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In some cases, an insurance company’s misconduct, lateness in payments, or failure to follow specific Minnesota workers’ compensation rules can result in a penalty. There are two types of penalties – those payable to the State, and those payable to the employee.Our firm recently went to trial on a gentleman’s workers’ compensation case. We will have the Judge's decision within about 60 days. The employer and insurer initially admitted the gentleman’s claim, but incorrectly calculated his Temporary Partial Disability (TPD) benefits. As a result of a back injury, our client had lifting restrictions prohibiting him from lifting more than 40 pounds. At first, the employer accommodated his restrictions, and provided him with light duty work. They then sent him to an “Independent” Medical Examination (IME), and the doctor concluded that our client needed no restrictions. The employer then insisted that he return to work at full capacity, without restrictions. Given his ongoing back problems, and his treating physician’s restrictions, our client couldn’t go back to work. The insurance company then stopped paying him wage loss benefits. One thing the insurance company didn’t do, however, was file a Notice of Intent to Discontinue Benefits (NOID).
The Minnesota Workers’ Compensation Act provides very specific rules regarding the discontinuance of wage loss benefits. Pursuant to Minn.Stat. §176.238(1), the employer and insurer may not discontinue payment of compensation benefits to the employee until written notice is provided. A copy of the notice must also be filed with the Workers’ Compensation Division. The usual method for providing notice to the employee regarding the discontinuance of benefits is through the use of a specific form called a Notice of Intention to Discontinue Benefits (NOID).
Failure to follow these specific rules can result in penalties assessed against the insurance company. Some types of penalties are payable to the state, and some types of penalties are payable to the employee. In our case, because the insurance company failed to file a NOID before terminating our client’s benefits, we made a claim for penalties to be paid to the employee.
Penalties may be assessed which are payable to the state against an insurance company for violating the rules regarding discontinuation of benefits in the following circumstances:
- A penalty can be assessed if benefits were discontinued without a timely notice to the employee as required by Minn.Stat. § 176.238.
- Penalties can be assessed if benefits were discontinued “despite an administrative determination denying a request to discontinue.”
- A penalty can be assessed if the discontinuance occurred despite a decision of a court requiring the payment of ongoing benefits.
- A penalty can be assessed where benefits are discontinued “prior to the date that the Notice of Intention to Discontinue Benefits is served and filed.”
Improper discontinuances may also result in penalties assessed against the insurance company that are payable to the employee. The purpose of the rule that provides payment of penalties to an employee is punitive rather than compensatory in nature. The intent of the rules is to deter employers and insurers from inexcusably delaying payments due to employees. The Minnesota Workers’ Compensation rules set forth specific procedures a workers’ compensation insurance company must follow when it wishes to discontinue wage loss benefits to an employee. The rules set up a process whereby discontinuance disputes are resolved relatively quickly, i.e., in a matter of a few weeks or months at most. That way, an injured employee is not forced to go without wage loss benefits for an extended period of time. It also prevents an insurance company or employer from “starving out” an employee by simply refusing to pay benefits, and forcing the employee to file a Claim Petition demanding the disputed benefits, which typically takes much longer to reach resolution.
Minnesota Statute Section 176.255(1)(f) provides penalties payable to the employee for an insurance company’s failure to properly follow the discontinuance procedures. Failure to serve a Notice of Intention to Discontinue Compensation before discontinuing compensation can result in a penalty. Webeck v. Mochinski General Conractor, 41 W.C.D. 1063 (1989).
If it is found that penalties are warranted, the amount of the penalty owed to the employee is based on the amount of the benefit that was improperly discontinued, and how late the insurance company is in paying that benefit. Depending on how late the payment is, the percentage of the penalty ranges between 6% all the way up to 30%. In our case, all of our client’s wage loss benefits were over 60 days overdue, exposing the insurance company to a potential 30% penalty.
While not every delay in payment by the insurance company is grounds for a claim for penalties, there are some cases in which the employer’s or insurer’s actions are in serious violation of the rules, and those cases warrant a claim for penalties. Unfortunately, we frequently see insurance companies that either intentionally violate the rules and time frames for payment, or that simply don’t know the rules well enough to follow them. If you have questions about your workers’ compensation claim, or questions about whether you may be entitled to penalties from the insurance company, call us for a free, no-obligation consultation. Call Meuser & Associates at 877-746-5680 or click here to send us an email to schedule a free consultation.
Visit Minnesota Workers' Compensation and Personal Injury Law Firm, Meuser & Associates, P.A., at MeuserLaw.com
