Roodhouse Envelope Co. v. Industrial Com'n

• Court: Appellate Court of Illinois
• Writing for the Court: HOLDRIDGE
• Citation: Roodhouse Envelope Co. v. Industrial Com'n, 658 N.E.2d 838, 276 Ill.App.3d 576, 213 Ill.Dec. 89 (Ill. App. 1995)
• Decision Date: 28 September 1995
• Docket Number: No. 4-94-0531WC,4-94-0531WC
• Parties: , 213 Ill.Dec. 89 ROODHOUSE ENVELOPE COMPANY, Appellant, v. The INDUSTRIAL COMMISSION et al. (Myrtle Allen, Appellee).

Page 838

658 N.E.2d 838

276 Ill.App.3d 576, 213 Ill.Dec. 89

ROODHOUSE ENVELOPE COMPANY, Appellant, v. The INDUSTRIAL COMMISSION et al. (Myrtle Allen, Appellee).

No. 4-94-0531WC.

Appellate Court of Illinois,

Fourth District,

Industrial Commission Division.

Sept. 28, 1995.

Robert N. Hendershot, James M. Gallen (argued), Evans & Dixon, St. Louis, MO, for Roodhouse Envelope Company.

James R. Carey (argued), Pratt, Bradford & Tobin, P.C., East Alton, for Myrtle Allen.

JUSTICE HOLDRIDGE delivered the opinion of the court:

Claimant, Myrtle Allen, filed an application for adjustment of claim, pursuant to the Workers' Compensation Act (Act) (Ill.Rev.Stat.1989, ch. 48, pars. 138.1 through 138.30 (now 820 ILCS 305/1 [276 Ill.App.3d 578] through 305/30 (Michie 1993))) alleging injuries arising out of and in the course of her employment with Roodhouse Envelope Company (employer).

Following an emergency hearing pursuant to section 19(b-1) of the Act (Ill.Rev.Stat.1989, ch. 48, par. 138.19(b-1) (now 820 ILCS 305/19(b-1) (Michie 1993))), the arbitrator found that the claimant was entitled to 94 5/7 weeks of temporary total disability benefits (TTD) at the rate of $168.67 per week, i.e., $15,975, and $7,419.29 for necessary medical expenses. The arbitrator also found, pursuant to a stipulation of the parties, that the respondent had paid $7,421.92 in TTD benefits prior to the hearing.

The employer filed a petition for review of the arbitrator's decision with the Industrial Commission (Commission). The Commission affirmed the arbitrator's award. The employer did not seek review of the Commission's decision by the circuit court.

After more than two months had passed without the employer paying the award, the claimant filed a petition with the Commission for penalties pursuant to sections 19(k) and 19(l ) of the Act (Ill.Rev.Stat.1989, ch. 48, pars. 138.19(k), (l ) (now 820 ILCS 305/19(k), (l ) (Michie 1993))). The claimant also petitioned for attorney fees pursuant to section 16 of the Act (Ill.Rev.Stat.1989, ch. 48, par. 138.16 (now 820 ILCS 305/16 (Michie 1993))).

The Commission, finding that the employer's failure to pay the award promptly was unreasonable and vexatious, awarded section 19(k) penalties in the amount of 50% of the total TTD award ($15,974.74), for a penalty of $7,987.37. The Commission also awarded section 19(l ) penalties in the amount of $870 representing 87 days at $10 per day. Section 16 attorney fees were found to be $1,597.47, based upon 20% of the section 19(k) penalties. The employer appealed the Commission's award to the circuit court, and the circuit court confirmed the Commission's order.

On appeal, the employer contends that (1) the Commission lost jurisdiction to impose penalties after no appeal was taken on the Commission's original award of TTD and medical expenses; (2) the Commission's determination that the employer's delay in payment of the award was unreasonable and vexatious was against the manifest weight of the evidence; and (3) the Commission improperly calculated the amount of penalties by failing to give the employer credit for voluntary TTD payments of $7,421.92 made prior to the arbitration award. We affirm the Commission's imposition of penalties and attorney fees, and remand with direction that the section 19(k) penalty and attorney fees be recalculated.

The employer initially argues that the Commission lacked jurisdiction to impose penalties and attorney fees. The employer suggests that once the time for appeal of a Commission award has lapsed, the circuit court has sole jurisdiction to enforce the award and assess penalties under section 19(g) of the Act (Ill.Rev.Stat.1989, ch. 48 par. 138.19(g) (now 820 ILCS 305/19(g) (Michie 1993))).

