Heyl Royster

 


Heyl Royster

 

App. Ct. Holds that Section 19(n) Interest Applies Until Commission Decision is Reduced to Judgement

2/27/18

By: Brad Elward, belward@heylroyster.com

Our April 2016 issue of Below the Red Line reported on a trend gaining momentum in Illinois where petitioner’s attorneys were demanding, and sometimes obtaining, nine percent judgment interest on Commission awards that were appealed by employers to a reviewing court on judicial review and confirmed. According to these attorneys, the nine percent judgment interest commenced once the circuit court entered its order confirming the Commission’s decision and applied until payment. These attorneys reasoned that the circuit court’s order was in essence a judgment and that as a result, section 2-1303 of the Code of Civil Procedure, which applies nine percent interest rates to a judgment, applied.

Section 19(n) of the Illinois Workers’ Compensation Act sets the interest rate applicable to arbitration decisions until paid. Section 19(n) ties interest to the yield on indebtedness issued by the United States Government with a 26-week maturity on the auction date prior to the date on which the decision is filed. Thus, if an arbitration decision is rendered on January 8, 2018, the applicable rate would be 1.57 percent. To illustrate the significance of this issue, applying that rate to a $100,000 award yields a yearly interest obligation of $1,570. At nine percent, the annual interest is $9,000. Interest applies to the entirety of the unpaid award, including medical bills paid.

On February 16, 2018, the Illinois Appellate Court, Workers’ Compensation Commission Division, handed down its much-awaited decision in Dobbs Tire & Auto v. Illinois Workers’ Compensation Comm’n, 2018 IL App (5th) 160297WC (consolidated with Stolte v. Illinois Workers’ Compensation Comm’n). In each case, the employer pursued an appeal from the Commission through the appellate court and, upon issuance of an adverse appellate court decision affirming the Commission award, promptly paid the award due plus full interest under section 19(n) of the Act. Despite prompt payment of the award in both cases, the petitioner demanded payment of nine percent judgment interest commencing with the circuit court’s order confirming the Commission’s decision. In Dobbs Tire, this additional interest amount to roughly $72,000, while in Stolte, it totaled approximately $1,200. When the employers refused to pay the higher interest, the petitioners filed a section 19(g) proceeding, seeking to reduce the Commission’s decision to judgment and further to obtain the higher nine percent interest rate. In Dobbs Tire, the circuit court granted the section 19(g) petition and entered the award for higher interest; in Stolte, the circuit court granted the employer’s motion to dismiss the section 19(g) petition and denied the petitioner’s request. Both cases ended up on appeal before the appellate court and were consolidated. Ironically, both cases involve the same counsel for both sides.

The appellate court, in a unanimous published decision authored by Justice Moore, found that section 2-1303’s nine percent interest rate does not apply unless and until a Commission’s decision, which is not a judgment, is reduced to a judgment under section 19(g) in a separate circuit court proceeding. Thus, the nine percent interest would not apply to a scenario where an employer promptly pays the award due plus applicable section 19(n) interest. The appellate court observed that where an employer pays the underlying award and pays section 19(n) interest, there are no grounds for entry of a section 19(g) judgment, and thus, section 2-1303 has nothing to which to attach.

Dobbs Tire is a significant victory for employers and one that clarifies the law concerning when section 19(n) interest ends and section 2-1303 interest begins. This decision means that employers who pay the awards when due and owing, and tender the appropriate interest under section 19(n), have no fear of being held liable for the higher nine percent judgment interest. Given the discrepancy between the current rates available under section 19(n) and nine percent interest, these amounts can be significant.

Both cases will likely see the filing of a petition for rehearing and request for certification to the Illinois Supreme Court. We will keep you updated.

Please keep Dobbs Tire in mind when you receive a demand from petitioner’s counsel asking for interest at the higher nine percent rate. Moreover, when an award becomes due, pay them promptly and tender the full amount of interest due on the award. Make sure, too, to pay enough additional interest to cover the time it takes for the check to travel from your office to opposing counsel. In most cases, with section 19(n) rates running as low as 0.15 percent ($150 per year on each $100,000 or $0.41 per day), tendering an addition $5.00 on an interest check so there are no questions of full tender may prove the best return on investment you can make.

Please feel free to call us with any questions you may have on calculating interest on an award or with issues you may be having resolving payment of your case.