Case Alert: Penalties at Claim Closure

sarah ewing
In the most recent workers’ compensation case from the Court of Appeals, Walker v. Providence Health System, the court addressed penalties assessed relating to claim closure.

The facts and procedural status of this claim have been over-simplified for this summary. The employer noticed an IME to determine if claimant had any permanent impairment due to her accepted mental health conditions; she did not attend. At the employer’s request WCD issued a suspension order effective until such time as she submits to the designated exam. At the request of claimant’s attorney, she submitted to closing exam by her treating psychiatrist; the report was issued September 29, 2009. The next day, claimant requested claim closure based on the report. The employer did not close the claim or issue a notice of refusal to close the claim within 10 days. Instead, a Notice of Closure (NOC) issued November 5, 2009 “pursuant to Order Suspending compensation.” This NOC did not award any PPD. Claimant requested reconsideration; ARU issued an order awarding 35% PPD based on her psychiatrist’s report. Claimant requested a hearing asserting unreasonable refusal to close and entitlement to a penalty and attorney fee.

The Board found that claimant was not entitled to a penalty because: 1) the suspension order created “legitimate doubt” on the duty to close the claim, and 2) no penalty was due as no PPD was “then due” when the employer issued the NOC.

First addressing the penalty, the court construed the statutory phrase “compensation determined to be then due.” It concluded the amount due in this case referred to the final PPD amount, less any overpayments rejecting the employer’s argument that it was limited to what was due on the tenth day after the request for closure or to the award from the NOC.

The court then reviewed the Board’s finding of legitimate doubt about the duty to close the claim or issue a notice of refusal to close within 10 days to see if it was supported by substantial reason. The court found the Board’s order lacked explanation on 1) why the suspension order created legitimate doubt or uncertainty on the duty to close the claim and 2) whether the employer had sufficient information to close the claim within the 10 day window. Finding a lack of substantial reasoning to support the Board’s order, the court reversed and remanded the case back to the Board for further consideration.

Sather, Byerly & Holloway Take Away: When a penalty is assessed relating to claim closure, the amount of the penalty is based on the final PPD award, less any overpayment.

If you would like a copy of the case or have additional questions about penalties in general, please feel free to contact me or any SBH attorney.

Sarah at: sewing@sbhlegal.com