things so he could think about bringing in another insurance carrier to help carry the load. I denied that request as the present medical filings don't seem to indicate that any earlier period of breathing problem was anything but a temporary and separate problem.

When the ALJ asked counsel for Shelby if he had any further comments on the issues, counsel for Shelby stated: "No, Your Honor, I think you had it right."

¶ 5. The ALJ's August 21, 1998, decision and order noted that Shelby conceded Bosco suffered the alleged injury but disputed that Bosco was 100 percent totally disabled. The ALJ found that Bosco was permanently totally disabled due to his work exposure since November 5, 1996. The ALJ ordered that A.T. Polishing and Shelby pay total disability benefits from November 5, 1996, for the rest of Bosco's life. The ALJ further ordered that such payments were to commence in 21 days from the date of the order.

¶ 6. Shelby appealed to LIRC, arguing that the ALJ's finding of the date of disability—November 1996 —was incorrect as a matter of law and that the correct date of injury was 1993. Shelby argued that, as a matter of law, the date of injury for occupational disease is the time when the disability first occurs and that liability is set at that time. Shelby asserted that the medical evidence established that Bosco's disability first occurred in 1993. In a decision dated April 27, 1999, LIRC rejected Shelby's claim:

In addition, applicant's application alleged an occupational disease in July of 1996, and respondent, in its answer, admitted that the accident or occupational exposure occurred on or about the time claimed. The respondent never amended its answer. Apart from the medical evidence recited above, the commission could not now find an earlier date of injury, when a different carrier was on the risk; that carrier was never given any opportunity to present evidence on its behalf because the employer had originally conceded to a July of 1996 date of injury.

¶ 7. Thereafter, Bosco's attorney sent repeated requests that Shelby pay the permanent total disability benefits pursuant to § 102.23(5).³ Shelby, contending that the statute did not apply unless there were two or more insurers joined in the action, did not pay and commenced an action for review with the circuit court of Kenosha County. On December 15, 1999, the circuit court affirmed LIRC's decision, noting that "[t]he answer which was filed raised no issue respecting the liability of the plaintiff insurer; the plaintiff employer's liability is not questioned." The circuit court remarked that the first time Shelby challenged the date of injury was when it requested a continuance at the administrative hearing, nearly eight months after filing its answer. The court emphasized that no amendment was made to the answer and no effort was made to bring in another insurer until that point in the proceeding. The circuit court held that because a request for continuance must be brought within a reasonable time before the date of the hearing under Wis. Admin. Code § DWD 80.09(2)(Nov., 2002)⁴ and the decision to grant a continuance is committed to the discretion of LIRC,⁵ it was required to uphold the decision of the commission.

¶ 8. Shelby again appealed, and the court of appeals affirmed the circuit court, noting that Shelby had essentially waived any date of injury defense by making a pleading error. A T Polishing Co. v. LIRC, No. 00-0343, unpublished slip op., ¶ 1 (Wis. Ct. App. Oct. 18, 2000). The court of appeals reasoned:

By not making a timely amendment to the answer, Bosco was not apprised of the fact that Shelby wanted to contest the date of injury and Sentry Insurance, the worker's compensation carrier for A T Polishing in 1993, was not made a party to the lawsuit. Therefore, Shelby failed to join the issue and was not free to belatedly claim, prior to the start of the hearing before the ALJ, that July 22, 1996, was not the date of injury.

Id., ¶ 6. Therefore, the court of appeals concluded that "LIRC's refusal to allow argument on the issue of date of injury was not only reasonable, it was compelled." Id., ¶ 5.

¶ 9. This court denied Shelby's petition for review on January 16, 2001. The merits of the underlying worker's compensation claim have therefore been finally adjudicated and are no longer at issue. Shelby did not make any payments to Bosco until this court denied its petition for review.

¶ 10. Meanwhile, on January 14, 2000, Bosco filed an amended Application for Hearing, seeking bad faith penalties under § 102.18(1)(bp)⁶ and Wis. Admin. Code § DWD 80.70(2)⁷ for failure to pay the permanent total disability award ordered by the ALJ pending appeal, as required by § 102.23(5). On February 18, 2002, the ALJ entered an order rejecting Bosco's claim for bad faith penalties under § 102.18(1)(bp). The ALJ specifically found that Shelby and A.T. Polishing were not required to make payments pending appeal under § 102.23(5). Finally, the ALJ's order denied jurisdiction for Bosco to litigate a claim under Wis. Stat. § 102.22(1) for inexcusable delay, as this claim was not pled in the hearing application.

¶ 11. Bosco appealed to LIRC, which, by order dated June 28, 2002, affirmed the order of the ALJ. Unlike the ALJ, LIRC did not provide a definitive interpretation of § 102.23(5). Rather, LIRC determined that the statute was susceptible to more than one reasonable meaning such that it was fairly debatable whether Shelby was required to make payments under § 102.23(5). Thus, LIRC ruled: "The commission cannot conclude that Shelby Mutual's reading of Wis. Stat. § 102.23(5) is unreasonable or `lacked a reasonable basis.'" Thereafter, on July 3, 2002, Bosco filed a complaint in Kenosha County Circuit Court seeking review of LIRC's decision.

¶ 12. On December 30, 2002, the circuit court, Judge Schroeder presiding, reversed the decision of LIRC and remanded for further proceedings on Bosco's bad faith claim. The circuit court ruled that LIRC erred in its interpretation of § 102.23(5). The court reasoned:

The decision of this court in the prior action between the parties contained, on its third page, the explicit

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