2008-EB-3 (2008). In re Pellicer.
Court | California |
California Workers Compensation Decisions
2008.
2008-EB-3 (2008).
In re Pellicer
WORKERS' COMPENSATION APPEALS BOARD
STATE OF CALIFORNIA DEE ANNE RAMIREZ, Applicant, vs. DRIVE
FINANCIAL SERVICES; and ONEBEACON INSURANCE CO., Defendant(s).Case No. ADJ4579659 (AHM
0089109)OPINION AND DECISION AFTER
RECONSIDERATION (EN BANC) The Appeals Board granted applicant's petition for
reconsideration to allow time to study the record and applicable law. Because
of the important legal issues regarding penalties under Labor Code section
5814[1] and attorney's fees under section 5814.5, and to secure uniformity of
decision in the future, the Chairman of the Appeals Board, upon a majority vote
of its members, assigned this case to the Appeals Board as a whole for an en
banc decision. (Lab. Code, § 115.)[2]
For the reasons discussed below, we hold: (1) that the amount of
the penalty under section 5814(a) is discretionary and should be determined
upon consideration of the factors enumerated in this opinion; (2) that
although, under new section 5814(a), a successive penalty may still be awarded
for an unreasonable delay in making a prior penalty payment, it should not be
awarded where the defendant had genuine doubt as to its liability or where
there is no legally significant intervening event; (3) that, if an unreasonable
delay in payment of an award of compensation occurred after January 1, 2003,
section 5814.5 entitles an applicant's attorney to receive fees for enforcing
the award, even against a private employer and even when the injury occurred
prior to January 1, 2003, the effective date of the amendment to section
5814.5; and (4) that such fees are to be awarded "in addition to" applicant's
section 5814(a) penalty - not as a percentage of the penalty - and are to be
based on the reasonable number of hours expended and a reasonable hourly rate.
BACKGROUND
Applicant was employed by Drive Financial Services as a
collections specialist from August 9, 2000 through February 15, 2001.
Defendant, One Beacon Insurance Company (One Beacon), had coverage for the
employer during some of this period. Applicant filed a claim of cumulative
injury to various body parts, which was resolved by a December 7, 2004 order
approving compromise and release (OACR). Pursuant to the OACR, One Beacon was
to pay applicant $57,000. In addition, One Beacon agreed to pay $3,000 to
applicant as settlement of prospective vocational rehabilitation services
(RU-122), and the agreement was approved by the workers' compensation
administrative law judge (WCJ) in a separate order, also dated December 7,
2004.
The compromise and release agreement provided that all penalty
issues were waived if defendant made payment within 30 days of service of the
OACR. Defendant concedes in its Response to Petition for Reconsideration that
it was five days late in making its payments of $57,000 and $3,000 to
applicant.[3]Applicant's attorney notified defendant of the late payments by
multiple letters, and requested penalties. Applicant's Exhibit 1 contains five
letters to defendant, requesting a 25 percent penalty on the late payments.
They are dated January 12, 2005, January 17, 2005, February 2, 2005 (letter
confirming a phone conversation), February 4, 2005 (faxed), and March 7, 2005.
Defendant, without any penalty award, paid applicant penalties of $5,700 and
$300 by checks dated February 8, 2005, and February 6, 2005, respectively.
(Defendant's Exhibit A.) Defendant did not withhold any attorney's fees from
the penalty payments.
Applicant then filed a penalty petition, essentially asserting
that defendant should have paid the maximum penalties available under section
5814(a) (i.e., the lesser of either 25 percent or $10,000) for each of the
delays, meaning that defendant should have paid $10,000 against the delayed
$57,000 payment and $750 against the delayed $3,000 payment. In addition,
applicant asserted that, because defendant underpaid the penalties by $4,300
and $450, respectively, defendant now also owes additional 25 percent
penalties, plus interest, against those amounts. Finally, applicant requested
attorney's fees pursuant to section 5814.5. The issues of applicant's section
5814 penalty and section 5814.5 attorney's fee claims were tried on August 30,
2006.
On October 20, 2006, the WCJ issued his Findings and Order,
finding that no further penalties were owed for the late payments, but that a
ten-percent ($600) fee for applicant's attorney was warranted.[4]The WCJ found
that, given the circumstances, a ten-percent penalty was sufficient to
accomplish a fair balance and substantial justice between the parties and that,
while section 5814(a) authorizes a penalty of up to 25 percent, it affords
discretion to award a lesser amount. The WCJ denied the claim for a fee
pursuant to section 5814.5, reasoning that section 5814.5, as amended to apply
to all employers except the State (see Lab. Code, §§ 5814.5, 3700),
applies only to dates of injury on or after January 1, 2003, the effective date
of the amendment. He cited Khan v. Workers' Comp. Appeals Bd.
(2006) 71 Cal.Comp.Cases 1168 (writ den.) (Khan).
Applicant petitioned for reconsideration, essentially reiterating
the contentions of her penalty petition. Defendant filed a Response. We granted
reconsideration on January 2, 2007.
On April 23, 2007, we received Applicant's Supplemental Petition
for Reconsideration. We received defendant's Response on May 14, 2007. Because
we did not request or approve these supplemental pleadings, we have not
considered them. (See Cal. Code Regs., tit. 8, § 10848.)
DISCUSSION I. LABOR CODE SECTION 5814
ISSUESA. Calculation of the Amount of a Section 5814(a) Penalty Prior to Senate Bill 899, section 5814 provided, "When payment of
compensation has been unreasonably delayed or refused, either prior to or
subsequent to the issuance of an award, the full amount of the order, decision,
or award shall be increased by 10 percent." Because former section 5814
mandated a "10 percent" increase whenever an unreasonable delay occurred, the
WCAB had no discretion to impose a penalty that was greater or lesser than 10
percent. Therefore, there was no basis to consider what factors might be
balanced in determining the amount of the penalty. The only balancing that
occurred was in determining whether to award a section 5814 penalty at all.
(See generally County of San Luis Obispo v. Workers' Comp. Appeals Bd.
(Barnes) (2001) 92 Cal.App.4th 869, 874-879 [66 Cal.Comp.Cases 1261,
1264-1268] (Barnes).)
The current version of section 5814 was enacted on April 19,
2004, and became operative on June 1, 2004. (Lab. Code, § 5814(i).)
Section 5814(a) now provides:
"When payment of compensation has been unreasonably delayed or refused, either prior to or subsequent to the issuance of an award, the amount of the payment unreasonably delayed or refused shall be increased up to 25 percent or up to ten thousand dollars ($10,000), whichever is less. In any proceeding under this section, the appeals board shall use its discretion to accomplish a fair balance and substantial justice between the parties."In light of the language of current section 5814(a), the WCJ correctly concluded that discretion is now required in setting the amount of a penalty and that an applicant is not necessarily "entitled" to the maximum. Section 5814(a) provides that, when an unreasonable delay is found, the penalty shall be "up to 25 percent or up to ten thousand dollars ($10,000), whichever is less" and that the Appeals Board "shall use its discretion to accomplish a fair balance and substantial justice...
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