PATRICK FARRIS, Applicant,
v.
INDUSTRIAL WIRE PRODUCTS; and LIBERTY MUTUAL INSURANCE COMPANY, Defendants.
No. SBR 0284141
California Workers Compensation Decisions
Workers Compensation Appeals Board State of California
July 17, 2000
OPINION AND DECISION AFTER RECONSIDERATION (EN
BANC)
MERLE
C. RABINE, Chairman.
On June
29, 2000, the Board granted applicant's petition for
reconsideration of the Supplemental Findings and Order issued
by the workers' compensation administrative law judge
(WCJ) on April 26, 2000. In the relevant portion of that
decision, the WCJ found that defendant, Liberty Mutual
Insurance Company, had unreasonably failed to self-assess a
ten-percent Labor Code section 4650(d)[1] penalty against
the late payments of permanent disability indemnity made to
applicant under an October 8, 1999 Findings and Award.
Accordingly, the WCJ imposed a penalty under section 5814 for
the unreasonable failure to pay the section 4650(d) penalty.
The WCJ specifically found that this section 5814 penalty
"shall be calculated and paid on the total amount of the
penalties calculated under section 4650(d) only." In his
petition for reconsideration, applicant contends that the
section 5814 penalty for defendant's unreasonable failure
to self-assess the section 4650(d) penalty should not apply
solely against the section 4650(d) penalty amount, but should
also apply against "the whole class of permanent
disability benefits."
Because
of the important and novel legal issue presented, and in
order to secure uniformity of decision in the future, the
Chairman of the Board, upon a majority vote of its members,
has reassigned this case to the Board as a whole for an
en banc decision. (Lab. Code, § 115.) Based on
our review of the relevant statutory and case law, we
conclude that, whenever a defendant unreasonably delays or
fails to pay a section 4650(d) penalty on late payments of
disability indemnity, the section 5814 penalty for that
unreasonable delay or failure to pay shall be ten-percent of
the entire class of the underlying indemnity, as increased by
the section 4650(d) penalty.
I.
BACKGROUND
Applicant
sustained an admitted cumulative industrial injury to both
upper extremities from September 1, 1989 through August 17,
1997, while employed by Industrial Wire Products, the insured
of defendant.
On
August 24, 1999, a trial was held on various issues,
including (1) the extent of permanent disability and (2)
defendant's alleged unreasonable failure to pay permanent
disability indemnity in accordance with applicant's
treating doctor's permanent and stationary report. (It is
not clear from the Board's record whether, by the time of
the August 24, 1999 trial, defendant had made any permanent
disability advances.)
On
October 8, 1999, the WCJ issued a Findings and Award which
determined that applicant's injury caused permanent
disability of 52-percent, "entitling him to disability
benefits payable at $170.00 per week over 282.25 weeks in the
total sum of $47,982.50...." (The Findings and Award did
not expressly state when the permanent disability indemnity
payments were to commence, but it did find a permanent and
stationary date of October 6, 1998. (See Lab. Code, §
4650(b).) The WCJ further found that defendant had
unreasonably delayed payment of permanent disability
indemnity because it failed to make permanent disability
advances in accordance with applicant's treating
physician's report, to which defendant had not timely
objected under section 4062. Therefore, the WCJ also awarded
applicant a ten-percent increase in his permanent disability
indemnity award under section 5814.
Defendant
did not seek reconsideration of the October 8, 1999 Findings
and Award, so it became final.
On
December 8, 1999, applicant filed a petition seeking further
penalties under section 5814. This petition alleged, among
other things, that defendant had not automatically increased
the late permanent disability indemnity payments due under
the October 8, 1999 Findings and Award by ten-percent, as
required by section 4650(d).
On
March 27, 2000, applicant's new penalty petition came on
for trial. The disposition at trial was that the parties
would have 20 days to file points and authorities; then, the
matter would be submitted for a decision on the record.
On
April 11, 2000, applicant filed his points and authorities.
He contended that defendant should have self-assessed a
ten-percent penalty under section 4650(d) against the accrued
permanent disability indemnity due from applicant's
October 6, 1998 permanent and stationary date to the date of
the October 8, 1999 Findings and Award. Applicant argued that
this section 4650(d) penalty was "automatic" and
should have been paid by defendant without any application by
him.2
Accordingly, applicant asserted that a section 5814 penalty
should be imposed for defendant's failure to self-assess
the section 4650(d) penalty.
On
April 17, 2000, defendant filed its points and authorities.
It argued that no additional penalty should be awarded
because applicant had not alleged "additional separate
and distinct acts [of delay] subsequent to the issuance of
the [October 8, 1999] Findings and Award." It also
argued that, because applicant did not seek reconsideration
of the Findings and Award, he had waived his right to seek
additional penalties.
On
April 26, 2000, the WCJ issued the Findings and Award now
before us. In relevant part, the WCJ first found that
applicant was entitled to a ten-percent section 4650(d)
penalty "on all payments of permanent disability delayed
herein." The WCJ further found applicant was entitled to
a new and separate section 5814 penalty for defendant's
failure to self-assess the automatic ten-percent section
4650(d) penalty on the accrued permanent disability indemnity
payable under the October 8, 1999 Findings and Award. The WCJ
concluded, however, that this section 5814 penalty applied
only to the section 4650(d) penalty amount, and not to all
permanent disability indemnity (past, present, and future) as
increased by the section 4650(d) penalty.
In
reaching his conclusion regarding the calculation of the new
section 5814 penalty, the WCJ reasoned, in essence: (1) that
a section 4650(d) penalty is "a clearly defined and
separate category of statutory benefit which is not
calculated on the entire permanent disability award;"
and (2) that, because a section 5814 penalty had previously
been awarded against all permanent disability indemnity,
"a second such penalty on the entire category is
inappropriate."
Thereafter,
applicant filed his petition for reconsideration. Again,
applicant contends that where a defendant unreasonably delays
or fails to pay the "automatic" section 4650(d)
penalty for a late payment of...
