1. Failure to timely deny a claim;
2. Failure to promptly pay a claim;
3. Failure to timely report an injury or death with the Department of Labor and Industry;
4. Failure to timely file medical reports and records;
5. Failure to timely pay medical and/or rehabilitation bills;
6. Failure to timely pay permanent partial disability benefits, temporary total disability benefits or temporary partial disability benefits;
7. Failure to properly recommence payment of temporary total disability benefits or temporary partial disability benefits;
8. Instituting a proceeding or interposing a defense which does not present a controversy, but which is frivolous or for the purpose of delay;
9. Unreasonable or vexatious delay of payment;
10. Neglect or refusal to pay compensation;
11. Intentional underpayment of compensation;
12. Unreasonable or vexatious discontinuance of compensation in violation of M.S. §§ 176.238 and 176.239; and
13. Failure to appear or participate in good faith at any conference or hearing.

2. Failure to Report Death or Injury to the Commissioner of the Department of Labor and Industry Pursuant to M.S. § 176.231, SUBDS. 1 and 2.
   1. Where death or serious injury occurs to an employee during the course of employment, the employer shall report the death or injury to the Commissioner and insurer within 48 hours after its occurrence. Any other injury which wholly or partly incapacitates the employee from performing labor or a service for more than three calendar days shall be reported to the Commissioner no later than 14 days from its occurrence. M.S. § 176.231, subd. 1.
   2. Where an injury requires reporting within 48 hours, the employer may make the initial report by telephone or personal notice, and then file a written report of the injury within seven days from its occurrence or within such time as the Commissioner shall designate. M.S. § 176.231, subd. 2.
   3. Failure to file with the Commissioner any report required by M.S. § 176.231 shall result in a penalty of up to $500.00 for each failure. M.S. § 176.231, subd. 10.
   4. Rule 5220.2820 further clarifies the penalty provision found in M.S. § 176.231. If the employer has one violation in a 12-month period of time prior to the assessment, only an advisory letter will be sent to the employer and/or insurer. If there has been one previous violation in the previous 12 months, a penalty of $125.00 must be assessed. If there are two previous violations in the past 12 months, a penalty of $250.00 must be assessed. If there has been three previous violations in the past 12 months, a penalty of $375.00 must be assessed. If there has been four or more violations in the past 12 months, a penalty of $500.00 must be assessed.
   5. The penalty is paid to the Assigned Risk Safety Account, a branch of the Special Compensation Fund.

3. Failure to Begin Payment of Compensation Within the Time Limits Pursuant to M.S. § 176.221, SUBDS. 1 and 3.
   1. M.S. § 176.221, subd. 1 provides that within 14 days of notice to or knowledge by the employer of an injury compensable under Chapter 176, the payment of temporary total disability benefits shall commence. Furthermore, within 14 days of notice to or knowledge by the employer of a new period of temporary total disability which is caused by an old injury, the payment of temporary total disability shall commence. However, the employer or insurer may file for an extension with the Commissioner within this 14-day period of time, in which case the Commissioner may grant an extension not to exceed 30 days from the date of notice for the employer or insurer to either admit or deny the claim.
      
   2. If liability is denied, a Notice of Denial must be filed within 14 days (unless there is an extension).
      
   3. If the employer and insurer commence payment of compensation but determine within 60 days of notice to or knowledge by the employer of the injury that the disability is not a result of the personal injury, payment of compensation may be terminated upon the filing of a Notice of Denial within 60 days of notice or knowledge. After the 60 day period, payment may be terminated only by filing a Notice of Intention to Discontinue Benefits (NOID) pursuant to 176.239.
      
   4. If the employer or insurer do not begin payment of compensation within the time limits prescribed above, there shall be a penalty payable to the Assigned Risk Safety Account. The penalty shall be a percentage of the amount of compensation to which the employee is entitled to receive up to the date compensation payment is actually made. The amount of the penalty shall be determined as follows:
      

      Number of Days Late	Penalty
      1 - 15	30 percent of compensation due not to exceed $500.00
      16 - 30	55 percent of compensation due not to exceed $1,500.00
      31 - 60	80 percent of compensation due not to exceed $3,500.00
      61 or more	105 percent of compensation due not to exceed $5,000.00
      This penalty is in addition to any other penalty otherwise provided by statute.

      
      
      
   5. In lieu of any other penalty under Chapter 176.221, the Commissioner may assess a penalty of up to $2,000.00 for each instance in which an employer or an insurer does not pay benefits or file a Notice of Denial of Liability within the time limits prescribed under this section.
      
