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Industry Insights

Hannon: Significant Decisions Refresher: Penalties

  • State: Washington
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This week’s refresher concerns significant Washington Board of Industrial Insurance Appeals decisions related to penalties.

Mary Hannon

Mary Hannon

When reviewing this week’s installment, please consider the following:

  • Benefits are due as soon as claimant is entitled to them. Every time a self-insurer unreasonably delays or refuses to pay benefits as they become due, the self-insurer shall pay a penalty not to exceed the greater of one $1,000 or 25% of:
    • The amount due.
    • Or each underpayment made to the claimant.
  • For purposes of this section, “the amount due” means the total amount of payments due at the time of the calculation of the penalty. The director shall issue an order determining whether there was an unreasonable delay or refusal to pay benefits within 30 days upon the request of the claimant (see Revised Code of Washington Section 51.48.017).
  • The term “subject to a penalty” does not mandate the imposition of a penalty for every violation, whether minor or unintended. Determining whether a penalty is appropriate and if so, in what amount, must first be decided by the Washington State Department of Labor and Industries.
  • An assessed penalty bears some relationship to the violation that gave rise to the penalty.

Significant decision No. 1: In re Frank Madrid, BIIA Dec., 86 0224-A (1987)

  • Legal issue: How does the Department of Labor and Industries penalty adjudicator determine if an employer’s delay in paying benefits is reasonable or unreasonable?
  • Key point: The test of whether an employer’s delay in paying benefits is “unreasonable” within the meaning of RCW 51.48.017 is “whether the employer had a genuine doubt from a medical or legal standpoint as to the liability for benefits.” Also, “[G]enerally a failure to pay because of a good faith belief that no payment is due will not warrant a penalty.” The question as to whether the self-insured employer had a genuine doubt, from a medical or legal standpoint, about its liability to pay a benefit necessarily involves questions as to the state of mind of the employer and the information it had regarding the issue of entitlement to the benefits in question, and when it gained possession of that information.

Significant decision No. 2: In re Emily Eyrich, BIIA Dec., 11 22230 (2013)

  • Legal issue: Is a penalty assessed against a self-insured employer as provided by RCW 51.48.017 considered a “benefit,” thereby inducing a further penalty when not paid timely?
  • Key point: Yes. A penalty order as provided by RCW 51.48.017 is also a benefit within the meaning of that statute such that an unreasonable delay in paying the penalty by itself is grounds for the imposition of a further penalty.

 Significant decision No. 3: In re Jackie Washburn, BIIA Dec., 03 11104 (2004)

  • Legal issue: Under RCW 51.48.017, must penalties derive from the violation of a department order mandating payment?
  • Key point: No, not necessarily. An otherwise warranted penalty against a self-insured employer should not be denied merely because the department had not issued an order requiring the payment. In assessing whether a penalty was appropriate under RCW 51.48.017, the board focused on whether the self-insured employer maintained a genuine doubt regarding the claimant’s entitlement to benefits during the period that benefits were withheld or denied.

Significant decision No. 4: In re James Coston, BIIA Dec., 11 12310 (2012)

  • Legal issue: Should a self-insured employer be penalized for a delay in payment of medical benefits?
  • Key point: Payment of medical bills is a benefit under the Industrial Insurance Act. In the event that a self-insured employer unreasonably delays the benefit or refuses to pay the benefit as it comes due, RCW 51.48.017 requires a penalty against the self-insured employer.

Significant decision No. 5: In re Alfredo Suarez, BIIA Dec., 15 20822 (2016)

  • Legal issue: Does the filing of a motion to stay benefits insulate the self-insured employer from an assessment of a penalty for delay in paying benefits?
  • Key point: No. For purposes of determining genuine doubt, the mere filing of an appeal does not establish genuine doubt. When the self-insured employer delays paying benefits, it must have a genuine doubt that the benefits are due and cannot rely on the appeal or stay process under RCW 51.52.050 as a basis for delaying payment if there is no genuine doubt that payment is due.

Mary Hannon is a litigation attorney in Reinisch Wilson Weier PC's Washington practice group for workers’ compensation defense. This column is republished with permission from the firm's website

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