ARS Section 44-1201 Interpretation

In Tisdel v. Industrial Commission, 156 Ariz. 211, 751 P.2d 527 (1988), the carrier issued its notice of claim status in 1971, did not deny coverage, and suggested the claimant would begin receiving permanent partial disability benefits. 156 Ariz. at 212, 751 P.2d at 528. Neither the claimant nor the carrier followed up with that notice, and no benefits were paid at the time. Id. Thirteen years later, the claimant sustained a second injury and hired counsel to assist with that claim; counsel discovered the prior oversight and sought payment of the past due benefits from the 1971 claim. Id. the carrier paid the full amount of benefits due on the 1971 claim but refused to pay interest. Id. The Arizona Supreme Court concluded that a workers' compensation claimant is owed interest under the general interest statute, A.R.S. 44-1201, on benefits not timely paid. Tisdel, 156 Ariz. at 212-13, 751 P.2d at 528-29. That statute states, in relevant part, that "interest on any loan, indebtedness or other obligation shall be at the rate of ten per cent per annum." 44-1201(A). In determining when interest began to accrue, the court noted the carrier had not denied coverage and "counsel for both parties stipulated that it was an error for the carrier not to have issued a notice of permanent disability in December of 1971." Tisdel, 156 Ariz. at 212, 751 P.2d at 528. The court further noted that A.R.S. 23-1047(A), the statute establishing the procedure for payment of benefits in that case, provides that an "employer or insurance carrier may commence payment of a permanent disability award without waiting for a determination under subsection B of this section." Tisdel, 156 Ariz. at 213, 751 P.2d at 529. Because "the carrier could have begun payments as of 23 December 1971 when it issued its notice of claims status," the court concluded "that the legal obligation for interest occurred on 23 December 1971 when the carrier had notice of its obligation to pay permanent benefits." Id.