Third-party administrator's 1-day delay entitles worker to incapacity benefits

In Maine, an employer has 14 days to file a notice of controversy of a worker's claim even if the worker did not suffer an actual loss of earnings from the injury.

Case name: Doucette v. Hallsmith/Sysco Food Services, Inc., et al., No. WCB-10-669 (Maine 06/09/11).

Ruling: The Maine Supreme Judicial Court held that a worker was entitled to total incapacity benefits due to the employer's late filing of a notice of controversy.

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What it means: In Maine, an employer has 14 days to file a notice of controversy of a worker's claim even if the worker did not suffer an actual loss of earnings from the injury.

Summary: A selector in a warehouse for a food company injured his back while lifting a bag of onions onto a pallet. He was diagnosed with a lumbar strain and was placed on light duty for two weeks. He did not lose any earnings as a result of the injury.

Four years later, the selector reinjured his back while working for a different employer. He claimed entitlement to benefits from the time of the first injury. The food company's third-party administrator prepared a notice of controversy 14 days later, but it was not electronically sent until after midnight, one day after it was due. The Maine Supreme Judicial Court found that the selector was entitled to total incapacity benefits.

The company argued that its third-party administrator intended to file it on the 14th day, there was no resulting delay, and the system penalizes an insurer for its computer system. The court refused to disturb the finding that the notice was filed on the 15th day. Therefore, it was a violation of rules and called for an award of total benefits from the date of alleged incapacity until the violation was cured. The court explained that disallowing an award when the worker suffered no loss of earnings could thwart a purpose of the rule to encourage timely filing.

The company asserted that allowing an award was unfair and inconsistent with the legislature's goals. The court said that while the award might seem "harsh," it promoted numerous goals, including encouraging timely filing and ensuring efficiency.

A dissenting judge said that the $140,000 penalty appeared unfair and contrary to the policy objectives. The judge wrote, "The end result in this case is not just."

Read more at the WorkersComp Forum homepage.

July 21, 2011

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