Employer shielded from interest charge on payment for 14-day rule violation

In Maine, a payment for a 14-day rule violation is not compensation paid pursuant to an award, and interest should not be imposed.

Case name: Estate of Joyce v. Commercial Welding Co., et al., No. WCB-11-352 (Maine 05/03/12).

Ruling: The Maine Supreme Judicial Court held that an employer was not required to pay interest on the amount it paid for a violation of the 14-day rule, and the amount did not offset a death benefits award.

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What it means: In Maine, a payment for a 14-day rule violation is not compensation paid pursuant to an award, and interest should not be imposed.

Summary: A worker was frequently exposed to airborne asbestos fibers on the job, and he rarely wore respiratory protection. He sought benefits for an occupational disease. He died, and his widow sought death benefits. The worker's employer had violated a rule requiring it to accept a claim, pay it, or deny the claim within 14 days of receiving notice of a work-related injury. It paid more than $60,000 for the rule violation. The Maine Supreme Judicial Court held that the employer was not required to pay interest on the payment, and the amount did not offset the death benefits awarded to the widow.

The court explained that the payment for the 14-day rule violation was not analogous to an award for compensation because it was payable to the worker without regard to whether his claim was successful. The purpose of the 14-day rule was to encourage timely filings by employers and facilitate the administrative decision-making process. The payment was credited toward the award received by the worker's estate. Because the payment exceeded the amount of the award, the employer was not required to make further payments to the estate. The estate was entitled to retain the full amount of the payment. The court found that interest should not be imposed on the payment because it was not compensation paid pursuant to an award.

The employer argued that because the payment was in excess of the amount awarded to the estate, it should be entitled to use the excess amount to offset the death benefits awarded to the widow. The court disagreed, stating that the employer violated the 14-day rule when it responded to the worker's petition for benefits, but not when responding to the widow's claim for death benefits.

Read more at the WorkersComp Forum homepage.

July 2, 2012

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