No Penalties for Delay in Authorizing Medical Treatment: A Defense for Employers

October 2020

By: Markeya A. Fowler

Expanding on its reasoning in Hollywood Casino-Aurora, Inc. v Ill. Workers’ Comp. Comm’n, 2012 IL App (2d) 110426WC, the Second District Appellate Court issued a decision that limits the awarding of Section 19(l) and Section 8(a) penalties and attorney’s fees under the Illinois Workers’ Compensation Act.

In the case of Hollywood Casino, the Second District Appellate Court determined that the issue regarding whether 19(k) allowed for penalties was one of statutory construction and reviewed the matter de novo. Section 19(k) states that: "In case where there has been any unreasonable or vexatious delay of payment or intentional underpayment of compensation, then the Commission may award compensation additional to that otherwise payable under this Act equal to 50% of the amount payable at the time of such award."

The Court determined the language of the statute was clear and unambiguous and that payment was defined according to its ordinary meaning. Payment is defined as the act of paying or giving compensation and it does not include the giving of authorization for a service.

When evaluated in context of the statute, the Court held that the plain language of the statute does not contain language regarding any award of additional compensation (penalties) for an employer's delay in authorizing medical treatment. The Court found that this applied even assuming that an employer had an obligation to give authorization in advance of medical treatment for an injured employee.

The Court reversed the decision to award penalties for revoking authorization as the benefits were not awarded for a delay in paying the medical bills or an underpayment of the bills.

The Second District Appellate Court expanded on this decision in the case of O’Neil v. Illinois Workers’ Compensation Comm’n, 2020 IL App (2d) 190427WC. At the Arbitration level, Claimant was awarded penalties under 19(l), 8(a) and awarded attorney’s fees based on the Respondent’s decision to revoke authorization for a procedure.

On appeal, the Commission relied on Hollywood Casino and held that by extension, the reasoning which found penalties were not proper for revoking authorization under 19(k) also applied to awarding penalties under Section 16 and 19(l). The Commission further found that based on the language of Section 16, penalties were not appropriate unless there was an award pursuant to 19(k). The Lake County Circuit Court confirmed the decision.

The Second District Court affirmed the Circuit Court decision. Again the Court relied on the plain language of Section 19(l) which states that: “In case the employer or his or her insurance carrier shall without good and just cause fail, neglect, refuse, or unreasonably delay the payment of benefits under Section 8(a) or Section 8(b), the Arbitrator or the Commission shall allow to the employee additional compensation in the sum of $30 per day for each day that the benefits under Section 8(a) or Section 8(b) have been so withheld or refused.”

The Court found that the plain language of Section 19(l) does not allow awarding penalties for the refusal or unreasonable delay in authorizing medical treatment. The Court acknowledged that while Section 8(a) does require an employer to “provide and pay” for all necessary medical expenses, neither Section 8(a) nor any other section of the Act allows for the assessment of penalties against an employer for failure or delay to authorize medical treatment.

In practice this decision can be used by Respondent to dispute the assessment of penalties when treatment is denied based on a dispute to accident or causation and petitioner has not undergone the recommended treatment. However, the decision does not eliminate the need for Respondent to prepare for trial by securing an expert or submitting treatment through utilization review. It does provide Respondent the ability to thoroughly evaluate recommended treatment and make a decision regarding authorization.