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Board of Education v. Industrial Com.





Appeal from the Circuit Court of Cook County, the Hon. Arthur L. Dunne, Judge, presiding.


This is an appeal from a decision of the circuit court of Cook County that confirmed an Industrial Commission determination that claimant, John F. Tully, was entitled to temporary total disability and permanent partial disability payments and additional payments as penalties for delay from his employer, the Chicago board of education (the board), and reversed an award of attorney fees. In the circuit court, the board contested the length of Tully's temporary total disability as well as the imposition of penalties and attorney fees. Before this court the board concedes liability for the disability payments in the amounts determined by the Commission, but challenges the penalties awarded under sections 19(k) and 19(l) of the Workmen's Compensation Act (Ill. Rev. Stat. 1977, ch. 48, pars. 138.19(k), (l)). Tully seeks on cross-appeal to reinstate the award of attorney fees.

John Tully was employed by the board as a truck driver, his duties being to deliver equipment to various city schools and to load and unload the equipment from his truck. He had worked for the board for 13 years when on January 26, 1977, he fell while at work and struck his back on the floor. Sharp pain in the area of his tailbone prevented him from standing upright, and he was taken by ambulance to Holy Cross Hospital, where the emergency room records diagnosed his condition as a right sacroiliac joint sprain and possible ruptured disc. Tully underwent medical treatment and did not return to work until September 1977. His first doctor, Dr. Francis Mazeika, treated him until March 1977, but referred him to Dr. Arthur Rodriquez in that month when the pain did not abate. Dr. Rodriquez treated him with hot packs until his release from the hospital in September 1977, at which time he was advised to continue applying the hot packs at home and to wear a brace.

Tully returned to work on September 5, 1977, and worked for another 16 months, missing a few days sporadically because of pain. Although back at work through the latter half of 1978, Tully continued to experience back pains and returned periodically to Dr. Rodriquez for X rays and treatment. In January 1979 he noticed that his back pain was becoming worse and was spreading into his legs. He missed 12 to 14 days from work, and stopped working altogether on January 22, 1979. Dr. Rodriquez continued to treat him through June 1979, at which time he advised Tully that he could return to work. Tully did return, but not until August 3, 1979.

In the meanwhile, an Industrial Commission arbitrator decided in Tully's favor on a claim he had filed against the board in February 1977. The arbitrator's decision, entered May 22, 1978, awarded Tully 32 2/7 weeks' temporary total disability payments at a weekly rate of $218.77 and 100 weeks' permanent partial disability payments on the basis of 20% loss of bodily function. The board had already paid Tully 14 3/7 weeks' temporary total disability compensation by the time the arbitrator's decision was rendered. Rather than pay the rest of the award, it sought review of the arbitrator's findings, contesting both the nature and extent of the permanent partial disability and the length of the temporary total disability.

The Industrial Commission held review hearings in November 1978 and June 1979. Tully testified on his own behalf at both hearings, and the medical records of each of the doctors who had treated him were introduced into evidence. Dr. Rodriquez' diagnosis, contained in a report dated June 12, 1979, was that Tully's continuing disability was due to a herniated disc caused by his 1977 fall and to osteoarthritis which pre-existed the fall but was exacerbated by it. Doctors Robert Busch and Hyman Hirshfield, whom Tully had also consulted, gave an independent diagnosis dated November 7, 1978, which agreed with that of Dr. Rodriquez. The May 1979 report of Dr. James Milgram, who examined Tully at the board's request, also attributed Tully's symptoms to a chronic lower back problem exacerbated by his fall and did not discredit Tully's suggestion that he continued to require treatment, although it noted that Tully seemed to be progressing unusually slowly under Dr. Rodriquez and ventured the opinion that "the patient was procrastinating" and should have a myelogram. Some compensation for this period was paid in June, although the record is unclear as to how much.

On the basis of Tully's testimony and the medical reports, the Industrial Commission issued an order on July 17, 1980, modifying the award of the arbitrator. The new order raised the temporary total disability award to 52 2/7 weeks but reduced the permanent partial disability award to 60 weeks on the basis of 12% loss of bodily function. It also imposed on the board a penalty of $2,500 for unreasonable delay in payment of the temporary total disability benefits pursuant to section 19(l), a 50%-of-amount-due penalty for vexatious and unreasonable delay in payment of temporary total disability benefits between January 23, 1979, and June 12, 1979, pursuant to section 19(k), and a charge for attorney fees in the amount of $1,812.62 pursuant to section 16 of the Act (Ill. Rev. Stat. 1977, ch. 48, par. 138.16).

Tully's position is that the circuit court properly affirmed the award of penalties under sections 19(k) and (l) because the board's liability for his temporary total disability for the periods assessed was clear, the board's challenge to the liability was not in good faith, and its delay of payment of the benefits during the period of litigation was thus unreasonable, vexatious, and without good cause. The board takes the position that inasmuch as it won a modification of the arbitrator's award, its challenge before the Industrial Commission was in good faith. It also points out that the Commission based its award of penalties solely on nonpayment of benefits over the period between January and June 1979, a period for which no adjudication of liability had yet been made, and asserts that penalties should not be imposed where there is no adjudication of liability and grounds for reasonable doubt as to whether the employer would in fact be held liable for compensation exist.

The board's first objection appears convincing at first glance but lacks merit on closer inspection. The fact that the Industrial Commission modified the arbitrator's award would indicate that the board's challenge to the part of the award that was modified in the board's favor was in good faith and would excuse the nonpayment of that part of it. However, the modification in the board's favor in this case, a reduction of 40 weeks, was only with respect to the permanent partial disability award. The award for temporary total disability, on which the penalties for nonpayment were based, was increased by 20 weeks to cover the weeks between January and June 1979, which occurred after the arbitrator's award was made. The weekly payment the board was supposed to have made to Tully was left unchanged; it was $218.77 both before and after the Industrial Commission modified the award, and the entire temporary total disability award made by the arbitrator was left standing. The board should have made the payments; there is nothing in the fact that a permanent partial disability award was modified in its favor that would indicate good faith in challenging the temporary total disability claim for 1979.

The question of whether the board was guilty of bad faith, so as to bring it under sections 19(k), 19(l) and 16 of the Workmen's Compensation Act, must be resolved by referring to the other evidence in the record. The penalty sections of the Act provide as follows:

"Sec. 16. * * *

Whenever the Commission shall find that the employer, his agent, service company or insurance carrier has been guilty of delay or unfairness towards an employee in the adjustment, settlement or payment of benefits due such employee within the purview of the provisions of paragraph (c) of Section 4 of this Act; or has been guilty of unreasonable or vexatious delay, intentional underpayment of compensation benefits, or has engaged in frivolous defenses which do not present a real controversy, within the purview of the provisions of paragraph (k) of Section 19 of this Act, the Commission ...

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