Brown v. Texas-LA Cartage, Inc.

721 So. 2d 885, 1998 La. LEXIS 3507, 1998 WL 827456
Supreme Court of Louisiana·Decided December 1, 1998·No. 98-C-1063·Published·Cited by 312 cases

Opinion

721 So.2d 885 (1998)

Richard L. BROWN
v.
TEXAS-LA CARTAGE, INC.

No. 98-C-1063.

Supreme Court of Louisiana.

December 1, 1998.
Rehearing Denied January 15, 1999.

George Arthur Flourney, Fuhrer, Flournoy, Hunter & Morton, Alexandria, for Applicant.

Dee Dodson Drell, Gold, Weems, Bruser, Sues & Rundell, Alexandria, for Respondent.

*886 KIMBALL, Justice.[*]

We granted plaintiff's writ to consider the proper standard to be applied in determining whether a workers' compensation claimant is entitled to penalties and attorney fees pursuant to La. R.S. 23:1201. After examining the unambiguous language of the statute, we note the arbitrary and capricious standard no longer applies to actions brought under this statute and hold that statutory penalties and attorney fees shall be awarded if the employer or insurer fails to timely pay benefits due claimant pursuant to La. R.S. 23:1201 unless: (1) the claim is reasonably controverted or (2) such nonpayment results from conditions over which the employer or insurer had no control. Furthermore, we hold plaintiff is entitled to an award of penalties and attorney fees for defendants' failure to timely and adequately compensate him since his claim was not reasonably controverted and the nonpayment did not result from conditions over which the employer or insurer had no control.

Facts and Procedural History

Plaintiff, Richard Brown, was injured in the course and scope of his employment for the defendant, Texas-LA Cartage, Inc., on May 21, 1996. Brown, however, continued to work until his physician found him temporarily unable to work on July 9, 1996. Following this restriction from work, defendant began paying workers' compensation benefits.

Compensation for Brown's first week of injury was suspended pursuant to La. R.S. 23:1224.[1] On July 24, 1996, defendant issued a check in the amount of $239.62 covering benefits from July 16 to July 20. This first check was a partial payment because defendant's workers' compensation insurer pays from Sunday through Saturday of each week and issues checks only on Wednesday for the prior pay period. After this partial pay period, Brown was paid at a weekly rate of $299.53. The claims adjuster testified that to calculate this weekly rate, she called Texas-LA Cartage and requested Brown's gross wages for the four weeks prior to his injury. She further testified that the payroll information she was given revealed that Brown's average weekly wage for those four weeks was $449.30 which allowed her to conclude Brown was entitled to temporary total disability benefits at a rate of $299.53.

After receiving benefits for several weeks, Brown contacted an attorney who then advised the claims adjuster by letter dated August 30, 1996, that Brown was a full-time employee and therefore entitled to increased benefits. The claims adjuster contacted Texas-LA Cartage and was told that although Brown worked less than forty hours a week in the four weeks preceding his injury due to a business slow down, he was hired as a full-time employee. The claims adjuster then recalculated the rate and increased Brown's benefits to $322.68 per week. On September 10, 1996, Brown was issued a check for the difference in the pay rate for the weeks previously paid. On that same date, Brown was also issued a check for the first week following injury which had been withheld pursuant to La. R.S. 23:1224.

On September 12, 1996, Brown filed a Disputed Claim for Compensation, Form LDOL-WC-1008, with the Office of Workers' Compensation, alleging that he was injured during the course and scope of his employment and seeking, inter alia, penalties and attorney fees for the allegedly late and inadequate benefits.

Subsequent to a hearing on the merits, the hearing officer dismissed Brown's claims, reasoning that there was no negligence present in the handling of Brown's claim and that the matter was reasonably controverted. Specifically, the court stated:

This Court is going to rule in favor of the Defense. In finding for the Defendant I think a reoccurring thing that goes throughout the evidence that was presented *887 and what I heard today is an attitude of indifference, and I do think that the insurance company did not—or they were not neglectful in their handling of this claim. In fact there were some things or some actions between the employer and I guess the TPA that I would almost commend or, you know, salute the employer for doing in the handling of this case. You know, so I'm going to state—I'm going to hold to that and I'll cite Stegall[2] as case law in upholding my decision.... I think that the employer, or the insurance company, when they learned that there was a possible discrepancy in the amount that they needed to pay in this matter was—or that matter was reasonably controverted.

The court of appeal, with one judge dissenting, affirmed the decision of the Office of Workers' Compensation, reasoning that the hearing officer was not clearly wrong in denying penalties and attorney fees in this case as defendant acted responsibly in administering Brown's claim and was willing to appropriately compensate him. The court reviewed the testimony of the claims adjuster and noted that she had no indication of Brown's status as a full-time employee who might, or might not, work forty hours a week. Furthermore, her testimony confirmed that although Brown's status was unclear, a check was issued for the increased amount when the discrepancy was discovered. The third circuit declined to penalize defendant since it had paid the increased benefits despite the alleged "gray area" surrounding Brown's work status.

Regarding Brown's contention that the first check issued compensated him for less than a full week's benefits, the appellate court found the insurer was acting pursuant to its established policy of issuing checks only on Wednesday for the prior week ending on Saturday. The court held the claimant was adequately paid and defendant sought to systematically meet the compensation requirements; therefore, the hearing officer was not clearly wrong in denying penalties in this respect.

Turning to the payment of benefits for Brown's first week following disability, the third circuit found the hearing officer was not clearly wrong in denying penalties and attorney fees given the wording of La. R.S. 23:1224. The claims adjuster testified that the benefits for the first week were due on August 20 and the company then had a fourteen-day period in which to pay them. The benefits were paid on September 10 because, according to the adjuster, checks were issued only on Wednesdays and she was out of the office on the Wednesday prior to September 10. After considering this testimony, the appellate court concluded defendant acted responsibly in administering Brown's claims.

Brown asked this court to review the case, arguing the lower courts erred in not awarding penalties and attorney fees because: (1) the first installment of compensation due on the fourteenth day after notice of disability was paid late, was a partial payment, and was paid at an improper weekly rate; and (2) the withheld first week of disability payments due after six weeks of continued disability was not paid until 21 days after the expiration of six weeks of continuous disability. We granted Brown's writ to determine whether the lower courts applied the correct standard in denying penalties and attorney fees and to consider the correctness of that decision. Brown v. Texas-La Cartage, Inc., 98-1063 (La.6/19/98), 720 So.2d 1207.

Legal Background

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Brown v. Texas-LA Cartage, Inc., 721 So. 2d 885, 1998 La. LEXIS 3507, 1998 WL 827456 (La. 1998).

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