The employer's argument has been rejected by our supreme court in Board of Education v. Industrial Comm'n (1932), 351 Ill. 128, 184 N.E. 202. In Board of Education, a petition for penalties was filed with the Commission pursuant to section 19(k), after the Commission had entered an award and the circuit court confirmed. On appeal, the employer argued that the Commission had no jurisdiction under section 19(k) to assess penalties after its decision entering an award became final. Our supreme court rejected this argument, stating:

"[Section 19(k) ] clearly contemplates that proceedings to impose the penalty there provided shall first be instituted before the Industrial Commission. By its nature it is clear that such proceeding can be brought only after the Industrial Commission has made an award which has become final either by confirmation on review or the lapse of time for review without such being sought." (Emphasis added.) (Board of Education, 351 Ill. at 131, 184 N.E. at 203.)

Based upon the controlling authority of Board of Education, we find the employer's argument that the Commission lacked jurisdiction to impose penalties and fees to be without merit.

The employer next maintains that it did not act in an unreasonable or vexatious manner in delaying payment on the award. Rather, it claims that it properly delayed payment of the award pending the conclusion of settlement negotiations with the claimant and that once it realized settlement was unattainable, it immediately paid the award. The Commission found this explanation to be unreasonable.

When an employer chooses to delay payment of compensation, it has the burden of showing that it had a reasonable belief that the delay was justified. (Lester v. Industrial Comm'n (1993), 256 Ill.App.3d 520, 194 Ill.Dec. 694, 697, 628 N.E.2d 191, 194.) It is well settled that whether an employer acted unreasonably or vexatiously in refusing to pay benefits is a question of fact to be determined by the Commission and such findings will not be disturbed by a reviewing court unless the determination is against the manifest weight of the evidence. Crockett v. Industrial Comm'n (1991), 218 Ill.App.3d 116, 121-22, 161 Ill.Dec. 13, 16, 578 N.E.2d 140, 143.

The Commission's finding that the employer unreasonably and vexatiously delayed payment of the award is not against the manifest weight of the evidence. The employer presented no evidence to support its contention that the delay in paying the award was reasonable; nor was there any evidence that the parties were mutually engaged in settlement negotiations. The record shows that the employer did not pay the arbitration award until 87 days after it had received notification of the award. The record further indicates that the employer made no contact with the claimant's attorney to discuss settlement until approximately one week before the petition for penalties was filed. The claimant's response to those settlement overtures was to reiterate her demand for payment of the award. Clearly, a final and binding award of compensation had been entered and there was nothing regarding the award in need of negotiation. Accordingly, the Commission's decision to impose penalties was not contrary to the manifest weight of the evidence. See Lester, 256 Ill.App.3d at 524, 194 Ill.Dec. at 697, 628 N.E.2d at 194.

The employer lastly maintains that the Commission improperly calculated the section 19(k) penalty by not giving it credit for TTD payments made prior to the hearing. The employer's contention requires this court to examine the statutory construction of section 19(k) of the Act, which states as follows:

"In case 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, then the Commission may award compensation additional to that otherwise payable under this Act equal to 50% of the amount payable at the time of such award. Failure to pay compensation in accordance with the provisions of Section 8, paragraph (b) of this Act, shall be considered unreasonable delay." (Emphasis added.) Ill.Rev.Stat.1989, ch. 48, par. 138.19(k) (now 820 ILCS 305/19(k) (Michie 1993)).

The employer asserts that the Commission misinterpreted the provision concerning the "amount payable at the time of such award" when it failed to credit the respondent with the amount of TTD paid prior to the entry of the award. The employer contends that the amount of TTD benefits "payable at the time of such award" should reflect a credit for the stipulated payments as referenced in the arbitrator's decision. We agree.

Relying upon Moore v. Industrial Comm'n (1989), 188 Ill.App.3d 31, 35-36, 135 Ill.Dec. 494, 497, 543 N.E.2d 1062, 1065, claimant contends that once a penalty is imposed for failure to pay a benefit, the penalty is to be calculated on the entire amount of that type of benefit, not only on the amount remaining unpaid at the time the penalty is awarded. We agree that the claimant has properly stated the holding in Moore. We do not agree, however, with the claimant's assertion that Moore mandates that the employer cannot receive credit for payments stipulated to prior to arbitration.

In Moore, the arbitrator awarded 20 weeks of TTD and 85 1/4 weeks of permanent partial disability (PPD) and determined that the respondent was entitled to a credit of $4,139.20 previously paid by the employer to the claimant. (Moore, 188 Ill.App.3d at 32, 135 Ill.Dec. at 495, 543 N.E.2d at 1063.) The arbitrator noted the pre-award payment was approximately equal to the TTD portion of the award. (Moore, 188 Ill.App.3d at 32, 135 Ill.Dec. at 495, 543 N.E.2d at 1063.) In its appeal to the Commission, the respondent, for the first time, attempted to obtain an additional credit for another previous payment of $4,811.12. The Commission held that the employer was not entitled to take this credit against the award since it had failed to request credit for this payment from the arbitrator, even though the payment had been made prior to the hearing. (Moore, 188 Ill.App.3d...