Workers' compensation penalties -- late first payment of benefits

Penalty:  Late first payment of benefits

Statute violated -- Minnesota Statutes 176.221 Subd. 1

Applicable rule -- Minnesota Rules Part 5220.2770 and 5220.2790

Assessment statutes -- Minnesota Statutes 176.221 Subd. 3 and 176.225 Subd. 5

Penalty payable to -- Assigned Risk Safety Account (ARSA); employee

Assessed against -- insurance company or self-insured employer

Determination

The information used to determine if a penalty will be assessed includes:

• the first day of disability;
• the date the employer received notice of the injury or disability, whichever is later;
• the date of first payment of temporary total disability; and
• whether the employer is continuing to pay the employee full wages per Minnesota Statutes 176.221 Subd. 9.

The first payment of temporary total disability must be issued by the 14th day after the first day of disability or the date the employer received notice, whichever is later. If the payment is late and the claim has not previously been denied, a penalty may be assessed. A penalty is not assessed if there is a proper wage continuation plan by the employer.

Calculation

When penalty amounts are assessed for late first-payment of temporary total disability, two penalty amounts are calculated. One is payable to the employee and the other is payable to the Assigned Risk Safety Account.

Payable to the employee per Minnesota Statutes 176.225, Subd. 5
The amount of the penalty payable to the employee is 25 percent of the benefits found to be delayed. The amount of benefits found to be delayed is the amount of benefits paid up to a date two weeks before the date the first payment was made.

Payable to the ARSA per Minnesota Statutes 176.221
The amount payable to the ARSA is based on

• the number of days the payment was made late; and
• the amount of benefits due to the date of the first payment.

The total benefits paid to the date of the first payment is multiplied by a set percentage, determined by the number of days the first payment is late. The amount of this penalty is subject to a maximum set by statute and rule.

Number of days late	Percent of late benefits	Maximum penalty amount
One to 15	30 percent	$500
16 to 30	55 percent	$1,500
31 to 60	80 percent	$3,500
61 or more	105 percent	$5,000