Title: Cesare Bosco v. Labor & Industry Review Commission
Citation: 2004 WI 77
Docket Number: 2003AP000662
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: June 15, 2004

2004 WI 77 
 
 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
03-0662 
COMPLETE TITLE: 
 
 
Cesare Bosco,  
          Plaintiff-Respondent, 
 
     v. 
 
Labor & Industry Review Commission,  
          Defendant, 
 
A.T. Polishing Company and Shelby  
Insurance Company, d/b/a Insura Property  
& Casualty Insurance Company,  
          Defendants-Appellants- 
          Petitioners. 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2003 WI App 219 
Reported at: 267 Wis. 2d 293, 671 N.W.2d 331 
(Ct. App. 2003-Published) 
 
 
OPINION FILED: 
June 15, 2004   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
March 9, 2004   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Kenosha  
 
JUDGE: 
Bruce E. Schroeder   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING: SYKES, J., did not participate.   
 
 
 
ATTORNEYS: 
 
For the defendants-appellants-petitioners there were briefs 
by Michael C. Frohman and Kasdorf, Lewis & Swietlik, S.C., 
Milwaukee, and oral argument by Michael C. Frohman. 
 
For the plaintiff-respondent there was a brief by Gregory 
A. Pitts and Schoone, Leuck, Kelley, Pitts & Knurr, S.C., 
Racine, and oral argument by Gregory A. Pitts. 
 
 
2004 WI 77 
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  03-0662  
(L.C. No. 
02 CV 923) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Cesare Bosco,  
 
          Plaintiff-Respondent, 
 
     v. 
 
Labor & Industry Review Commission,  
 
          Defendant, 
 
A.T. Polishing Company and Shelby  
Insurance Company, d/b/a Insura Property  
& Casualty Insurance Company,  
 
          Defendants-Appellants- 
          Petitioners. 
 
FILED 
 
JUN 15, 2004 
 
Cornelia G. Clark 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
JON P. WILCOX, J.   This case is an action for bad 
faith penalties under Wisconsin's Worker's Compensation Act.  
See Wis. Stat. § 102.18(1)(bp)(2001-02).1  The defendants, A.T. 
Polishing Company and its insurer, Shelby Insurance Company 
                                                 
1 All references to the Wisconsin Statutes are to the 2001-
02 edition unless otherwise noted.   
No. 
03-0662   
 
2 
 
(Shelby),2 appeal from a published court of appeals decision, 
Bosco v. LIRC, 2003 WI App 219, 267 Wis. 2d 293, 671 N.W.2d 331.  
The court of appeals affirmed a Kenosha County Circuit Court 
order, Bruce E. Schroeder, Judge, which reversed the conclusion 
of the Labor and Industry Review Commission (LIRC) that it was 
fairly debatable whether Wis. Stat. § 102.23(5) required Shelby 
and A.T. Polishing to make payments to A.T. Polishing's 
employee, Cesare Bosco, during the appeal on the merits of his 
worker's compensation claim, even though Shelby conceded that 
Bosco suffered permanent total disability caused by occupational 
exposure while he was employed at A.T. Polishing.  For the 
reasons discussed below, we affirm the decision of the court of 
appeals.  
I. 
FACTUAL BACKGROUND AND PROCEDURAL POSTURE 
¶2 
This case has an extremely lengthy and complex 
procedural history, which is set forth in full below in order to 
appreciate the issues involved in this appeal.  Bosco was 
employed by A.T. Polishing from 1987 until November 5, 1996.  In 
1993 Bosco saw a doctor regarding breathing difficulties; 
however, Bosco continued working at A.T. Polishing until 
November 1996 when his doctor took him off work due to asthma.  
On April 4, 1997, Bosco filed an Application for Hearing with 
the 
Worker's 
Compensation 
Division 
of 
the 
Department 
of 
                                                 
2 A.T. 
Polishing 
has 
been 
continuously 
represented 
throughout this litigation by its insurance carrier, Shelby.  
Therefore, except where it is necessary to refer to each party 
individually, this opinion refers to both entities collectively 
as Shelby.  
No. 
03-0662   
 
3 
 
Industry, Labor and Human Relations (DILHR) regarding his lung 
disease. 
¶3 
In his application, Bosco identified the date of 
injury as "occupational; 7/22/96" and listed his last day of 
work before disability as "11/96."  Bosco alleged that he 
developed pulmonary problems due to exposure to irritants while 
employed at A.T. Polishing.  Further, Bosco claimed possible 
total disability as a result of this injury.  Shelby, A.T. 
Polishing's insurer in 1996, filed an answer on June 5, 1997, 
wherein it admitted that "[t]he accident or occupational 
exposure alleged in the application actually occurred on or 
about the time claimed[,]" but denied that "[t]he accident or 
disease causing injury arose out of the alleged employment."  
Shelby also denied that Bosco was temporarily or permanently 
disabled.  Shelby left blank the section of the answer that 
stated:  "State exactly what matters are in dispute and your 
reason for denying liability."   
¶4 
On February 4, 1998, a hearing was held in front of 
Administrative Law Judge (ALJ) Thomas R. Jones.  At the hearing, 
the ALJ noted that Shelby admitted it was on the risk from 1994 
until 
Bosco's 
last 
day 
of 
work 
and 
stated: 
 
"The 
defense . . . is the insurance carrier which has been variously 
known as Shelby Mutual and other names, and it now is willing to 
concede that an occupational illness exists, though it's not 
entirely sure that it's the right insurance company."  Further, 
the ALJ noted:   
No. 
03-0662   
 
4 
 
Before we went on the record Mr. Frohman [counsel for 
Shelby] asked if he could delay things so he could 
think about bringing in another insurance carrier to 
help carry the load.  I denied that request as the 
present medical filings don't seem to indicate that 
any earlier period of breathing problem was anything 
but a temporary and separate problem. 
When the ALJ asked counsel for Shelby if he had any further 
comments on the issues, counsel for Shelby stated:  "No, Your 
Honor, I think you had it right." 
¶5 
The ALJ's August 21, 1998, decision and order noted 
that Shelby conceded Bosco suffered the alleged injury but 
disputed that Bosco was 100 percent totally disabled.  The ALJ 
found that Bosco was permanently totally disabled due to his 
work exposure since November 5, 1996.  The ALJ ordered that A.T. 
Polishing and Shelby pay total disability benefits from November 
5, 1996, for the rest of Bosco's life.  The ALJ further ordered 
that such payments were to commence in 21 days from the date of 
the order.   
¶6 
Shelby appealed to LIRC, arguing that the ALJ's 
finding of the date of disability——November 1996——was incorrect 
as a matter of law and that the correct date of injury was 1993.  
Shelby argued that, as a matter of law, the date of injury for 
occupational disease is the time when the disability first 
occurs and that liability is set at that time.  Shelby asserted 
that the medical evidence established that Bosco's disability 
first occurred in 1993.  In a decision dated April 27, 1999, 
LIRC rejected Shelby's claim: 
In 
addition, 
applicant's 
application 
alleged 
an 
occupational disease in July of 1996, and respondent, 
No. 
03-0662   
 
5 
 
in 
its 
answer, 
admitted 
that 
the 
accident 
or 
occupational exposure occurred on or about the time 
claimed.  The respondent never amended its answer.  
Apart from the medical evidence recited above, the 
commission could not now find an earlier date of 
injury, when a different carrier was on the risk; that 
carrier was never given any opportunity to present 
evidence on its behalf because the employer had 
originally conceded to a July of 1996 date of injury.   
¶7 
Thereafter, Bosco's attorney sent repeated requests 
that Shelby pay the permanent total disability benefits pursuant 
to § 102.23(5).3  Shelby, contending that the statute did not 
apply unless there were two or more insurers joined in the 
action, did not pay and commenced an action for review with the 
circuit court of Kenosha County.  On December 15, 1999, the 
circuit court affirmed LIRC's decision, noting that "[t]he 
answer which was filed raised no issue respecting the liability 
of the plaintiff insurer; the plaintiff employer's liability is 
not questioned."  The circuit court remarked that the first time 
Shelby challenged the date of injury was when it requested a 
continuance at the administrative hearing, nearly eight months 
after filing its answer.  The court emphasized that no amendment 
was made to the answer and no effort was made to bring in 
another insurer until that point in the proceeding.  The circuit 
court held that because a request for continuance must be 
brought within a reasonable time before the date of the hearing 
                                                 
