An “Interesting” Decision

The Illinois Appellate Court has recently issued a decision which addresses the question of the rate to be used when calculating post-appeal interest.  On February 16, 2018, the court issued a decision in the case of Dobbs Tire & Auto v. Illinois Workers’ Compensation Commission, 2018 IL App. (5th)160297WC, finding that post-appeal interest is to be calculated pursuant to Section 19(n) of the Illinois Workers’ Compensation Act only, without any additional interest pursuant to Section 2-1303 of the Illinois Code of Civil Procedure. 

By way of background, Section 19(n) of the Act provides, in relevant part, that “decisions of the …Commission reviewing an award of an arbitrator of the Commission shall draw interest at a rate equal to the yield on indebtedness issued by the United States Government with a 26-week maturity next previously auctioned on the day on which the decision is filed. Said rate of interest shall be set forth in the Arbitrator’s Decision.” 820 ILCS 305/19(n) (West 2014). The actual interest rate to be used is calculated by the Commission and set forth on the cover sheet of the arbitration decision. Accordingly, the amount of interest varies among awards.

Section 2-1303 of the Code of Civil Procedure, on the other hand, provides for a specific interest rate of 9% to calculate post-judgment interest (735 ILCS 5/2-1303 (West 2014)). So, the question before the court was whether an employer is liable to pay interest at the rate calculated by the Commission, pursuant to Section 19(n) of the Act, or the larger rate, pursuant to Section 2-1303 of the Code, once the appeals process had come to an end.

 

Facts

This decision actually represents a resolution of two appeals, Dobbs Tire & Auto v. IWCC, and Peggy Stolte v. IWCC.  In Stolte, the arbitrator ruled in the claimant’s favor and the employer appealed the decision all the way to the appellate court, with no change in the amount of the award. The employer paid the award, including Section 19(n) interest, and the claimant subsequently filed a “Motion For Enforcement Of Judgment And Interest At 9% Per Annum, On Workers’ Compensation Arbitration Decision And Commission Decision And Pursuant to 820 ILCS 305/19(g)”.  The circuit court granted a motion to dismiss filed by the employer and declined to order payment of interest pursuant to Section 2-1303 of the Code.

In Dobbs Tire, the arbitrator also ruled in the claimant’s favor, and subsequent appeals by the employer only resulted in a slight deduction in the award. The employer paid the award and interest pursuant to Section 19(n). After receipt of payment from the employer, the claimant filed a “Motion For Enforcement Of Judgment And Interest On Workers’ Compensation Commission Decision And Pursuant to 820 ILCS 305/19(g)”. The circuit court granted this motion and ordered the employer to pay additional interest at the 9% rate mandated by Section 2-1303 of the Code.

 

Holding 

The appellate court found that so long as the employer pays the award, plus interest under Section 19(n) of the Act, prior to the award being reduced to a judgment under Section 19(g) of the Act, additional interest under Section 2-1303 of the Code is not appropriate.

 

Analysis

 The appellate court cited two previous appellate court decisions in reaching the conclusion that Section 2-1303 judgment interest is not required, so long as the employer pays the award in a timely fashion following the exhaustion of all appeals. 

In Radosevich v. Industrial Comm’n, 367 Ill. App. 3d 769, 778 (2006), the court stated, “[a] claimant is entitled to section 2-1303 interest if and when the arbitrator’s award or Commission’s decision becomes an enforceable judgment.” Id. at 778. This occurs “[w]hen an employer fails or refuses to pay a final award determined by the arbitrator, which becomes the Commission’s decision.” Id. The court further stated that, interest is only proper once a judgment is entered by the circuit court and does not affect an employer who makes timely payments on the award. Radosevich, 367 Ill. App. 3d at 778.

In Sunrise Assisted Living v. Banach, 2015 IL App (2d) 140037, the court stated the issue succinctly:

“In this case, Sunrise appealed the Commission’s decision, and section 19(n) interest accrued while that appeal was pending. When the appellate court rendered its decision, Sunrise promptly paid the lump sum, accrued installments, and section 19(n) interest, before [the claimant] filed her section 19(g) application. Sunrise did not refuse to pay before [the claimant] implemented section 19(g). When Sunrise tendered full payment of  was owed, [the claimant] was no longer entitled to a judgment under section 19(g). Without a judgment, [the claimant] was not entitled to additional interest under section 2-1303 of the Code.” Sunrise Assisted Living, 2015 IL App (2d) 140037, ¶ 35.

 

Take Away

So, there are two important take-ways from the Dobbs Tire & Auto decision, as well as the previous Radosevich and Sunrise Assisted Living decisions.  

  • First, the proper interest rate to use for calculation of final payment of an award is that set forth in the arbitration decision, pursuant to Section 19(n) of the Act, provided the award has not been reduced to a judgment under Section 19(g) of the Act.  

  • Second, once all appeals have been exhausted, it is important to pay the award (including Section 19(n) interest) without delay.  The Act does not specifically define timely payment of an award, but it is generally accepted that payment within 30 days is considered reasonable. Under no circumstances should payment be delayed to the point that claimant files a Section 19(g) motion and the award is reduced to a judgment. The ramifications of failing to pay the final award prior to the court entering judgment on the award could be thousands of additional dollars.