   6. An insurer who has paid a penalty under M.S. § 176.221 may recover from the employer the portion of the penalty attributable to the acts of the employer which resulted in the delay. A penalty paid by the insurer under this section which is attributable to the fault of the employer shall be treated as a loss in an experience rated plan, retrospective rating plan or dividend calculation where appropriate.
   7. Rule 5220.2770 further clarifies the penalty provision found in M.S. § 176.221.
      
      1. The Commissioner's designee must complete a delayed payment worksheet containing information identifying the claim and setting forth the time period of late payment.
         
      2. Calculation of the amount of the penalty is to be in the following manner:
         
         1. The 14-day period is calculated first. The period will begin on the following day after either the first day of lost time or on the day of notice, whichever is latest;
            
         2. The number of days after the 14-day period until payment is made constitute the number of days late;
            
         3. The penalty due for the number of days late is calculated under M.S. § 176.221, subd. 3.
      3. Where an old injury recurs causing disability, an extension under M.S. § 176.221, subd. 1 is filed, and payment is not made within 30 days, calculation of the amount owing above shall be made using a period of 30 days rather than 14 days.
         
      4. Where no compensation has been paid, but the insurer has failed to file a Denial of Liability within the statutory 14 or 30-day limit on a claim required to be reported, a penalty of up to $2,000.00 may be assessed under M.S. § 176.221, subd. 3a as follows:
         
         1. 1 - 15 days late, $250.00;
            
         2. 16 - 30 days late, $500.00;
            
         3. 31 - 60 days late, $1,000.00; and
            
         4. Over 60 days late, $2,000.00.
            
         If the insurer has been assessed one to five violations of this item in the two-year period preceding the assessment, a penalty of $1,000.00 shall be assessed and if the insurer has been assessed six or more violations a penalty of $2,000.00 shall be assessed.
         

4. Failure to Timely Pay Medical Expenses Under M.S. § 176.131, Rehabilitation Under M.S. § 176.102, and Permanent Partial Compensation Pursuant to M.S. § 176.221, SUBD. 6A.
   
   1. The penalties provided by this section apply in cases where payment for treatment, rehabilitation expenses, or permanent partial compensation are not made in a timely manner as required by law or by rule adopted by the Commissioner.
      
   2. As soon as reasonably possible and no later than 30 calendar days after receiving a medical bill, the employer and insurer shall pay the charge or any portion of the charge which is not denied, deny all or part of the charge with written notification to the employee and the provider explaining the basis for denial. All or part of a charge must be denied if any of the following conditions exist:
      1. The injury or condition is not compensable;
      2. The charge for service is excessive;
      3. The charges are not submitted on the prescribed billing form; or
      4. Additional medical records or reports are required to substantiate the nature of the charge and its relationship to the work injury.
         
      If payment is denied because the charges are not submitted on the prescribed billing form or additional records or reports are required, the employer or insurer shall reconsider the charges within 30 calendar days after receiving additional medical data, a prescribed billing form, or documentation of enrollment or certification !as a provider.
      Failure to make a timely payment or denial of medical charges may result in a penalty to the Assigned Risk Safety Account pursuant to M.S. § 176.221, subd. 6a. It is assumed that the penalty provision of M.S. § 176.221, subd. 3 would be applicable.
      The Commissioner may also levy a $2,000.00 penalty pursuant to M.S. § 176.221, subd. 3a.
      
   3. Rule 5220.2740 clarifies the penalty for failure to pay or deny medical charges.
      
      1. A penalty of up to $2,000.00 shall be assessed as follows:
         
         1. 1 - 15 days late, $500.00;
         2. 16 - 30 days late, $1,000.00;
         3. 31 - 60 days late, $1,500.00; and
         4. Over 60 days late, $2,000.00.
      2. Penalties assessed under this part are payable to the Assigned Risk Safety Account.
         
      3. Interest on the sums owed under M.S. § 176.221, subd. 8 is payable to the health care provider.
   4. Permanent partial disability must be paid at the time specified in M.S. §§ 176.021 and 176.101.
      
   5. Rule 5220.2750 clarifies the penalty for failure to make timely payment of permanent partial compensation.
      
      1. The timetable set forth in M.S. § 176.101 and Rule 5220.2550 for proper payment of economic recovery or impairment compensation benefits is applicable.
         
      2. A penalty of up to 100 percent of the amount owing may be assessed.
         
      3. The penalty is payable to the Assigned Risk Safety Account.
         
      4. The Commissioner may also levy a $2,000.00 penalty pursuant to M.S. § 176.221, subd. 3a.
   6. Rule 5220.2780 clarifies the penalty which can be levied for failure to pay under Order or provide rehabilitation.
      