3 Wisconsin Stat. § 102.23(5) provides:  "The commencement 
of action for review shall not relieve the employer from paying 
compensation as directed, when such action involves only the 
question of liability as between the employer and one or more 
insurance companies or as between several insurance companies." 
No. 
03-0662   
 
6 
 
under Wis. Admin. Code § DWD 80.09(2)(Nov., 2002)4 and the 
decision to grant a continuance is committed to the discretion 
of LIRC,5 it was required to uphold the decision of the 
commission.   
¶8 
Shelby again appealed, and the court of appeals 
affirmed the circuit court, noting that Shelby had essentially 
waived any date of injury defense by making a pleading error.   
A T Polishing Co. v. LIRC, No. 00-0343, unpublished slip op., ¶1 
(Wis. Ct. App. Oct. 18, 2000).  The court of appeals reasoned:   
By not making a timely amendment to the answer, Bosco 
was not apprised of the fact that Shelby wanted to 
contest the date of injury and Sentry Insurance, the 
worker's compensation carrier for A T Polishing in 
1993, was not made a party to the lawsuit.  Therefore, 
Shelby failed to join the issue and was not free to 
belatedly claim, prior to the start of the hearing 
before the ALJ, that July 22, 1996, was not the date 
of injury.   
Id., ¶6.  Therefore, the court of appeals concluded that "LIRC's 
refusal to allow argument on the issue of date of injury was not 
only reasonable, it was compelled."  Id., ¶5.   
¶9 
This court denied Shelby's petition for review on 
January 16, 2001.  The merits of the underlying worker's 
compensation claim have therefore been finally adjudicated and 
are no longer at issue.  Shelby did not make any payments to 
Bosco until this court denied its petition for review.   
                                                 
4 All subsequent references to the Wisconsin Administrative 
Code are to the November 2002 version unless otherwise noted.   
5 See Wis. Stat. § 102.17. 
No. 
03-0662   
 
7 
 
¶10 Meanwhile, on January 14, 2000, Bosco filed an amended 
Application for Hearing, seeking bad faith penalties under 
§ 102.18(1)(bp)6 and Wis. Admin. Code § DWD 80.70(2)7 for failure 
to pay the permanent total disability award ordered by the ALJ 
pending appeal, as required by § 102.23(5).  On February 18, 
2002, the ALJ entered an order rejecting Bosco's claim for bad 
faith penalties under § 102.18(1)(bp).  The ALJ specifically 
found that Shelby and A.T. Polishing were not required to make 
payments pending appeal under § 102.23(5).  Finally, the ALJ's 
order denied jurisdiction for Bosco to litigate a claim under 
                                                 
6 Wisconsin Stat. § 102.18(1)(bp) provides:   
The department may include a penalty in an award 
to an employee if it determines that the employer's or 
insurance carrier's suspension of, termination of or 
failure to make payments or failure to report injury 
resulted from malice or bad faith.  This penalty is 
the exclusive remedy against an employer or insurance 
carrier for malice or bad faith.  The department may 
award an amount which it considers just, not to exceed 
the lesser of 200% of total compensation due or 
$15,000.  The department may assess the penalty 
against the employer, the insurance carrier or both.  
Neither the employer nor the insurance carrier is 
liable to reimburse the other for the penalty amount.  
The department may, by rule, define actions which 
demonstrate malice or bad faith. 
7 Wisconsin Admin. Code § DWD 80.70(2) states:   
An insurance company or self-insured employer 
who, without credible evidence which demonstrates that 
the claim for the payments is fairly debatable, 
unreasonably fails to make payment of compensation or 
reasonable and necessary medical expenses, or after 
having commenced those payments, unreasonably suspends 
or terminates them, shall be deemed to have acted with 
malice or in bad faith.   
No. 
03-0662   
 
8 
 
Wis. Stat. § 102.22(1) for inexcusable delay, as this claim was 
not pled in the hearing application.  
¶11 Bosco appealed to LIRC, which, by order dated June 28, 
2002, affirmed the order of the ALJ.  Unlike the ALJ, LIRC did 
not provide a definitive interpretation of § 102.23(5).  Rather, 
LIRC determined that the statute was susceptible to more than 
one reasonable meaning such that it was fairly debatable whether 
Shelby was required to make payments under § 102.23(5).  Thus, 
LIRC ruled:  "The commission cannot conclude that Shelby 
Mutual's reading of Wis. Stat. § 102.23(5) is unreasonable or 
'lacked a reasonable basis.'"  Thereafter, on July 3, 2002, 
Bosco filed a complaint in Kenosha County Circuit Court seeking 
review of LIRC's decision.   
¶12 On December 30, 2002, the circuit court, Judge 
Schroeder presiding, reversed the decision of LIRC and remanded 
for further proceedings on Bosco's bad faith claim.  The circuit 
court 
ruled 
that 
LIRC 
erred 
in 
its 
interpretation 
of 
§ 102.23(5).  The court reasoned:   
The decision of this court in the prior action between 
the parties contained, on its third page, the explicit 
finding: 
 
"the . . . employer's 
liability 
is 
not 
questioned."  In the subsequent appeal, in which this 
court's decision was affirmed by the court of appeals 
and a petition for review denied by the supreme court, 
no issue was taken with that finding.  It was 
therefore clear that the plaintiff was entitled to the 
payment of benefits from A.T. Polishing.  The appeal 
concerned the date of the injury, and was an effort by 
Shelby to force another insurer to bear the cost.  The 
plaintiff's substantial rights, and those of A.T. 
Polishing, were fixed, regardless of the outcome of 
the appeal, with only the final sum and obligated 
insurer potentially subject to adjustment after the 
No. 
03-0662   
 
9 
 
appeal, a situation identical to that contemplated by 
the statute. 
In reversing LIRC's decision, the circuit court noted that the 
entire appeal on the merits was "a tardily-conceived effort by 
Shelby to escape liability on the claim[.]"  Because the 
original appeal was merely a coverage dispute, the circuit court 
ruled that "[n]either Shelby, nor A.T. Polishing, was relieved 
of the obligation to make the required payments."  
¶13 Shelby then appealed to the court of appeals.  The 
court of appeals affirmed the circuit court and remanded to LIRC 
to consider whether A.T. Polishing, Shelby, or both were liable 
for bad faith penalties under the proper interpretation of 
§ 102.23(5).  Bosco, 267 Wis. 2d 293, ¶36.  The court of appeals 
concluded that § 102.23(5) is plain and unambiguous:  "The 
intent of [the statutory] language is unequivocal:  an employer 
must make payment of benefits during judicial review when the 
only question is who will pay the benefits."  Id., ¶32 (emphasis 
in original).  The court reasoned that "[a]n interpretation of 
Wis. Stat. § 102.23(5) that would permit an employer or insurer 
to impugn liability on a phantom insurance company would be 
tantamount to permitting employers and insurers to engage in 
mischief and to avoid paying benefits that they concede are due 
to the injured employee."  Id., ¶33.  
II. ISSUES 
No. 
03-0662   
 
10 
 
¶14 The present appeal involves two related issues:  1) 
whether § 102.23(5) unambiguously requires an employer8 to pay 
benefits to an employee upon commencement of an action for 
judicial review of LIRC's award when only the date of injury is 
challenged on appeal, but it is conceded that the employee 
suffered permanent total disability that was caused by his 
employment with the employer, such that failure to make payment 
pending appeal could not be based on a reasonable interpretation 
of § 102.23(5); and 2) whether an insured employer is subject to 
bad faith penalties under § 102.18(1)(bp), separate from its 
insurer, for failure to comply with § 102.23(5).  We answer both 
questions in the affirmative.   
                                                 
