Sec. 1. 39-A MRSA §205, sub-§6, as enacted by PL 1991, c. 885, Pt. A, §8 and affected by §§9 to 11, is repealed and the following enacted in its place:

6.__Interest.__An employer or insurance carrier shall pay simple interest on a benefit owed under this Title or Title 39 at the rate of one percent per month for each full calendar month in which the payment is due, commencing with the month following the month in which the obligation was incurred and ending with the month in which the obligation is paid.

Sec. 2. 39-A MRSA §205, sub-§9, ¶F, as enacted by PL 1991, c. 885, Pt. A, §8 and affected by §§9 to 11, is amended to read:

F. If benefits have been discontinued or reduced pursuant to paragraph A or B and the board, after hearing, determines that benefits have been wrongfully withheld, the board shall order payment of all benefits withheld together with interest at the rate of 6% a year in accordance with subsection 6. The employer shall pay this amount within 10 days of the order.

SUMMARY

This bill resolves conflicts and uncertainties about payment of interest on overdue workers' compensation benefits. Current law identifies 2 different rates: 10% and 6%. It is not clear what rate, if any, applies to an award for medical bills, nor is it certain what law applies to new awards for old injuries arising prior to January 1, 1993.

The bill proposes for workers' compensation cases a single rate of one percent per month and gives a grace period for the month in which each benefit first accrues.

The bill also simplifies the calculation process. Because both wage and medical benefits accrue in small increments, usually from week to week, calculating interest on each installment separately is difficult and time-consuming. Under the bill, benefits payable within each calendar month are treated as a single award with interest to accrue only from the end of the month forward.

The bill specifies a simple monthly rate of one percent and makes clear that the same rate applies to both medical bills and wage benefits included within the award. This uniform method of