FORETHOUGHT - Whyte Hirschboeck Dudek SC

PUNITIVE CONSEQUENCES:
UNINSURED WORKER’S
COMPENSATION PENALTY
CLAIMS AGAINST EMPLOYERS
Written by
Maryeve Heath and
Mary Beth Hughes
2013 is here and, unfortunately,
the economic outlook is not much
better than 2012. One of the biggest
consequences for employers in the
worker’s compensation arena is an
increase in the value of worker’s
compensation claims. There are a number
of ways this occurs, but one of the most
dangerous and potentially overlooked
ways is through penalty claims pursued
directly against employers. There are
four different penalty claims an employee
may pursue against his or her employer,
all of which are uninsurable under a
worker’s compensation policy. This means
the employer bears the full burden of
defending the claim, including hiring an
attorney and paying its own defense
costs, as well as paying for any judgment
or settlement. It is important to note,
however, that the employee may only
prevail in any of these claims after proving
the existence of a compensable, workrelated
injury. Following are descriptions of
the potential penalty claims that may be
pursued by an injured employee.
1. Bad Faith: Wisconsin Statutes
§ 102.18(1)(bp)
If the employer (or insurance carrier)
suspends, terminates, fails to make
payments or fails to report an injury as a
result of malice or bad faith, the penalty is
200% of compensation, including medical
expenses, up to a maximum of $30,000 for
each act of bad faith. The Department of
Workforce Development (DWD) regulation,
§ DWD 80.70, defines “malice or bad
faith” in two ways: (1) where the employer
unreasonably refuses or unreasonably fails
to report an alleged injury to its worker’s
compensation carrier; or (2) where the
self-insured employer or insurance carrier
unreasonably fails to make payment or
unreasonably suspends or terminates
payments without credible evidence
demonstrating that the claim for payments
is fairly debatable. Under Wis. Stat. §
102.22(1), the “delayed payment penalty”
statute, if the employer or insurance carrier
“inexcusably” fails to pay, a penalty of
10% of the delayed compensation can be
awarded. The two penalties may not be
awarded concurrently.
2. Unreasonable Refusal to Rehire:
Wisconsin Statute § 102.35(3)
If an employee sustains a work-related
injury and the employer refuses to rehire
that employee without reasonable cause,
where suitable employment is available
within the employee’s physical and
mental limitations, the employer may
have exclusive liability to pay the wages
lost during the period of refusal, with a
maximum exposure of one year’s wages.
Yet, the Worker’s Compensation Act does
not require the employer to create a job.
The statute also applies to the situation
where an employee is hired back to work
by the employer, but is subsequently
terminated. When the employer
determines its duty to bring an employee
back to work after a work-related injury,
it should not overlook the employer’s
obligations under the Family and Medical
Leave Act, Americans With Disabilities
Act, and Wisconsin Fair Employment Act.
3. Violation of Safety Provisions:
Wisconsin Statutes § 102.57
If an injury is caused by the failure of the
employer to comply with any statute,
HUMAN RESOURCES 21