The employee appeals from the compensation judge’s denial of his claims for additional penalties under Minn. Stat. § 176.225, subds. 1 and 5, and the denial of his claim for attorney fees. We affirm.

In September 2011, Attorney Patrick Kelly filed a claim petition on behalf of the employee, Richard Larson, seeking benefits arising out of a number of injuries which occurred during his employment at RR Donnelley.  In October 2012, the parties entered into a settlement of the employee’s claims; an award on stipulation approving the settlement was served and filed on November 5, 2012.  Pursuant to the stipulation and award, the employee was to be paid the sum of $62,728.00, and Mr. Kelly was to be paid $18,422.00 for attorney fees and costs.

The settlement checks were issued by the claims office of Gallagher Bassett in Milwaukee and on November 16, 2012, the claims representative at that office requested that the checks be issued.  Gallagher Bassett had a business practice that checks over $50,000 had to be approved by a branch manager to ensure that the appropriate funds were available.  November 16, 2012, was a Friday and the branch manager approved the payment on Monday, November 19. The check to the employee was issued the next day.  The parties agreed the payment to the employee was one day late.

The check to Mr. Kelly did not require the branch manager’s approval, and was issued on November 16.  In mailing the check to Mr. Kelly, Gallagher Bassett used a database of tax ID numbers and addresses.  The address for Mr. Kelly’s check was out of date and had not been used by him since 2008.  The check was returned to Gallagher Bassett as “addressee unknown.”  When Mr. Kelly did not receive his check, he contacted the attorney for Gallagher Bassett, Larry Peterson.  Mr. Peterson asked Mr. Kelly if he wanted Gallagher Bassett to issue a stop payment order on the check; Mr. Kelly responded in the negative.  Gallagher Bassett re-mailed Mr. Kelly’s check, but once again used the 2008 address.  The check was returned again to Gallagher Bassett.  After some further communications between Mr. Kelly and Mr. Peterson, the check was eventually sent to the correct address.  The parties agreed Mr. Kelly’s check was 22 days late.

Mr. Kelly wrote to Compliance Services at the Department of Labor & Industry (DLI) in December 2012 and requested an award of penalties against Gallagher Bassett for the late payment of monies owed by the award on stipulation.  Mr. Kelly asked for a penalty of 6 percent, $3,768.63, for the late payment to the employee.  Mr. Kelly requested a contingent fee of 20 percent to be deducted from that payment and paid to him.  Mr. Kelly also requested a penalty of 18 percent to be paid for the late payment of fees and costs.  Mr. Kelly asked that this penalty be paid to the employee and 20 percent of the penalty paid to him as attorney fees.

DLI issued a notice of penalty assessment on January 2, 2013.  Penalties were awarded under Minn. R. 5220.2780 and Minn. R. 5220.2760.  The employer and insurer were ordered to pay all penalties, totaling $7,079.68, to the employee.  There was no provision in the assessment for withholding or paying attorney fees to Mr. Kelly.  Mr. Kelly took no action with regard to the issue of fees.  The employer and insurer filed an objection to the penalty assessment under Minn. R. 5220.2870, but on May 6, 2013, made payment pursuant to the assessment.

The employee filed a claim petition seeking additional penalties against the employer and insurer in May 2013.  The claim petition was heard by Compensation Judge Danny Kelly on April 8, 2014.  Issues for determination were identified as:

The compensation judge issued his findings and order on June 18, 2014.  The compensation judge:

The employee has appealed the compensation judge’s decision.

In his appeal, the employee makes four arguments:

Whether a penalty is appropriate in a given case and the amount of any penalty awarded are questions of fact for the compensation judge.  Saarela v. Sun Country Airlines, slip op. (W.C.C.A. Sept. 25, 1998); Maxfield v. Stremel Mfg., slip op. (W.C.C.A. Jan. 6, 1997).  Our review of factual determinations made by a compensation judge is limited to a consideration of whether substantial evidence supports the compensation judge’s decision.  Minn. Stat. § 176.421, subd. 3(3); Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).  Our consideration of the employee’s appeal in this matter is made under this standard of review.

Minn. Stat. § 176.225, subd. 1, provides for an “additional award as penalty” of “up to 30 percent” on a number of grounds, including where the employer or insurer has “neglected” to pay compensation.  The compensation judge found the late payment of the award to the employee and late payment of attorney fees and costs were the result of neglect.  The compensation judge awarded a penalty of 1 percent for the late payment to the employee and 10 percent for the late payment to Mr. Kelly.  The employer and insurer have not appealed the award of penalties under this section.

The employee has, however, challenged the amount of the penalties awarded by the compensation judge.  The compensation judge awarded a penalty of 1 percent to the employee and 10 percent to Mr. Kelly.  When combined with the penalties awarded by DLI, the employee has received a penalty award of 7 percent for receiving his benefit payment one day late.  Mr. Kelly has been awarded a penalty of 28 percent, only 2 percent less than the maximum allowed by statute.

The employee does not acknowledge the previous award of penalties by DLI, but we see no reason why the total amount of penalties awarded under Minn. Stat. § 176.225, subd. 1, whether by the compensation judge or DLI, should not be considered in reviewing the adequacy of the penalties ordered by the compensation judge.  The employee advances no argument as to why the total amount of penalties awarded under this section are inadequate.

We conclude substantial evidence supports the compensation judge’s decision on this issue.

