Practice Alerts

New Case Law: Radosevich v. IC - Interest on Awards

http://www.state.il.us/court/Opinions/Work...

This opinion is a long read, especially the convoluted procedural history, including a prior remand. The first part deals with an employer getting slammed with attorneys fees for not paying an arbitration award in full within 30 days, despite its claim that it was trying to negotiate a lump-sum settlement. The circuit court further found that this refusal to pay subjected the employer to additional attorneys fees under Section 19(g) (the provision for judicial enforcement of Commission awards.) The appellate court affirmed all of this. Next, the appellate court addressed the issue of interest.

The arbitration award consisted of TTD and PTD that accrued prior to arbitration, as well as future PTD, maintenance, and home healthcare to be paid in fixed monthly amounts after the arbitration. No review was taken to the Commission. The 19(g) proceedings were filed one month after the arbitration decision became final. The employer made partial payments of the award over the next six months, but never did pay any interest prior to the circuit court's judgment. The judgment order included Section 19(n) interest on the benefits that accrued prior to arbitration. This interest was calculated for the period between the arbitration decision and the entry of the court judgment. However, the court applied interest under the Code of Civil Procedure Section 2-1303 on the weekly/monthly benefits payable after arbitration but prior to the circuit court judgment, up until the date of actual payment. On appeal, the claimant argued that Section 2-1303 interest should apply to the entire award entered by the arbitrator beginning the date that the award became final. The respondent agreed with the circuit court's calculation.

The appellate court had to answer a few questions: Was section 19(n) interest chargeable to the benefits that were not payable until after the arbitration award? Past decisions of the court indicated this was not the case. However, the court now has stated:

"A claimant is entitled to section 19(n) interest on all awards of arbitrators and decisions of the Commission. 820 ILCS 305/19(n) (West 2004). Interest pursuant to section 19(n) is "drawn from the date of the arbitrator's award on all accrued compensation due the employee through the day prior to the date of payments." 820 ILCS 305/19(n) (West 2004). Cases such as Ballard v. Industrial Comm'n, 172 Ill. App. 3d 41, 526 N.E.2d 675 (1988), and Folks v. Hurlbert's Wholesale Siding & Roofing, Inc., 93 Ill. App. 3d 19, 416 N.E.2d 745 (1981), are cited for the proposition that a claimant is not entitled to section 19(n) interest on benefits that accrued after the arbitrator's award. However, upon further review of these cases and the clear language of section 19(n), specifically that "[i]nterest shall be drawn from the date of the arbitrator's award" (820 ILCS 305/19(n) (West 2004)), we decline to follow Ballard, Folks, and cases with similar holdings."

I take that as a reversal of Ballard and Folks. Therefore, interest does now accrue even though the benefits were not due until after arbitration.

The next question: When does Section 19(n) interest end and Section 2-1303 interest begin? The court stated that in 19(g) proceedings the 2-1303 interest is retroactive to the date the arbitration award became final. This holding was based on the language of 2-1303:

"Section 2-1303 provides that judgments shall draw interest at the rate of 9% per annum from the date of judgment, and "[w]hen judgment is entered upon any award, report or verdict, interest shall be computed at the above rate, from the time when made or rendered to the time of entering judgment upon the same, and included in the judgment." 735 ILCS 5/2-1303 (West 2004). Once a claimant implements section 19(g) of the Act, a resulting order of the circuit court is an enforceable judgment, and section 2-1303 interest is properly awarded from the date of the arbitrator's award through the date judgment was entered on that award. In addition, any prospective payments due pursuant to the section 19(g) judgment that are untimely shall also be subject to section 2-1303 interest."

Because this changed the amount of interest liability, the case was remanded (again) for further determination of interest by the circuit court.

Please note that this is different from the situation where the Commission decision is appealed to the circuit court under Section 19(f). In that case, the 19(n) interest continues until the the date the circuit court decision is entered. The 2-1303 interest then begins after the circuit court decision, and is not retroactive.