Interest is Payable on Death Benefits

Stenz v. Industrial Commission, (Arizona Supreme Court, Published Opinion, Filed 7/20/2015)

In this case, the Arizona Supreme Court addressed the questions of whether a widow is entitled to interest on an award of death benefits paid approximately four years after her claim was filed.

The widow filed a claim for death benefits following the death of her husband in September 2009. The claim was denied. The Administrative Law Judge (ALJ) upheld the denial. The award denying benefits was appealed and reversed. At subsequent hearings the claim was found compensable about four (4) years after the original filing of the claim. The carrier paid benefits without interest. The widow then filed a request for interest. The ALJ denied the request. The Court of Appeals reversed the award and ordered interest. The Supreme Court accepted review and held that she was entitled to interest from the date the carrier was notified of the claim.

The Court held that the general interest statute applies to workers compensation claims. Interest begins to accrue when there is a legal indebtedness or other obligation to pay benefits and a carrier has notice of the obligation to pay. Death benefits are liquidated (able to be determined with exactness without reliance on opinion or discretion) and are therefore subject to interest. Further, because the obligation to pay is created by statute and not by the ALJ’s award, a legal obligation to pay may exist before, or even in the absence of an award. In this case, interest began to accrue on the date the carrier was notified of the claim in October 2009.

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