Opinion ID: 1885322
Heading Depth: 1
Heading Rank: 5

Heading: History of the award of penalties

Text: This Court in two recent cases Brown v. Texas-La. Cartage Inc., 98-1063 (La.12/1/98), 721 So.2d 885 and Williams v. Rush Masonry, Inc., 98-2271 (La.6/29/99), 737 So.2d 41, [4] traced the statutory and jurisprudential history of penalty awards in workers' compensation actions. In Brown, this Court summarized the development of penalties [5] in the workers' compensation arena until 1983: Prior to the insertion of provisions for penalties ... into La. R.S. 23:1201, penalties... were awarded to injured employees under La. R.S. 22:658 when insurers failed to timely pay claims. Louisiana R.S. 22:658, as it appeared in the Revised Statutes of 1950, provided that all insurers issuing any type of contract other than policies for life, health and accidents, shall pay the amount of any claim within a specified time period or be subject to a penalty and reasonable attorney fees if the failure to pay was found to be arbitrary, capricious or without probable cause. In Wright v. National Surety Corp., 221 La. 486, 59 So.2d 695 (La.1952), this court held La. R.S. 22:658 was applicable to workers' compensation policies. In Acts No. 432 of 1958, the legislature enacted La. R.S. 23:1201.2 which provided for essentially the same penalties ... against employers. It was under these provisions that Louisiana courts were required by statute to analyze the employer's/insurer's actions under the arbitrary, capricious or without probable cause standard. See, e.g., Patton v. Silvey Companies, 395 So.2d 722 (La. 1981); Crawford v. Al Smith Plumbing & Heating Service, Inc., 352 So.2d 669 (La.1977); Guillory v. Travelers Ins. Co., 294 So.2d 215 (La.1974). In 1983, Act No. 1 of the 1 st Ex.Sess. placed provisions for penalties ... entirely within the Workers' Compensation Act and applied those provisions to both insurers and employers. Specifically, the Act reenacted La. R.S. 23:1201 to provide, inter alia, that the first installment of compensation payable for temporary total disability shall become due on the fourteenth day after the employer has knowledge of the injury on which date all such compensation then due shall be paid. If any installment of such compensation was not paid within the specified time period, a penalty, equal to twelve percent of the unpaid installment, was imposed, unless such nonpayment results from conditions over which the employer or insurer had no control. Whenever the employee's right to such benefits has been reasonably controverted by the employer or his insurer, the penalties set forth in this Subsection shall not apply. Brown, 721 So.2d at 887-888. Besides the gathering of the varying penalty provisions from diverse statutory locations into a comprehensive workers' compensation act, it is also significant to note that the 1983 amendments replaced the arbitrary and capricious standard for the award of penalties to one of assessing penalties for untimely payment unless the employees rights to benefits were reasonably controverted by the employer or his insurer or the nonpayment resulted from conditions over which the employer or insurer had no control. As noted in Brown, [u]nreasonably controverting a claim ... requires action of a less egregious nature than that required for arbitrary and capricious behavior. Id. at 890. Nevertheless, neither Brown nor Williams, addressed the multiple penalties issue now before us. Accordingly, from the outset of our analysis in the present case, we will highlight the more recent legislative enactments, particularly LA. ACTS 1992, No. 1003 and LA. ACTS. 1995, No. 1137 which specifically affect the present issue. In 1992, the Louisiana Legislature recognized that some employers may have been unreasonable in failing to pay medical bills as well as weekly workers' compensation indemnity benefits. House Committee on Labor and Industrial Relations, Minutes of Meeting 6/18/92. Realizing that the employer's failure to pay medical benefits was not included as a basis for the assessment of a penalty under the provisions of LA.REV.STAT. ANN. § 23:1201, subsection E was amended to read: E. If, pursuant to this Chapter, any compensation or medical benefits payable without an order is not paid within the time period provided in Subsection B, C, or D of this Section, there shall be added to such unpaid compensation a penalty of an amount equal to twelve percent thereof or a total penalty of not more than fifty dollars per calendar day for each day in which any and all compensation or medical benefits remain unpaid, whichever is greater, which shall be paid at the same time as, and in addition to, such compensation, unless such nonpayment results from conditions over which the employer or insurer had no control. No amount paid as a penalty under this Subsection shall be included in any formula utilized to establish premium rates for worker's compensation insurance. Whenever the employee's right to such compensation or medical benefits has been reasonably controverted by the employer or his insurer, the penalties set forth in this Subsection shall not apply. The twelve percent or fifty dollars per calendar day, whichever is greater, additional payment shall be assessed against either the employer or the insurer, depending upon who was at fault in causing the delay. No worker's compensation insurance policy shall provide that this sum shall be paid by the insurer if the administrative hearing officer determines that the twelve percent or fifty dollars per calendar day, whichever is greater, additional payment is to be made by the employer rather than the insurer. Any additional compensation paid by the employer or insurer pursuant to this Section shall be paid directly to the employee. The total fifty dollar per calendar day penalty provided for in this Subsection shall not exceed two thousand dollars in the aggregate. The Legislature made several further changes to the penalty provision. In 1995 LA. ACTS No. 1137, the Legislature redesignated former § 23:1201(E) as subsection (F) and rewrote redesignated subsection F into its present form. The Act also inserted new subsection E, thereby establishing a 60-day time limit for the payment of medical benefits, a temporal element not heretofore provided. In addition, Act 1137 [6] also conferred upon health care providers the right to assert a claim against the employer for unpaid medical bills and to recover the penalty, as well as attorneys' fees. Accordingly, the penalty provision now reads, in pertinent part: F. Failure to provide payment in accordance with this Section shall result in the assessment of a penalty in an amount equal to twelve percent of any unpaid compensation or medical benefits or fifty dollars per calendar day, whichever is greater, for each day in which any and all compensation or medical benefits remain unpaid, together with reasonable attorney fees for each disputed claim, however, the fifty dollars per calendar day penalty shall not exceed a maximum of two thousand dollars in the aggregate for any claim. Penalties shall be assessed in the following manner: (1) Such penalty and attorney fees shall be assessed against either the employer or the insurer, depending upon fault. No workers' compensation insurance policy shall provide that these sums shall be paid by the insurer if the workers' compensation judge determines that the penalty and attorney fees are to be paid by the employer rather than the insurer. (2) This Subsection shall not apply if the claim is reasonably controverted or if such nonpayment results from conditions over which the employer or insurer had no control. (Emphasis added).