Opinion
CLAIM NO. F107441
OPINION FILED NOVEMBER 20, 2002
Upon review before the FULL COMMISSION in Little Rock, Pulaski County, Arkansas.
Claimant represented by HONORABLE KENNETH E. BUCKNER, Attorney at Law, Pine Bluff, Arkansas.
Respondents represented by HONORABLE JOHN D. DAVIS, Attorney at Law, Little Rock, Arkansas.
Decision of the Administrative Law Judge: Reversed.
OPINION AND ORDER
Claimant appeals an April 5, 2002 opinion and order of the Administrative Law Judge finding that respondents do not owe penalties and fees for incorrect installment benefits they paid. Upon de novo review of the entire record, the Full Commission reverses this opinion.
Claimant suffered a compensable back injury on June 25, 2001 and began missing work on June 27, 2001. Respondents erroneously paid temporary total disability benefits of $330.00 per month, but should have paid $410.00 per month. On December 3, 2001, respondents paid claimant $1,951.85, representing the difference between $330.00 and $410.00.
The Administrative Law Judge ruled that respondents owed an 18% penalty on the two-week installment payment of temporary total disability benefits that was due on July 25, 2001 but was not paid until August 20, 2001. He further ruled that claimant is due an attorney's fee for controversion on this amount. Conversely, the Administrative Law Judge denied claimant a penalty and attorney's fee on the $1,951.85 check resolving the difference between the incorrect rate and the corrected rate of claimant's temporary total disability compensation. From this decision claimant appeals.
Controverted attorney's fee
Arkansas' workers' compensation law specifically provides for claimant's attorney's fees, "whenever the Commission finds that a claim has been controverted, in whole or part. . . ." Ark. Code Ann. § 11-9-715(a)(2) (Supp. 1996); See also, Tyson Foods, Inc. v. Fatherree, 16 Ark. App. 41, 696 S.W.2d 782 (1985).
As noted in Cleek v. Great S. Metals, 335 Ark. 342, 345, 981 S.W.2d 531 (1998), "[i]f the fundamental purposes of attorney's fees statutes such as § 11-9-715 are to be achieved, it must be considered that their real objective is to place the burden of litigation expenses upon the party which made it necessary."
Holding respondents liable for at least a portion of the attorney's fees serves the legitimate social purposes of discouraging oppressive delays in recognition of liability, deterring arbitrary and capricious denials of claims, and insuring the ability of a necessitous employee to obtain adequate legal representation. See, Aluminum Company of America v. Henning, 260 Ark. 699, 543 S.W.2d 480 (1976). Thus, the purpose of determining whether or not a claim has been controverted, and by whom, "is to place the burden of litigation expense upon the party which made it necessary." Henning, supra; Buckner v. Sparks Regional Medical Center, 32 Ark. App. 5, 794 S.W.2d 6223 [ 794 S.W.2d 623] (1990). Therefore, whether a claim is controverted must be determined from the circumstances of each particular case. Buckner, supra, Masonite Corporation v. Mitchell, 16 Ark. App. 209, 699 S.W.2d 409 (1985);Climer v. Drake's Backhoe, 7 Ark. App. 148, 644 S.W.2d 637 (1983).
Consequently, the mere failure to pay compensation benefits does not, in and of itself, amount to controversion. Revere Copper Brass, Inc. v. Talley, 7 Ark. App. 234, 647 S.W.2d 477 (1983). Likewise, controversion may not necessarily be found where the respondent accepts compensability, but delays payment in a reasonable attempt to investigate the extent of disability. Horseshoe Bend v. Sosa, 259 Ark. 267, 532 S.W.2d 182 (1976); Hamrick v. The Colson Company, 271 Ark. 740, 610 S.W.2d 281 (1981). However, assuming a position which requires an injured employee to retain an attorney to take the actions necessary to assure that the employee's rights are protected may constitute controversion. New Hampshire Insurance Co. v. Logan, 13 Ark. App. 116, 680 S.W.2d 720 (1984); Turner v. Trade Winds Inn, 267 Ark. 861, 592 S.W.2d 454 (1980); Buckner, supra.
The record indicates, and respondents concede, that claimant was entitled to a compensation rate of $410 when they were paying him $330. Respondents ultimately sent claimant a check for $1,951.85 to make up this difference.
In determining that claimant was not entitled to an attorney's fee and penalty on this amount, the Administrative Law Judge stated:
. . . the respondents accepted the claimant's compensable injury, and began paying regular installments of temporary total disability. It was apparent that the respondents made a mistake in their calculations of the amounts owed on the installment payments. . . . On December 3, 2001, the respondents were notified of the error and agreed to pay the difference in the amounts.
* * * *
The record in this case reflects that the respondents were late in paying one week installment of compensation. No excuse has been made for that late payment; therefore, the claimant's attorney is entitled to a penalty and an attorney's fee on that amount. However, the record in this case also reflects that when it was shown to the respondents that a mistake had been made, the amount of temporary total disability had been paid at an erroneous rate, the respondents agreed that a mistake had been made and a check for $1951.85 was paid, representing the difference in the temporary total disability amounts. The preponderance of the evidence reflects that even though that amount should have been paid originally, the claim was accepted and installments were being paid. For whatever reason, the respondents miscalculated the amount, but did not controvert it. The preponderance of the evidence reflects that neither a penalty, nor an attorney's fee is owed on that amount sent to the claimant on December 3, 2001.