      1. Where rehabilitation services are not provided as required in M.S. § 176.102 and Rules 5220.0130, subpart 2 and 5220.0410, subpart 2, the Division may assess a penalty pursuant to M.S. § 176.221, subd. 3a.
         
      2. Where payment of compensation or expenses is not made within 14 days following an order, the division may assess the penalties provided in M.S. § 176.221, subd. 3 or 3a. However, the division shall not issue a penalty under this part unless payment is made after the 30th day following a final order. A penalty may be issued for a payment after the 14th day and through the 30th day following a settlement award under M.S.176.521. Payment made after the 14th day must include interest to the payee.
         
      3. The penalty available shall be assessed where there has been a failure to pay under an order which has not been appealed. If the payor chooses not to appeal the order, payments made more than 14 days after the order is served and filed are late. Each day after the 14th day is considered a late day. Penalties under M.S. § 176.221, subd. 3a shall be assessed as follows:
         
         1. 1 - 15 days late, $500.00;
         2. 16 - 30 days late, $1,000.00;
         3. 31 - 60 days late, $1,500.00; and
         4. Over 60 days late, $2,000.00.
      4. The penalty is payable to the Assigned Risk Safety Account.

5. Additional Award as Penalty Pursuant to M.S. § 176.225, SUBDS. 1 and 5.
   
   1. Pursuant to M.S. § 176.225, subd. 1, a penalty of up to 30 percent of the total amount of compensation may be awarded as a penalty to the employee if the employer or insurer has:
      
      1. Instituted a proceeding or interposed a defense which does not present a real controversy but which is frivolous or for the purpose of delay;
         
      2. Unreasonably or vexatiously delayed payment;
         
      3. Neglected or refused to pay compensation;
         
      4. Intentionally underpaid compensation; or
         
      5. Unreasonably or vexatiously discontinued compensation in violation of §§ 176.238 and 176.239.
         
   2. For purposes of this section, "frivolously" means without a good faith investigation of the facts or on a basis that is clearly contrary to fact or law.
      
   3. To determine whether an employer or insurer is liable for payment, the Division, a Compensation Judge, or the Workers' Compensation Court of Appeals upon appeal may examine the books and records of the employer or insurer relating to the payment of compensation, and may require the employer or insurer to furnish any other information relating to the payment of compensation.
      
   4. If an insurer persists in an action or omission listed above, or does not permit the examination of books or records, or fails to furnish information as required, the Commissioner or the Chief Administrative Law Judge shall file a written complaint with the Commissioner of Commerce. Upon receipt of a complaint, the Commissioner of Commerce shall hear and determine the matter. On finding that a charge made by the complaint is true, the Commissioner of Commerce may suspend or revoke the license of the insurer to do business in the state. The insurer may appeal from the action of the Commissioner revoking the license.
      
   5. Pursuant to M.S. § 176.225, subd. 5, a 25% penalty may be assessed where the employer is guilty of inexcusable delay in making payments. Only those payments delayed shall be increased by 25%.
      
   6. Rule 5220.2760 further clarifies the penalty provision found in M.S. § 176.225.
      
      1. A penalty assessed will be for at least 5 percent of the compensation owing and shall be assessed as follows:
         
         1. 1 - 5 days late, 6 percent;
            
         2. 6 - 15 days late, 12 percent;
            
         3. 16 - 30 days late, 18 percent;
            
         4. 31 - 60 days late, 24 percent; and
            
         5. Over 60 days late, 30 percent.
      2. Penalties assessed under this part are payable to the employee.

6. Improper Discontinuance of Compensation Benefits pursuant to M.S. § 176.238.
   1. An employer who violates the requirements set forth in M.S. § 176.238 is subject to a fine of up to $1,000.00 for each violation payable to the Special Compensation Fund.
      
   2. An employer and insurer are also subject to possible penalties pursuant to M.S. § 176.225, subd. 1 and 176.225, subd. 5.

7. Sanctions; Failure to Prepare, Appear or Participate Pursuant to M.S. § 176.081, SUBD. 12.
   If a party or party's attorney fails to appear at any conference or hearing, is substantially unprepared to participate in the conference or hearing, or fails to participate in good faith, the Commissioner or Compensation Judge shall require the party or the party's attorney or both to pay the reasonable expenses, including attorney's fees incurred by the other party, due to the failure to appear, prepare or participate.

