Employment — worker’s compensation — bad faith

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Wisconsin Court of Appeals

Civil

Employment — worker’s compensation — bad faith

LIRC cannot impose a bad faith penalty for paying a worker’s compensation claim untimely when the employer was in bankruptcy subject to an automatic stay.

“The Commission argues that the penalty claim against Grede arose after the June 30, 2009, filing because Grede was not in default of the Department’s June 17, 2009, order until it did not make the required payment by July 8, 2009. But, under §§ 362(a)(1), (2), & (6), the automatic stay, triggered by the June 30 filing, prevented enforcement of the Department’s June 17 order as of June 30 (although, as we have seen, Grede got a bankruptcy-court order permitting Grede to make worker’s-compensation payments ‘in its sole discretion,’ given the competing needs set out in Grede’s motion and accepted by the bankruptcy-court order). Thus, as a result of the automatic stay, Grede could not be in default of its obligation to Northcott under the Department’s June 17 order because it was entered before the June 30 filing, and the payment directed by that order was not due until July 8, 2009. Simply put, the automatic stay froze Grede’s obligation to pay claims that were not yet due, including Northcott’s.”

Reversed.

Recommended for publication in the official reports.

2011AP2636 Grede Foundries, Inc., v. LIRC

Dist. I, Milwaukee County, Siefert, J., Fine, J.

Attorneys: For Appellant: Hertel, David C., Milwaukee; Eisenmann, Erik Kurt, Milwaukee; For Respondent: Rice, David C., Madison; Fitzpatrick, Ronald M., La Crosse