Respondents assert simply in their brief that they mistakenly paid claimant the incorrect rate and offered no further explanation of this error. Also, in their brief, respondents concede that they owe a controverted attorney's fee on the $1,951.85 check issued to claimant — despite the Administrative Law Judge's ruling. Respondent's actions caused claimant to obtain an attorney and take the necessary actions to secure his rights under the law. Based on the record, we find that claimant is entitled to a controverted attorney's fee on the $1,951.85.
Penalty on insufficient installment payments
If we are to allow a controverted attorney's fee on the $1,951.85, it seems to follow that claimant should also be awarded the 18% penalty on this amount as well.
While case law establishes that delays in disability payments due to investigation into the extent of liability may be warranted, it also clearly establishes that any delays in compensation (payable without an award) must be legitimate and excusable by the court. See Turner, supra (delay excusable where carrier was attempting to determine the extent of its liability regarding items in three hospital bills).
Ark. Code Ann. § 11-9-802 sets forth the guidelines for installment payments of disability benefits:
(a) The first installment of compensation shall become due on the fifteenth day after the employer has notice of the injury or death. . . . Thereafter, compensation shall be paid every two (2) weeks. . . .
(b) If any installment of compensation payable without an award is not paid within fifteen (15) days after it becomes due, as provided in subsection (a) of this section, there shall be added to the unpaid installment an amount equal to eighteen percent (18%) thereof, which shall be paid ta the same time as, but in addition to, the installment, unless notice of controversion is filed or an extension is granted the employer under § 11-9-803 or unless such nonpayment is excused by the Commission after a showing by the employer that, owing to conditions over which he had no control, the installment could not be paid within the period prescribed.
Under Ark. Code Ann. § 11-9-802(b), the Commission may excuse late payments of compensation payable without an award when the employer can show that, owing to conditions over which it had no control, the installment could not be paid within the prescribed time period.
This Commission rejected an argument that installment benefits were delayed beyond their control where respondents blamed computer errors and office renovations for their tardy payments. Bill Barkley v. Kagle Heat Air Conditioning, Full Commission Opinion, filed January 10, 1995 ( E316820).
Respondents in Barkley conceded that payments were not timely made, but reasoned that it was due to circumstances entirely beyond their control. Respondents stated in their brief that they were experiencing numerous computer problems and were undergoing office renovations during the same month claimant was to receive his disability checks. Respondents contended, as do the respondents in this case, that they promptly made payments once they determined that none had been made. This Commission rejected that argument and awarded a penalty on each late installment payment. Barkley, supra.
Respondents here failed to make any argument whatsoever as to why the first installment payment was late and why the subsequent installment payments were for an insufficient amount, except to say that they miscalculated the amount of benefits claimant was to receive. Respondents are well aware of how much salary they paid the claimant, and that claimant's disability benefits are based on this salary. Nevertheless, the Administrative Law Judge penalized the first late installment payment, but excused the subsequent insufficient payments from penalty. We cannot reconcile these findings with the case law as applied to the particular facts of this case.
While the Administrative Law Judge stated that respondents became aware of the discrepancy on December 3, 2001 and timely corrected the rate, the record indicates that respondents have been aware of the discrepancy for some time.
The record indicates that: (1) claimant's attorney first notified the Commission of the matter on July 25, 2001, requesting a prehearing conference on the controverted difference; (2) claimant's August 8, 2001 Prehearing Questionnaire listed the disputed difference as an issue to be litigated, and (3) respondents conceded at the November 2001 prehearing conference that the rate they paid was incorrect (according to the claimant's brief).
One could understandably presume that respondents either controverted the difference, since they waited some five months to finally pay, or that they had no valid reason for delaying the full payments. In either case, we find that claimant is entitled to a penalty on the $1,951.85, which represents the difference between the rate of compensation paid and the correct rate of compensation. Accordingly, we reverse the Administrative Law Judge's ruling and award a penalty and attorney's fee on this amount.
All accrued benefits shall be paid in a lump sum without discount and with interest thereon at the lawful rate from the date of the Administrative Law Judge's decision in accordance with Ark. Code Ann. § 11-9-809 (Repl. 1996). For prevailing on this appeal before the Full Commission, claimant's attorney is hereby awarded an additional attorney's fee in the amount of $250.00 in accordance with Ark. Code Ann. § 11-9-715 (Repl. 1996).
IT IS SO ORDERED.
______________________________ ELDON F. COFFMAN, Chairman
______________________________ SHELBY W. TURNER, Commissioner
Commissioner Yates concurs and dissents.
CONCURRING AND DISSENTING OPINION
I respectfully concur in part and dissent in part from the majority opinion. I concur in the award of an attorney's fee on the payment of $1,951.85, as the respondents did concede in their brief that the claimant was entitled to this award. However, I dissent from the award of an 18% penalty on that payment.
_____________________________ JOE E. YATES, Commissioner