8 We recognize that because the Worker's Compensation Act 
requires almost all employers to carry insurance to cover all 
liabilities 
under 
the 
Act, 
see 
Wis. Stat. §§ 102.28(2) 
& 
102.31(1)(b), it is most likely that an insurer would pay 
benefits under § 102.23(5) when its insured becomes obligated to 
do so, either by indemnifying the employer or paying benefits 
directly on its behalf.  The terms of the insurance policy will 
govern whether the employer will make payments directly or 
through its insurer.  Wis. Stat. § 102.30(5).  Also, we note: 
In 
a 
typical 
tripartite 
insurance 
relationship 
involving an insurer, the insured, and the insurance 
defense attorney, the insurer has a duty to retain and 
pay 
for 
an 
attorney 
to 
represent 
the 
policyholder/insured when the insured is sued by a 
third party.  As such, the insurer maintains the right 
to control the defense, the settlement of a claim, and 
the payment of a claim within policy limits.   
Marten Transp., Ltd. v. Hartford Specialty Co., 194 Wis. 2d 1, 
18, 533 N.W.2d 452 (1995)(internal citation omitted).   
 
No. 
03-0662   
 
11 
 
¶15 We conclude that § 102.23(5) unambiguously requires an 
employer to make payment to a disabled employee pending appeal 
of a date of injury defense in an occupational disease case when 
the employer's liability is not disputed on appeal and the only 
question is who will pay benefits.  Therefore, we hold that 
Shelby's interpretation of § 102.23(5) is not reasonable or 
fairly debatable as a matter of law because Shelby's original 
appeal did not contest A.T. Polishing's liability and involved 
only the question of whether Shelby was liable to pay benefits.  
Further, because § 102.18(1)(bp) specifically allows for the 
imposition of bad faith penalties on an employer for failure to 
pay benefits and because § 102.23(5) specifically directs the 
employer to pay benefits pending an appeal when the only issue 
is who will pay benefits, we hold that an employer may be 
subject 
to 
bad 
faith 
penalties 
under 
§ 102.18(1)(bp), 
independent from its insurer, when it fails to pay benefits in 
accordance with § 102.23(5). 
III. STANDARDS OF REVIEW 
¶16 When reviewing an appeal from a circuit court in an 
administrative 
review 
proceeding, 
this 
court 
reviews 
the 
decision of the agency, not that of the circuit court or ALJ.  
See Motola v. LIRC, 219 Wis. 2d 588, 597, 580 N.W.2d 297 (1998); 
Lopez v. LIRC, 2002 WI App 63, ¶9, 252 Wis. 2d 476, 642 
N.W.2d 561.   
¶17 Section 102.18(1)(bp) provides, in relevant part, that 
the Department of Workforce Development (DWD) may include a 
penalty in an award to an employee if the department determines 
No. 
03-0662   
 
12 
 
that "the employer's or insurance carrier's . . . failure to 
make 
payments . . . resulted 
from 
malice 
or 
bad 
faith."  
Wis. Stat. § 102.18(1)(bp). 
 
A 
claimant 
seeking 
to 
impose 
penalties 
for 
bad 
faith 
failure 
to 
make 
payments 
under 
§ 102.18(1)(bp) must prove two elements:  1) the employer or 
insurer did not have a reasonable basis for denying benefits; 
and 2) the employer or insurer knew it lacked a reasonable basis 
for denying benefits or recklessly disregarded a lack of a 
reasonable basis for denying payment.  See Brown v. LIRC, 2003 
WI 142, ¶¶24-26, 267 Wis. 2d 31, 671 N.W.2d 279.   
¶18 A determination of bad faith under § 102.18(1)(bp) 
presents a mixed question of fact and law.  Id., ¶10.  The 
historical conduct of a party constitutes an issue of fact, and 
we will sustain LIRC's factual determinations if they are 
supported by credible and substantial evidence.  Id.  Here, the 
facts are undisputed:  Following LIRC's decision affirming the 
award of the ALJ, Bosco demanded payment of benefits under 
§ 102.23(5). 
 
Shelby, 
based 
on 
its 
interpretation 
of 
§ 102.23(5), refused and did not begin to make payments until 
this court denied its petition for review.  
¶19 Whether a party's conduct rises to the level of bad 
faith under § 102.18(1)(bp) is a question of law.  Brown, 267 
Wis. 2d 31, ¶11.  LIRC concluded that Shelby did not engage in 
bad faith because Shelby's interpretation of § 102.23(5) was not 
unreasonable and therefore it was fairly debatable whether 
§ 102.23(5) required Shelby to make disability payments to Bosco 
during the original appeal.  In Brown, we determined that LIRC's 
No. 
03-0662   
 
13 
 
conclusion concerning whether a party's conduct constitutes bad 
faith is entitled to great weight deference.  Id., ¶17.  
However, even under the great weight standard, we will not 
uphold an agency's interpretation of a statute if it is contrary 
to the clear meaning of a statute.  Beverly Enters., Inc. v. 
LIRC, 2002 WI App 23, ¶18, 250 Wis. 2d 246, 640 N.W.2d 518.   
¶20 In 
addition, 
unlike 
Brown, 
LIRC's 
bad 
faith 
determination in the present case did not involve any value or 
policy choices based on the party's conduct; rather, LIRC based 
its conclusion regarding bad faith solely on its interpretation 
of § 102.23(5), a statute which it admitted it had no previous 
experience interpreting.  In fact, there is no reported case 
interpreting § 102.23(5).  Further, LIRC did not actually render 
a definitive interpretation of § 102.23(5); it merely determined 
that § 102.23(5) was susceptible to more than one reasonable 
interpretation and that Shelby's interpretation of § 102.23(5)——
that payment is not required pending appeal of the date of 
injury unless two or more insurers are part of the proceeding——
was not unreasonable.  Generally, "[n]o deference is due an 
agency's conclusion of law when an issue before the agency is 
one of first impression or when an agency's position on an issue 
provides no real guidance."  Brown, 267 Wis. 2d 31, ¶14.   
¶21 We determine that LIRC's conclusion that Shelby did 
not engage in bad faith for failing to make payments pending 
appeal under § 102.23(5) is entitled to no deference because 
LIRC based its bad faith conclusion solely on an interpretation 
of a statute with which it has no prior experience interpreting, 
No. 
03-0662   
 
14 
 
its interpretation in this case will provide no guidance to 
future litigants, and because we ultimately conclude that LIRC's 
interpretation of § 102.23(5) is contrary to the plain meaning 
of the statute.   
¶22 Therefore, we examine de novo whether § 102.23(5) 
unambiguously required A.T. Polishing to make payments to Bosco 
pending the appeal on the merits of this case such that Shelby 
or A.T. Polishing did not have a reasonable basis for denying 
benefits.  In addition, the second issue——whether an insured 
employer 
is 
subject 
to 
bad 
faith 
penalties 
under 
§ 102.18(1)(bp), separate from its insurer, for failure to 
comply with § 102.23(5)——was not addressed by LIRC.  Rather, the 
second issue was first raised by the parties at the court of 
appeals in response to the circuit court's statement that 
"[n]either Shelby, nor A.T. Polishing, was relieved of the 
obligation to make the required payment."  Thus, we review de 
novo whether § 102.18(1)(bp) permits the imposition of bad faith 
penalties upon an insured employer, separate from its insurer, 
for failure to comply with § 102.23(5).   
¶23 Both issues before us require the application of 
statutory language to a set of facts.  When interpreting 
statutes, our goal is to give effect to the language in the 
statute.  State ex rel. Kalal v. Circuit Court for Dane County, 
2004 WI 58, ¶43, ___Wis. 2d ___, ___N.W.2d ___.  We begin by 
looking to the language of the statute because we "assume that 
the 
legislature's 
intent 
is 
expressed 
in 
the 
statutory 
language."  Id., ¶44.  Technical terms or legal terms of art 
No. 
03-0662   
 
15 
 
appearing in the statute are given their accepted technical or 
legal definitions while nontechnical words and phrases are given 
their common, everyday meaning.  Wis. Stat. § 990.01(1).  Terms 
that are specifically defined in a statute are accorded the 
definition 
the 
legislature 
has 
provided. 
 