8. Overlap Of Penalty Payments.
   An employer and insurer may be subjected to penalties pursuant to M.S. § 176.221 with payment to the Special Compensation Fund and also be subjected to separate and distinct penalties resulting in payment to the employee. The bottom line is that employers and insurers must understand the timetables for accepting or denying claims,and follow proper procedures for commencing and terminating benefits. Failure to do so may result in penalty assessments to the Special Compensation Fund and/or the employee.

9. Case Law.
   
   1. Diem Nguyen v. Seagate Technologies, Inc., File No. 473-98-0313 (June 10, 1997).
      Facts:
      The parties reached a settlement and an Award on Stipulation was served and filed. The Stipulation contained the employee's current address. The insurer issued payment, with the employee's attorney and medical providers receiving timely payment. The employee's check, however, was sent to an old address. The insurer stopped payment and then reissued payment to the correct address. The employee claimed penalties for late payment pursuant to M.S. § 176.225. The employer and insurer defended claiming their mistake was inadvertent and not vexatious. The Compensation Judge awarded a penalty for unreasonable delay in payment. The Court of Appeals agreed, indicating that while the employer and insurer's act of sending the initial check to the wrong address was inadvertent and not vexatious, it was still a mistake which delayed payment.
      
   2. B. Grover v. City of St. Paul, File No: 476-84-1410 (September 28, 1995).
      Facts:
      The employee initially sustained a non-work-related injury to his right knee and then he reinjured the knee during the course of his employment. He treated with Dr. Paul Yellin, who subsequently opined he had 3 percent permanency attributable equally to the two injuries. The employer paid the employee benefits representing 1.5 percent permanency. The employee did not bring a claim for the additional permanency. The Department served a Notice of Penalty Assessment against the employer for failure to pay the additional permanency. The employer objected and the matter went to hearing. The Compensation Judge found the evidence did not justify penalties because there were genuine issues regarding the amount of the permanency in dispute. The Department appealed. The Court of Appeals agreed the employer's defense presented a real controversy and was not frivolous. Thus, the Court also determined the employer was not liable for penalties pursuant to M.S. § 176.221, subd. 6a.
      
   3. Stang v. Hutton and Rowe, Inc., File No. 475-60-0474 (January 17, 1995).
      Facts:
      The parties reached a settlement and an Award on Stipulation was issued. Checks payable to the employee and his attorney for fees were inadvertently attached to a NOBP sent to the employer. The employer advised the insurer of the mistake, the checks were picked up, and sent to the employee's attorney's office. However, the checks were sent to an old address. The forwarding order had expired, and the checks were eventually returned to the insurer. The employee's attorney claimed penalties, a Compensation Judge determined the employee was entitled to penalties representing 10 percent of the amount of the settlement proceeds payable to the employee, and the employer and insurer appealed. The Court of Appeals affirmed the Compensation Judge's decision, noting that the insurer did not act in a responsible manner. Thus, the court held it was not unreasonable for the Judge to conclude the insurer's actions were, as a whole, sufficiently careless or negligent to warrant a 10 percent penalty pursuant to M.S. § 176.225, subds. 1 and 5.
      
   4. Valine v. Harbor City Masonry, File No. 471-70-3412 (December 27, 1993).
      Facts:
      A Findings and Order was served awarding benefits, the employer and insurer appealed to the Court of Appeals. The Court of Appeals affirmed the Compensation Judge's decision, and no further appeal was taken. The employer did not make timely payment of benefits. The Department filed a Notice of Penalty Assessment claiming penalties pursuant to M.S. § 176.221, subd. 3 payable to the Special Compensation Fund and pursuant to M.S. 176.221, subd. 1b, payable to the employee. A Compensation Judge determined that payment of benefits was not timely and the Department's penalty assessment was proper. The Court of Appeals agreed, indicating the plain language of M.S. 176.221, subd. 8 requirespayment within 14 days of the filing of an Order awarding benefits unless the decision is appealed.
      
   5. Ristvedt v. Carl Bolander & Sons, File No. 504-52-7500 (February 10, 1993).
      Facts:
      The employee sustained two work-related injuries to his groin. His treating physician opined he had 6 percent permanency. He underwent an IME by Dr. Ivan Schloff who also rated him as having 6 percent permanency, apportioning two-thirds to the first injury and one-third to the second. The employer and insurer on the risk for the first injury (the employer was self-insured at the time of the second injury) paid 4 percent permanency. The employee claimed the additional permanency and entitlement to penalties for late payment of permanency benefits pursuant to Rule 5220.2550. The Compensation Judge determined the employee had 6 percent permanency relating solely to the first injury and that he was not entitled to penalties. The Court rejected the employee's contention the permanency was clear and undisputed. The Court of Appeals affirmed.