Minn. Stat. § 176.225, subd. 5, requires that a penalty of 25 percent must be assessed against an employer that is guilty of “inexcusable delay” in making payments.  The compensation judge found that there was no inexcusable delay in the present case with regard to the checks issued by the insurer to the employee and the attorney.  The employee contests that conclusion.

In considering this issue, we note that while the penalty provisions now codified as Minn. Stat. § 176.225, subd. 1, have been part of the statute since 1901, subdivision 5 was not added until 1981.^[1]  Initially, the mandatory penalty in subdivision 5 was set at 10 percent, and was increased to 25 percent in 1995.^[2]  We conclude that the legislature, in adding subdivision 5 to the statute meant for inexcusable delay to refer to actions and behavior by an employer and insurer that were more egregious than the neglect or vexatious delay referred to in subdivision 1.

We have affirmed the compensation judge’s denial of a penalty for inexcusable delay where the insurer used an incorrect address in sending the settlement check to the employee.  McCarty v. Andersen Windows, No. WC11-5364 (W.C.C.A. May 7, 2012).  We have affirmed a compensation judge’s denial of a penalty for an inexcusable delay where the insurer’s delay in issuing settlement checks was due to the insurer’s procedure in issuing checks as well as to the adjuster’s workload.  Kriesel v. University of Minn., 72 W.C.D. 39 (W.C.C.A. 2012).  This court reversed a compensation judge’s award of penalties for inexcusable delay where the insurer had delayed payment of attorney fees from a settlement because it was waiting for a signed W-9 from the attorney.  Meyers v. K Byte-Hibbing Mfg., 66 W.C.D. 146 (2006), summarily aff’d (Minn. May 1, 2006).

In contrast with the above decisions, we have reversed a compensation judge’s denial of penalties for inexcusable delay where the compensation judge found that the employer and insurer offered no reason for its delay in making payment to the employee.  Myers v. Minn. Vikings Football Club, 69 W.C.D 367 (W.C.C.A. 2009).  In Peulen v. Andersen Corp., No. WC09-120 (W.C.C.A. July 1, 2009), this court reversed a denial of penalties for inexcusable delay where there was no explanation provided for the delay in paying the amounts owed pursuant to a settlement.  The court affirmed the compensation judge’s award of benefits for inexcusable delay where the employer took a credit for sick pay from payments to be made under a stipulation where the stipulation did not authorize the credit.  Kuehn v. St. Louis Co., 65 W.C.D. 185 (W.C.C.A. 2004), summarily aff’d (Minn. Mar. 30, 2005).

In his brief, the employee cites to most of these decisions and concludes that their authority requires an award of penalties under Minn. Stat. § 176.221, subd. 5.  Given the evidence here, as well as the case law, we are unable to state that the compensation judge’s denial of penalties under this subdivision is not supported by substantial evidence.  We affirm the compensation judge on this issue.

The penalty assessment made by DLI was done under the authority of Minn. R. 522.2780 and Minn. R. 5220.2760.  Minn. R. 5220.2870 provides that a party may object to an assessment within 30 days.  After an objection is filed, the assessment is referred for a hearing before a compensation judge “to determine the amount and conditions of any penalty.”

The employer and insurer filed a timely objection to the assessment but later dismissed the objection and paid the penalties assessed by DLI.  The employee claims that in filing the objection, the employer and insurer were raising a defense which was “frivolous or for the purposes of delay.”  The employee argues that a penalty at 30 percent should have been awarded by the compensation judge pursuant to Minn. Stat. § 176.225, subd. 1.

The employee’s primary argument on this issue is that the employer and insurer subsequently paid the assessment after having objected to it.  It does not follow, however, that payment of the assessment means that the employer and insurer never had any defense to the assessment.  The rule allows an objection to be made to the amount of the penalty and it would indicate that the employer and insurer could consider an objection to the assessment on that basis alone.  The compensation judge found that “the employer and insurer have valid defenses to the penalties assessed.”

There is no other evidence cited by the employee to support a claim that the objection by the employer and insurer was frivolous.  The decision of the compensation judge on this issue is supported by substantial evidence and is affirmed.

The employee argues that the compensation judge erred in failing to award contingent attorney fees from the penalties paid by the employer and insurer pursuant to the penalty assessment and from the additional penalties ordered by the compensation judge.

In his brief, the employee argues that the employer and insurer should have withheld attorney fees from the payments it made to the employee, even though the assessment did not order those fees to be withheld, and instead ordered the entire amount of penalties to be paid to the employee.  Whether or not the employer and insurer should have withheld attorney fees has little relevance to the present issue.  The question here is whether attorney fees should have been awarded by the compensation judge.

The compensation judge denied the claim for attorney fees from the amounts paid under the penalty assessment.  The compensation judge noted that although the employee’s attorney had requested that attorney fees be withheld, he had not objected when fees were not ordered in the assessment.  More importantly, however, the compensation judge determined that the services provided by the employee’s attorney did not support the award of an attorney fee from the amount paid under the penalty assessment.  This finding is not addressed in the employee’s brief.

In further support of the compensation judge’s denial of fees, we note that the retainer agreement in the record provides for a maximum fee of $13,000.  (Petitioner’s Ex. B.)  The stipulation provided for attorney fees of $15,932.00 and Mr. Kelly was paid this amount without a petition for excess fees.  No petition for excess fees was filed in connection with the penalty claims and no evidence offered that excess fees were appropriate.  We see no basis in the evidence for an award of additional fees.

The decision of the compensation judge is affirmed.