Wis. 
Citizens 
Concerned for Cranes and Doves v. DNR, 2004 WI 40, ¶6, 
___Wis. 2d ___, 677 N.W.2d 612.  In addition, we read the 
language of a specific statutory section in the context of the 
entire statute.  Id.  Thus, we interpret a statute in light of 
its textually manifest scope, context, and purpose.  Kalal, 
___Wis. 2d ___, ¶48 & n.8. 
¶24 "'If this process of analysis yields a plain, clear 
statutory meaning, then there is no ambiguity and the statute is 
applied according to this ascertainment of its meaning.'"  Wis. 
Citizens Concerned for Cranes and Doves, ___Wis. 2d ___, ¶6 
(quoting Bruno v. Milwaukee County, 2003 WI 28, ¶20, 260 
Wis. 2d 633, 660 N.W.2d 656).  If the statute is unambiguous, 
there is no need to resort to extrinsic sources such as 
legislative history; we simply apply the language of an 
unambiguous statute to the facts before us.  Id.  A statute is 
not ambiguous merely because the parties disagree as to its 
meaning or because different courts have reached different 
conclusions.  Id., ¶7.  A statute is ambiguous if it is "readily 
susceptible to two or more meanings by reasonably well-informed 
individuals."  Id. (citing Lincoln Sav. Bank v. DOR, 215 
Wis. 2d 430, 441-42, 573 N.W.2d 522 (1998)). 
IV. ANALYSIS 
No. 
03-0662   
 
16 
 
A. 
Wisconsin Stat. § 102.23(5) 
¶25 Wisconsin 
Stat. 
§ 102.23(5) 
provides: 
 
"The 
commencement of action for review shall not relieve the employer 
from paying compensation as directed, when such action involves 
only the question of liability as between the employer and one 
or more insurance companies or as between several insurance 
companies."  The heart of this dispute is whether by contesting 
Bosco's date of injury on the appeal on the merits, Shelby was 
appealing "only the question of liability as between the 
employer and one or more insurance companies or as between 
several insurance companies," Wis. Stat. § 102.23(5), or whether 
Shelby was contesting the ultimate liability of A.T. Polishing.   
¶26 Shelby argues that § 102.23(5) applies only to cases 
where liability for a specific date of injury is undisputed and 
the only issue on appeal is whether the employer had insurance 
coverage for that date or which insurance company was on the 
risk for that particular date.  According to Shelby, the statute 
does not apply where the issue on appeal is when the employee 
became disabled.  Shelby asserts that under Wis. Stat. § 102.03, 
liability in worker's compensation cases attaches only to a 
specific date of injury.  Therefore, Shelby contends that by 
challenging the 1996 date of injury on its original appeal, it 
was challenging the ultimate liability of A.T. Polishing and was 
not simply contesting coverage.  As Shelby explains, the issue 
on the original appeal was whether A.T. Polishing was liable for 
a 1996 date of injury.  Shelby argues that had it been 
successful in arguing that the date of injury was 1993, A.T. 
No. 
03-0662   
 
17 
 
Polishing would not have automatically been liable for a 1993 
date of injury; rather, according to Shelby, Bosco would have to 
file another Application for Hearing asserting a 1993 date of 
injury, join the appropriate insurer, and prove A.T. Polishing 
was liable for a 1993 date of injury.  
¶27 At oral argument, Shelby clarified that while it 
conceded Bosco suffered a permanent total disability and while 
it conceded the permanent total disability was caused by 
occupational exposure at A.T. Polishing, it never conceded that 
A.T. Polishing was liable for a 1996 date of injury.  Shelby 
asserts that A.T. Polishing's liability was not fixed simply 
because it conceded a permanent total disability that was caused 
by occupational exposure as liability must be linked to a 
specific date of injury in order for an employer to be held 
liable for that injury.   
¶28 Finally, Shelby asserts that a challenge to the date 
of injury is only a challenge to coverage if there are several 
insurers joined in the action who were on the risk at different 
dates.  However, where there is only one insurer joined in the 
action, a challenge to the date of injury contests the ultimate 
liability of both the employer and insurer.  Shelby notes that 
while it attempted to implead another insurer who was on the 
risk in 1993, the ALJ prevented it from doing so.   
¶29 Bosco, on the other hand, asserts that Shelby's entire 
appeal was a last minute attempt to avoid its responsibility and 
force coverage on another insurer who was on the risk in 1993.  
Bosco notes that in its answer, Shelby conceded Bosco's 
No. 
03-0662   
 
18 
 
occupational exposure occurred around the time alleged and 
contested only causation.  In addition, Bosco states that by the 
time of the administrative hearing, Shelby conceded Bosco's 
injuries were caused by occupational exposure at A.T. Polishing.  
Bosco notes that the ALJ stated that Shelby was merely trying to 
bring in another insurer to "help carry the load."  Bosco argues 
that because Shelby contested only the date of injury and 
conceded that Bosco was permanently totally disabled due to 
occupational exposure at A.T. Polishing, the only question on 
appeal was whether Shelby was liable for paying benefits or 
whether the insurer on the risk in 1993 would pay benefits.  
According to Bosco, A.T. Polishing's liability became fixed once 
Shelby conceded that Bosco was permanently totally disabled due 
to occupational exposure at A.T. Polishing.   
¶30 Bosco contends that A.T. Polishing would still be 
liable if Shelby had been successful in arguing that the date of 
injury was 1993.  Bosco notes that the only practical difference 
had Shelby been successful would have been that the rate of 
disability payments would have been different and the checks 
would have been coming from a different insurer.  Thus, 
according to Bosco, the date of injury bears only on the 
question of which insurer is liable for disability payments.   
¶31 Finally, Bosco argues that Shelby's interpretation of 
§ 102.23(5) runs contrary to the purpose of the Worker's 
Compensation Act, which is to provide prompt payment to injured 
employees.  According to Bosco, Shelby's interpretation would 
force injured employees entitled to benefits to wait until all 
No. 
03-0662   
 
19 
 
issues between insurers are resolved when it is undisputed that 
the employer is liable for the payments.   
¶32 In the original appeal, Shelby contended that November 
1996 was not the correct date of injury and, as a matter of law, 
the proper date of injury was sometime in 1993.  It is 
undisputed that Bosco was employed by A.T. Polishing from 1987 
until 1996.  At oral argument, Shelby clarified that it has 
never claimed that Bosco's work-related injury was caused by 
exposure at another employer.  Therefore, we need not address 
whether a challenge to the date of injury in an occupational 
disease case is always a challenge to the employer's liability.  
Rather, the narrow question we address is whether a date of 
injury defense constitutes a challenge to the employer's 
liability where it is conceded that the employee suffered 
permanent total disability that was caused by his occupational 
exposure 
with 
the 
employer 
and 
where 
the 
employee 
was 
continuously employed with the defendant employer at the time of 
the alleged alternative date of injury. 
¶33 Shelby's primary argument is that by contesting the 
date of injury it was contesting A.T. Polishing's ultimate 
liability 
because 
liability 
for 
worker's 
compensation 
is 
dependent upon the date of injury under Wis. Stat. § 102.03.  
Section 102.03 provides, in pertinent part:   
(1)  Liability under this chapter shall exist 
against 
an 
employer 
only 
where 
the 
following 
conditions concur:   
(a)  Where the employee sustains an injury.  
No. 
03-0662   
 
20 
 
(b)  Where, at the time of the injury, both the 
employer and employee are subject to the provisions of 
this chapter.  
(c)1.  Where, at the time of the injury, the 
employee is performing service growing out of an 
incidental to his or her employment. 
 . . . . 
(d)  Where the injury is not intentionally self-
inflicted.  
(e)  Where the accident or disease causing injury 
arises out of the employee's employment.   
 . . . . 
(4)  The right to compensation and the amount of 
the compensation shall in all cases be determined in 
accordance with the provisions of law in effect as of 
the date of the injury except as to employees whose 
rate of compensation is changed . . . . 
¶34 We agree with Bosco that Shelby's initial appeal 
concerned only the issue of who would pay benefits and A.T. 
Polishing's liability was not in dispute.  First, even if Shelby 
had been successful in arguing that the correct date of injury 
was 1993, A.T. Polishing would still have met all of the 
statutory prerequisites to liability under § 102.03 so that a 
finding of a 1993 date of injury would have had no practical 
effect in regard to A.T. Polishing's liability.  As one 
commentator 
has 
noted, 
"[t]he 
date 
of 
disability 
[for 
occupational disease] is important because it determines which 
provisions of law (including the maximum limitations on wages 
and benefits) govern the claim, and which employer or insurer is 
liable." 
 
