JOSE L. MARTINEZ, Applicant,
v.
JACK NEAL & SON, INC.; FREMONT COMPENSATION INSURANCE COMPANY, In Liquidation; CALIFORNIA INSURANCE GUARANTEE ASSOCIATION; and CAMBRIDGE INTEGRATED SERVICES, INC. (Servicing Facility), Defendants.
No. SRO 0107686
California Workers Compensation Decisions
Workers Compensation Appeals Board State Of California
July 27, 2004
OPINION AND DECISION AFTER RECONSIDERATION (EN
BANC)
MERLE
C RABINE, CHAIRMAN.
On June
10, 2004, the Appeals Board granted the petition for
reconsideration filed by defendant, California Insurance
Guarantee Association ("CIGA"), in which CIGA
challenged of the Findings and Award issued by the
workers' compensation administrative law judge
("WCJ") on March 24, 2004. In the WCJ's
decision, it was found that applicant, Jose L. Martinez
("applicant"), sustained industrial injury to his
low back and psyche on August 13, 1999, while employed as a
heavy equipment operator by Jack Neal & Son, Inc. It was
also found that, at the time of applicant's injury, the
employer was insured by Fremont Compensation Insurance
Company ("Fremont"), which is now insolvent and
whose "covered claims" have become the liability of
CIGA. (See Ins. Code, §1063 et seq.) In relevant part,
it was further found that Fremont unreasonably delayed the
provision of medical benefits. Therefore, the decision
imposed a 10-percent penalty against all medical benefits
under Labor Code section 5814 ("section 5814"), to
be paid by CIGA.
CIGA's
petition contends in substance: (1) that, under Insurance
Code section 1063.1(c)(8) ("section 1063.1(c)(8)"),
as amended effective on January 1, 2004, it is no longer
liable for any section 5814 penalties for an insolvent
insurer's unreasonable delay in paying benefits, i.e.,
section 1063.1(c)(8) now excludes section 5814 penalties from
the definition of "covered claims;" and (2) that
the amendments to section 1063.1(c)(8) apply to all awards
issued on or after the January 1, 2004 effective date of the
amendments.
Because
of the important legal issue presented, and in order 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.)1Based on our review
of the relevant statutory and case law, we conclude that
section 1063.1(c)(8), as amended, applies to all awards
issued on or after the amendments' January 1, 2004
effective date. Therefore, with respect to any award issued
after 2003, CIGA may not be held liable for any section 5814
(or 5814.5) penalties based on an insolvent insurer's
pre-liquidation unreasonable delay or refusal in paying
benefits because such penalties are now excluded from the
definition of "covered claims."
I.
BACKGROUND
Applicant
sustained an admitted industrial injury to his low back on
August 13, 1999, for which Fremont assumed liability.
On
August 14, 2000, applicant's primary treating physician,
Gary P. McCarthy, M.D., indicated that applicant would need
surgical decompression of his back at L4-5, and ordered a
lumbar MRI.
On
September 29, 2000, the radiologist issued a report on the
lumbar MRI, stating it showed degenerative disc desiccation
at the L3-4, L4-5, and L5-S1 levels; moderate narrowing of
the left L5-S1 neural foraminal canal; and a congenitally
small...