John 
D. 
Neal 
& 
Joseph 
Danas, 
Jr., 
Worker's 
Compensation Handbook § 3.4 (5th ed. 2003).  Under § 102.03, the 
No. 
03-0662   
 
21 
 
date of injury is relevant to liability in three circumstances:  
1) at the time of the injury both the employee and employer must 
be 
subject 
to 
Wisconsin's 
Worker's 
Compensation 
Act, 
§ 102.03(1)(b); 2) at the time of the injury, the employee must 
be performing services growing out of or incidental to his 
employment, § 102.03(1)(c)1.; and 3) the right to compensation 
and the amount is determined by the law in effect at the time of 
injury 
except 
for 
changes 
in 
the 
rate 
of 
compensation.  
Wis. Stat. § 102.03(4). 
¶35 There is no dispute that in 1993 both Bosco and A.T. 
Polishing were subject to the Worker's Compensation Act.  
Likewise, because it is undisputed that Bosco was employed at 
A.T. Polishing in 1993, there can be no dispute that in 1993 
Bosco was performing services related to his employment when his 
injury allegedly occurred.  Also, there has been no allegation 
that the substantive law governing A.T. Polishing's liability 
was different in 1993 than it was in 1996.  Moreover, Shelby did 
not allege that Bosco's injury was self-inflicted and it 
conceded that Bosco's condition was caused by occupational 
exposure at A.T. Polishing.  In other words, it conceded that 
Bosco's disease arose "out of the employee's employment."  
Wis. Stat. § 102.03(1)(e).  Shelby challenged only the legal 
conclusion that the date of disability was Bosco's last day of 
work.  Therefore, even if Shelby had been successful in arguing 
that the correct date of injury was 1993, all of the 
prerequisites for liability contained in § 102.03(1) would have 
been met.  Had Bosco been employed with a different employer in 
No. 
03-0662   
 
22 
 
1993, a date of injury defense would have implicated A.T. 
Polishing's liability; however, it is undisputed that Bosco was 
continuously employed with A.T. Polishing from 1993 until 1996. 
¶36 Second, while Shelby asserts a new hearing would have 
been required to hold the 1993 insurer liable had Shelby been 
successful in its date of injury defense, this argument misses 
the point.  Regardless of whether a new hearing would have been 
required in order to hold the 1993 insurer liable, a new hearing 
would not have affected the liability of A.T. Polishing.  This 
court has twice recognized that a challenge to the date of 
injury when the employee has been continuously employed with the 
same employer does not affect that employer's liability, but is 
relevant only to the issue of which insurance carrier is 
responsible for making payments.   
¶37 In Maryland Casualty Co. v. Industrial Commission, 230 
Wis. 363, 284 N.W. 36 (1939), an employee filed for worker's 
compensation benefits alleging a date of injury in 1933; the 
insurance carrier as of the alleged date of injury, Employers 
Mutual, was made a party to the proceeding.  Id. at 364.  At the 
hearing, it was determined that the correct date of injury was 
in 1932.  The Commission awarded benefits, which Employers 
Mutual initially paid.  Id. at 364-65.  However, Employers 
Mutual later discovered that it was not on the risk in 1932 and 
petitioned for a new hearing.  At the hearing, Maryland 
Casualty, the insurer on the risk in 1932, contended that the 
Commission was without jurisdiction because it was not properly 
made a party.  Id. at 366-67.  While additional evidence was 
No. 
03-0662   
 
23 
 
taken at the second hearing, Maryland Casualty declined to 
request a de novo hearing on all the issues, instead claiming it 
could not be made a party to the proceeding.  Id. at 367.  After 
the hearing was concluded, the Commission again awarded benefits 
and ordered that Maryland Casualty was liable for payments from 
the time Employers Mutual stopped paying.  Id. at 368.   
¶38 On appeal to the Wisconsin Supreme Court, Maryland 
Casualty argued, inter alia, that it was not liable to pay 
benefits because it did not have timely notice of the claim.  
Id. at 371.  The court, in ruling that the relevant statute 
required notice only to the employer, stated:  "the employer 
being bound, its insurer was bound with it.  That the employer 
was bound was determined in the former proceeding. . . . The 
liability of the employer, Douglass county, was fixed by the 
first proceeding."  Id. at 371-72 (emphasis added).   
¶39 In Miller Brewing Co. v. LIRC, 173 Wis. 2d 700, 495 
N.W.2d 660 (1993), we again recognized that where an employee is 
continuously employed with the same employer, a date of injury 
defense affects only the liability of the various insurers and 
does not affect the employee's rights vis-à-vis its employer.  
In Miller Brewing, the employee filed a claim for worker's 
compensation, alleging that the harassment of his co-workers 
aggravated his post-traumatic stress disorder.  Id. at 708.  
DIHLR awarded benefits, concluding that the employee's date of 
injury was the last day the employee worked for Miller Brewing, 
rather than the date when his first harassment-related absence 
occurred.  Id. at 709.  During the relevant time period, Miller 
No. 
03-0662   
 
24 
 
Brewing had two insurers:  National Union Insurance (National 
Union) was on the risk when the employee's absences first 
occurred, and Twin City Insurance (Twin City) was the insurer 
during the period when the employee ended his employment at 
Miller Brewing.  Id.  After determining the date of injury, 
DIHLR dismissed National Union.  Id.  LIRC subsequently affirmed 
DIHLR's conclusion that the employee had suffered a compensable 
occupational disease as a result of his employment, but 
determined that the correct date of injury was the first date of 
the employee's wage loss; therefore, LIRC determined that 
National Union was liable for payment and it dismissed Twin 
City.  Id.   
¶40 Miller Brewing and National Union filed an action for 
judicial 
review, 
naming 
only 
LIRC 
and 
the 
employee 
as 
defendants.  Id.  On appeal before this court, the sole issue 
was whether, under Wis. Stat. § 102.23(1)(a)(1989-90), Twin City 
was an "adverse party" such that it was required to be made a 
party to the appeal.  Id. at 711.  The linchpin of National 
Union's argument was that it and Twin City were united in 
interest because neither had asserted a date of injury defense; 
rather, both had asserted that the employee's injury was not 
caused by his employment.  Id. at 718.  This court, in 
concluding that the action was properly dismissed for failure to 
join an adverse party stated:  "We conclude that in this case 
the respective liability of the two insurance companies depends 
upon the determination of the date of injury."  Id. at 722.  In 
addition, we noted that the question of which insurance company 
No. 
03-0662   
 
25 
 
was liable did not affect the employee's right to recover from 
the employer.  Id. at 721.  Thus, our case law establishes that 
a challenge to the date of injury when the employee has been 
continuously employed with the same employer does not affect the 
employer's liability, but is relevant only to the issue of which 
insurance carrier is responsible for making payments because the 
employer's liability was established at the first hearing. 
¶41 Finally, the position Shelby took during the original 
appeal completely belies its current position that the appeal 
was not merely an attempt to shift liability to another insurer.  
In his Application for Hearing, Bosco listed the date of injury 
as July 22, 1996.  In its answer, Shelby admitted that "[t]he 
accident or occupational exposure alleged in the application 
actually occurred on or about the time claimed."9  The first time 
Shelby asserted its date of injury defense was the day of the 
original administrative hearing.  At the hearing, the ALJ noted 
that Shelby was "willing to concede that an occupational illness 
exists, though it's not entirely sure that it's the right 
insurance company."  The ALJ stated that the sole issue was 
whether A.T. Polishing and Shelby would "have to pay on a 1996 
total perm claim, whether it's total or some other lesser amount 
                                                 
9 Shelby claims that simply admitting that the exposure 
occurred during the time alleged does not mean that it conceded 
Bosco's injury occurred during this time.  However, Shelby 
eventually conceded that Bosco's permanent total disability was 
caused by the occupational exposure at A.T. Polishing.  It seems 
perplexing to argue that the exposure causing Bosco's injury 
occurred sometime in 1996 but his injury occurred earlier in 
1993.  
No. 
03-0662   
 
26 
 
as far as the extent of disability."  When asked if he wanted to 
comment further on the issues, Shelby's counsel stated:  "No, 
Your Honor, I think you had it right."  The ALJ's decision 
stated:   
[The claim] alleges an occupational asthma work injury 
with a last day of work of November 5, 1996.  The 
claim is for total disability and past and future 
treatment expenses.   
The carrier now accepts that the applicant did 
sustain this work injury, but has not paid benefits to 
date.  It contends that permanent injury should be 15 
percent, rather than 100 percent. 
(Emphasis added.)   
¶42 Perhaps most damaging for Shelby are the statements 
contained in its brief to the circuit court, appealing the 
initial decision of LIRC.  Shelby argued:   
If a single employer has had successive insurers, 
liability is imposed upon the insurer whose policy was 
in force at the time the disability occurred.  The 
factual record establishes without doubt that the 
applicant's lung disability began in 1993, before 
Shelby Insurance Company came on the risk for A T 
Polishing Company.   
Resp't Br. at 107 (citations omitted).  Further, Shelby 
asserted: 
The statute provides for recovery of occupational 
disease benefits against the carrier on the risk as of 
the date of injury.  If the correct date of injury is 
shown to be in 1993 and not in 1996, the applicant 
must proceed against the carrier on the risk in 1993.  
The commission lacks statutory authority to order 
recovery of benefits against an insurance carrier 
whose policy was not in effect as of the date of 
injury. . . .  
No. 
03-0662   
 
27 
 
The commission has erred in its conclusion of law 
that Shelby Insurance Company is responsible for 
occupational disease benefits based on a date of 
injury of November 5, 1996.  
Id. at 110-11 (emphasis added).10  
¶43 Indeed, in the circuit court's original decision, it 
specifically stated, "the plaintiff employer's liability is not 
questioned."  The circuit court, when considering the present 
bad faith appeal, emphasized that no issue was taken with this 
factual finding during the original appeal, noting that the 
original appeal was "a coverage issue, and camouflaging it as a 
dispute over the date of the loss does not alter that fact."   
¶44 We conclude, based on § 102.03, Maryland Casualty, 
Miller Brewing, and the record before us that A.T. Polishing's 
liability was fixed at the first proceeding and the initial 
appeal concerned only the question of whether Shelby was liable 
to pay benefits.  Because Shelby conceded that Bosco's permanent 
total disability was caused by occupational exposure during his 
employment at A.T. Polishing and Bosco was continuously employed 
at A.T. Polishing from 1993 until 1996, Shelby's initial 
challenge to the date of Bosco's injury was not a challenge to 
the liability of A.T. Polishing.  Rather, by alleging that the 
correct date of injury was 1993, Shelby was challenging only its 
                                                 
10 In addition, the record contains an activity log report 
from Shelby concerning A.T. Polishing.  An entry dated February 
4, 1998, signed by one Ronald Aldridge, discussing Bosco's claim 
against A.T. Polishing, evidences that Shelby's entire strategy 
all along was to absolve itself from liability.  The entry 
states:  "If Dr. Levy gives us a favorable opinion on this case 
stating no change since '93 or early '94 prior to Shelby Ins. 
involvement, we will not pay a dime on it."   
No. 
03-0662   
 
28 
 
liability and attempting to place liability on the 1993 
insurance carrier.   
¶45 The 
unambiguous 
language 
in 
§ 102.23(5) 
requires 
payment to the injured employee pending appeal of LIRC's 
decision "when such action involves only the question of 
liability as between the employer and one or more insurance 
companies 
or 
as 
between 
several 
insurance 
companies."  
Wis. Stat. § 102.23(5).  We agree with the court of appeals that 
this language is unequivocal:  "an employer must make payment of 
benefits during judicial review when the only question is who 
will pay the benefits."  Bosco, 267 Wis. 2d 293, ¶32 (emphasis 
in original).  The facts of this case fall squarely within the 
statutory language.  
¶46 As demonstrated above, A.T. Polishing's liability was 
fixed at the first proceeding.  Because Shelby had conceded that 
Bosco was permanently totally disabled due to occupational 
exposure at A.T. Polishing, the employer's liability was not in 
question; indeed, under this set of facts it was the only 
employer that could have been liable.  A successful challenge 
would not have affected Bosco's rights vis-à-vis A.T. Polishing, 
except perhaps by changing the rate of disability.  The record 
is clear that the original appeal in this case involved only the 
question of Shelby's liability, not that of A.T. Polishing.  
Under these facts, the date of injury was relevant only to 
whether Shelby was liable or whether A.T. Polishing would be 
required to seek payment from its 1993 insurer.  Because the 
original appeal involved only the issue of who was liable for 
No. 
03-0662   
 
29 
 
benefits, the issue concerned only "liability as between the 
employer and one or more insurance companies or as between 
several insurance companies."  Wis. Stat. § 102.23(5).  Thus, 
the plain language of § 102.23(5) required A.T. Polishing to 
make payments to Bosco during appeal, either directly or through 
its insurer.    
¶47 We 
find 
no 
support 
for 
Shelby's 
position 
that 
§ 102.23(5) applies only where two or more insurers are parties 
to the original hearing.  First, the text of the statute does 
not require that two insurance companies must be joined in the 
action in order for its provisions to apply.  To permit an 
insurer to shirk its statutory obligations to make payment 
pending appeal when it contends that another carrier is liable 
simply because the other insurer is not a party to the action 
would contravene the statutory language.   
¶48 Moreover, Shelby's position defeats the textually 
manifest purpose of the Worker's Compensation Act.  As has long 
been recognized by courts in this state, the purpose of the 
Worker's Compensation Act "is to give prompt relief to injured 
employees who are entitled to compensation."  Schneider Fuel & 
Supply Co. v. Indus. Comm'n, 224 Wis. 298, 301, 272 N.W. 25 
(1937).11  Because the purpose of the Act is to "provide prompt 
justice for injured workers and to prevent, as far as possible, 
the delays that might arise from protracted litigation[,] [t]he 
                                                 
11 See also McDonough v. DWD, 227 Wis. 2d 271, 280, 595 
N.W.2d 686 (1999); Chappy v. LIRC, 128 Wis. 2d 318, 329-30, 381 
N.W.2d 552 (Ct. App. 1985).   
No. 
03-0662   
 
30 
 
proceedings should be as simple and as speedy as possible."  
Employers Health Ins. Co. v. Tesmer, 161 Wis. 2d 733, 738, 469 
N.W.2d 203 (Ct. App. 1991)(citations omitted).  This purpose is 
reflected in the express language of § 102.23(5), which requires 
payment to the employee during appeal if the employer's 
liability for such payments has been established and is not 
challenged on appeal.  The statutory language demonstrates that 
the arrangements between the employer and its insurer are 
irrelevant from the perspective of the employee, once it is 
established that the employer is liable to make benefit 
payments.  Thus, § 102.23(5) requires prompt payment to the 
insured when the only issues on appeal are collateral issues 
regarding the indemnification of the employer.  Had Shelby been 
successful on appeal and another hearing been required to hold 
the 1993 insurer responsible, this run-of-the-mill case would 
have been saddled with another entire layer of litigation and 
would have delayed payment to Bosco even longer, even though the 
liability of A.T. Polishing for those payments was fixed at the 
first proceeding.   
¶49 In addition, we note the original appeal in this case 
resulted from Shelby's failure to amend its pleading or timely 
request a continuance in order to bring in the 1993 insurer.  At 
oral argument, Shelby conceded that payment would have been 
required under § 102.23(5) had it been successful in bringing 
another insurer into the action.  Were we to hold that payment 
pending appeal is not required under § 102.23(5) when the only 
question on appeal is which insurer will have to pay, simply 
No. 
03-0662   
 
31 
 
because one insurer failed to successfully bring the other into 
the 
proceeding, 
we 
would 
be 
rendering 
the 
operation 
of 
§ 102.23(5) dependent upon parties' pleading choices.  The 
language of § 102.23(5) does not provide that its requirements 
are contingent upon there being another insurer joined in the 
action.  We decline to accept Shelby's invitation to read 
limiting language into § 102.23(5). 
¶50 Therefore, we conclude that § 102.23(5) unambiguously 
requires an employer to make payment to a disabled employee 
pending appeal of a date of injury defense in an occupational 
disease case when the employer's liability is not disputed on 
appeal and the only question is who will pay benefits.  Because 
A.T. Polishing's liability was not contested on appeal, and the 
only issue on appeal was who would pay benefits, under the plain 
language of § 102.23(5), A.T. Polishing should have paid 
compensation to Bosco.12    
                                                 
12 Because § 102.23(5) unambiguously required A.T. Polishing 
to make payments to Bosco on appeal and Shelby was in control of 
A.T. Polishing's defense, it had a duty to either make payment 
on A.T. Polishing's behalf, if its policy so provided, or, if 
not, to instruct A.T. Polishing that it (A.T. Polishing) was 
required to make payments less it be subject to bad faith 
penalties.  
"When, as 
here, 
the 
insurer 
undertakes and 
controls the defense of a claim against its insured, 
it has a duty not only to protect itself to the extent 
of its liability but it must act in good faith to 
protect the interest of its insured.  If it fails to 
do so it is liable to its insured for the amount the 
insured required over and above the policy limits." 
No. 
03-0662   
 
32 
 
¶51 The statutory scheme is clear that when there is only 
a dispute concerning who pays benefits on appeal, the employer, 
directly or through its insurer, is required to promptly pay the 
compensation award to the employee and any issues concerning 
reimbursement 
can 
be 
litigated 
after 
the 
appeal. 
 
See 
Wis. Stat. § 102.18(1)(bw).13  If it was ultimately determined 
that the correct date of injury was in fact 1993, Shelby could 
have petitioned for reimbursement under § 102.18(1)(bw).  The 
circuit court noted that such adjustments are an everyday part 
of worker's compensation practice.  In fact, this is precisely 
what occurred in Maryland Casualty, 230 Wis. at 364-68:  the 
insurer 
that 
was 
originally 
found 
to 
be 
liable 
paid 
compensation, later determined that it was not the insurer on 
the risk at the date of injury, and filed a new Application for 
Hearing, seeking reimbursement from the insurer who was on the 
risk at the date of injury.   
                                                                                                                                                             
Mowry v. Badger State Mut. Cas. Co., 129 Wis. 2d 496, 534, 385 
N.W.2d 171 (1986)(quoting Howard v. State Farm Mut. Auto. Ins. 
Co., 60 Wis. 2d 224, 227, 208 N.W.2d 442 (1973)(emphasis in 
original)). 
13 Wisconsin Stat. § 102.18(1)(bw) provides:  
If an insurer, a self-insured employer or, if 
applicable, 
the 
uninsured 
employers 
fund 
pays 
compensation to an employee in excess of its liability 
and another insurer is liable for all or part of the 
excess payment, the department may order the insurer 
or self-insured employer that is liable to reimburse 
the insurer or self-insured employer that made the 
excess payment or, 
if 
applicable, 
the 
uninsured 
employers fund.   
No. 
03-0662   
 
33 
 
¶52 We emphasize that we do not hold that the failure to 
comply with the dictates of § 102.23(5) in this instance 
constitutes bad faith.  Rather, like the court of appeals, we 
merely hold that Shelby's interpretation of § 102.23(5) is not 
reasonable or fairly debatable as a matter of law because 
Shelby's original appeal did not contest A.T. Polishing's 
liability and involved only the question of whether Shelby was 
liable to pay benefits.  In other words, it was not fairly 
debatable that A.T. Polishing, either directly or through 
Shelby, was required to make payments under § 102.23(5).  On 
remand, LIRC will be able to consider all of the relevant 
factors that go into a bad faith determination.  However, LIRC 
cannot use Shelby's interpretation of § 102.23(5) to conclude 
that there was a reasonable basis for denying benefits.   
B. 
Wisconsin Stat. § 102.18(1)(bp) 
¶53 The next issue we address is whether an insured 
employer 
is 
subject 
to 
bad 
faith 
penalties 
under 
§ 102.18(1)(bp), separate from its insurer, for failure to 
comply with § 102.23(5).  In other words, we must determine 
whether A.T. Polishing may be separately subject to bad faith 
penalties under § 102.18(1)(bp) for failing to make payments 
during the original appeal.   
¶54 Shelby argues that an insured employer cannot be held 
separately liable for failure to make benefit payments because 
an insured employer is under no independent obligation to make 
benefit payments.  According to Shelby, only self-insured 
employers are required to make benefit payments and therefore, 
No. 
03-0662   
 
34 
 
only self-insured employers may be held liable for bad faith 
failure to make benefit payments.  Shelby argues that an 
employee may not demand payment directly from an employer.  
Shelby 
asserts 
that 
Wis. Stat. § 102.30(4) 
is 
inapplicable 
because its only purpose is to make worker's compensation 
benefits primary regardless of other insurance.  
¶55 In contrast, Bosco notes that § 102.23(5) mandates 
that 
the 
employer 
pay 
benefits 
pending 
judicial 
appeal.  
Further, according to Bosco, § 102.30(4) explicitly permits an 
employee to recover compensation directly from an employer.  
Moreover, 
Bosco 
asserts 
that 
§ 102.18(1)(bp) 
specifically 
authorizes LIRC to assess penalties against either the insurer 
or employer, or both.   
¶56 Section 102.18(1)(bp), the provision governing the 
imposition of bad faith penalties, provides, in pertinent part:   
The department may include a penalty in an award 
to an employee if it determines that the employer's or 
insurance 
carrier's . . . failure 
to 
make 
payments . . . resulted 
from 
malice 
or 
bad 
faith. . . .  The department may assess the penalty 
against the employer, the insurance carrier or both.  
Wis. Stat. § 102.18(1)(bp)(emphasis added).  The language of 
this statute supports Bosco's position because it specifically 
permits the department to assess penalties against either the 
insurer 
or 
employer. 
 
However, 
the 
last 
sentence 
of 
§ 102.18(1)(bp) states that "[t]he department may, by rule, 
define actions which demonstrate malice or bad faith."  In fact, 
the department has done so in Wis. Admin Code § DWD 80.70.  This 
section provides: 
No. 
03-0662   
 
35 
 
(1) An employer who unreasonably refuses or 
unreasonably fails to report an alleged injury to its 
insurance 
company 
providing 
worker's 
compensation 
coverage, shall be deemed to have acted with malice or 
bad faith.   
(2) An insurance company or self-insured employer 
who, without credible evidence which demonstrates that 
the claim for the payments is fairly debatable, 
unreasonably fails to make payment of compensation or 
reasonable and necessary medical expenses, or after 
having commenced those payments, unreasonably suspends 
or terminates them, shall be deemed to have acted with 
malice or in bad faith.   
Wis. Admin Code § DWD 80.70.  This administrative code provision 
supports Shelby's position because it deems employers to have 
acted in bad faith only when they fail to report an injury or 
claim to their insurer and deems only insurers and self-insured 
employers to have acted in bad faith for failure to make benefit 
payments.  
¶57 Indeed, the secondary authorities also support this 
position.  In discussing the imposition of bad faith penalties, 
one authority notes:   
The test to determine if an employer's failure or 
refusal to report an injury is malicious or in bad 
faith 
is 
whether 
the 
failure 
or 
refusal 
is 
"unreasonable."  As to failure to pay indemnity or 
medical expenses, the test is whether the insurer or 
self-insured employer has "credible evidence" that 
demonstrates that the claim is "fairly debatable."  
No. 
03-0662   
 
36 
 
John D. Neal & Joseph Danas, Jr., Worker's Compensation Handbook 
§ 7.22 
(5th 
ed. 
2003)(emphasis 
added)(internal 
citations 
omitted).14   
¶58 However, we do not believe that Wis. Admin. Code § DWD 
80.70 is dispositive of the question before us.  First, Wis. 
Admin. Code § DWD 80.70 merely deems that certain actions 
constitute bad faith or malice.  It does not provide an 
exclusive list of what actions may constitute bad faith in 
certain circumstances.  Because the present issue is one of 
first impression, it is not surprising that the department's 
rules do not cover this specific situation.  Also, as noted 
supra, § 102.18(1)(bp) specifically allows for the imposition of 
bad faith penalties on an employer or insurer for failure to pay 
benefits.  In addition, chapter 102 repeatedly utilizes the 
phrase "self-insured employer" when it intends to refer to these 
entities, but § 102.18(1)(bp) does not refer to insurers and 
self-insured employers, it refers to insurers and employers.  
Moreover, the court of appeals has previously recognized that 
bad faith penalties could be imposed directly on an employer for 
delay in making payments.  See North Am. Mech., Inc. v. LIRC, 
157 Wis. 2d 801, 810, 460 N.W.2d 835 (Ct. App. 1990).   
¶59 Moreover, § 102.30 specifically permits an employee to 
recover benefits directly from an employer or insurer and 
                                                 
14 See 
also 
Charles 
B. 
Palmer, 
Wisconsin 
Worker's 
Compensation Law:  A Handbook for Employers § 8.8 (1999)(noting 
the same distinction between bad faith penalties for employers 
and self-insured employers).    
No. 
03-0662   
 
37 
 
provides that recovery against one shall bar recovery against 
the other:   
(4) 
Regardless 
of 
any 
insurance 
or 
other 
contract, 
an 
employee 
or 
dependent 
entitled 
to 
compensation 
under 
this 
chapter 
may 
recover 
compensation directly 
from the employer 
and may 
enforce in the person's own name, in the manner 
provided in this chapter, the liability of any 
insurance company which insured the liability for that 
compensation. . . .  
(5) Payment of compensation under this chapter by 
either the employer or the insurance company shall, to 
the extent thereof, bar recovery against the other of 
the amount so paid.  As between the employer and the 
insurance company, payment by either the employer or 
the insurance company directly to the employee or the 
person entitled to compensation is subject to the 
conditions of the policy. 
Wis. Stat. § 102.30(4)&(5)(emphasis added).  These two sections, 
when read together, recognize that an employee may recover 
directly from the employer, but whether the employer actually 
pays 
the 
money 
directly 
out 
of 
pocket, 
subject 
to 
indemnification by the insurer, or whether the insurer pays the 
money on behalf of the employer is dependent upon the specific 
insurance 
policy. 
 
Thus, 
in 
Miller 
Brewing, 
this 
court 
recognized that whether an employer is insured has no bearing on 
the 
ability 
of 
an 
injured 
employee's 
right 
to 
demand 
compensation from the employer:  "In any event, the financial 
arrangements between Miller Brewing and the insurance companies 
do not appear to affect [the employee].  [The employee] may seek 
payment from either the employer or the insurance company which 
is determined to have insured the liability."  Miller Brewing, 
No. 
03-0662   
 
38 
 
173 
Wis. 2d at 
721 
(citing 
Wis. Stat. §§ 102.28(2) 
and 
102.30(4)&(5) (1989-90)).   
¶60 Most importantly, the specific statute at issue in 
this case, § 102.23(5), explicitly directs the employer to make 
payments to the employee pending appeal when the only issue on 
appeal is who is to pay benefits:  "The commencement of action 
for 
review 
shall 
not 
relieve 
the 
employer 
from 
paying 
compensation 
as 
directed . . . ." 
 
Wis. 
Stat. 
§ 102.23(5)(emphasis added).  Therefore, because § 102.18(1)(bp) 
specifically allows for the imposition of bad faith penalties on 
an employer for failure to pay benefits and because § 102.23(5) 
specifically directs the employer to pay benefits pending an 
appeal when the only issue is who will pay benefits, we hold 
that an employer may be subject to bad faith penalties under 
§ 102.18(1)(bp), independent from its insurer, when it fails to 
pay benefits in accordance with § 102.23(5).  Again, we 
emphasize that we do not hold that A.T. Polishing is liable for 
bad faith penalties for failing to comply with § 102.23(5); 
rather, we merely hold that it may be liable for bad faith 
penalties under § 102.18(1)(bp) for failing to comply with 
§ 102.23(5) if LIRC determines that the prerequisites for a 
finding of bad faith are satisfied.   
¶61 We note that almost all employers are required to 
carry worker's compensation insurance, Wis. Stat. § 102.28(2), 
and that insurance must cover all liability of the employer 
under 
Wisconsin's 
Worker's 
Compensation 
Act.  
Wis. Stat. § 102.31(1)(b). 
 
See 
also 
State 
v. 
Koch, 
195 
No. 
03-0662   
 
39 
 
Wis. 2d 801, 
808, 
537 
N.W.2d 39 
(Ct. 
App. 
1995)(worker's 
compensation insurance must provide coverage for all workers and 
for all work-related activities).  Generally, an insurer 
maintains the right to control the defense of the insured, 
settle a claim on its behalf, and pay a claim within the policy 
limits.  Marten Transp. Ltd. v. Hartford Specialty Co., 194 
Wis. 2d 1, 18, 533 N.W.2d 452 (1995).  Thus, during the defense 
of a claim, the insured usually acts at the direction of its 
insurer.  If an employee seeks compensation directly from an 
employer, the employer's insurance policy will govern whether 
the insurer indemnifies the employer or pays the sum on its 
behalf.  Wis. Stat. § 102.30(5).  When bad faith penalties are 
sought directly against an insured employer for acts occurring 
after its insurer began handling the defense of the claim, these 
facts should be taken into consideration in determining whether 
the employer had a reasonable basis for denying benefits and 
whether the employer knew it lacked a reasonable basis for 
denying 
benefits 
or 
recklessly 
disregarded 
a 
lack 
of 
a 
reasonable basis for denying payment.   
V. 
CONCLUSION 
¶62 We conclude that § 102.23(5) unambiguously requires an 
employer to make payment to a disabled employee pending appeal 
of a date of injury defense in an occupational disease case when 
the employer's liability is not disputed on appeal and the only 
question is who will pay benefits.  Therefore, we hold that 
Shelby's interpretation of § 102.23(5) is not reasonable or 
fairly debatable as a matter of law because Shelby's original 
No. 
03-0662   
 
40 
 
appeal did not contest A.T. Polishing's liability and involved 
only the question of whether Shelby was liable to pay benefits.  
Further, because § 102.18(1)(bp) specifically allows for the 
imposition of bad faith penalties on an employer for failure to 
pay benefits and because § 102.23(5) specifically directs the 
employer to pay benefits pending an appeal when the only issue 
is who will pay benefits, we hold that an employer may be 
subject 
to 
bad 
faith 
penalties 
under 
§ 102.18(1)(bp), 
independent from its insurer, when it fails to pay benefits in 
accordance with § 102.23(5).   
By the Court.—The decision of the court of appeals is 
affirmed. 
¶63 DIANE S. SYKES, J., did not participate.   
 
No. 
03-0662   
 
 
 
1