Adams v. Workers' Comp. Appeals Bd.

• Decision Date: 25 October 1976
• Docket Number: S.F. 23426
• Citation: 555 P.2d 303,18 Cal.3d 226,133 Cal.Rptr. 517
• Court: California Supreme Court
• Parties: , 555 P.2d 303 Robert L. ADAMS, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Granite & Stolte Construction Company et al., Respondents.

Page 517

133 Cal.Rptr. 517

18 Cal.3d 226, 555 P.2d 303

Robert L. ADAMS, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Granite & Stolte Construction Company et al., Respondents.

S.F. 23426.

Supreme Court of California.

Oct. 25, 1976.

Eugene C. Treaster, Sacramento, for petitioner.

Dennis J. Hannigan, San Rafael, for respondents.

SULLIVAN, Justice.

Petitioner Robert L. Adams seeks review of a decision of the Workers' Compensation Appeal Board (Board), following reconsideration, refusing to apply to medical-legal costs a 10 percent penalty against respondent carrier, Beaver Insurance Company (Beaver), for unreasonable delay in paying compensation. (Lab.Code, § 5814.) ¹ We have concluded that the penalty provided in section 5814 should be so applied.

On June 1, 1971, petitioner sustained an injury to the lower portion of his body while employed as a heavy construction carpenter by Granite & Stolte Construction Company. Beaver, the employer's compensation carrier, provided medical treatment, hospitalization and surgery which was performed on June 30, 1971. After an apparently satisfactory recuperation, petitioner returned to work in the middle of September, but soon experienced further lower body pain and rectal and urinary difficulties. A long period of diagnosis and treatment ensued during which petitioner was examined and treated by a number of physicians, psychiatrists and chiropractors. He has not worked since November 1971.

On June 25, 1975, the referee filed findings and award, finding that the injury caused temporary and permanent disability, and awarding petitioner temporary disability indemnity for a period of 91 3/7 weeks in the total amount of $8,000, less credits to the carrier for payments theretofore made, and less $449.50 payable to the Employment Development Department in satisfaction of its lien for disability benefits. Petitioner was also awarded permanent disability indemnity for a period of 222 weeks, in the total sum of $11,655, reimbursement for self-procured medical costs in the sum of $2,778.42 and medical-legal costs in the sum of $1,229.13. Neither party sought reconsideration of this award.

Beaver delayed payment of the temporary disability indemnity, self-procured medical costs and medical-legal costs until at least August 5, 1975. Petitioner thereupon sought to reopen claiming the benefit of section 5814. In response to a letter from the referee inquiring as to reasons why a penalty should not be imposed for unreasonable delay, Beaver's counsel indicated that payment had been delayed due to the vacation of the employee responsible for paying benefits. On September 18, 1975, the referee issued an order finding that the carrier had delayed payment of temporary and permanent disability indemnity set forth in the award of June 25, 1975, and had not shown that the delay was reasonable. The award was ordered increased by the amount of $566. ²

Petitioner sought reconsideration on the ground that the penalty provided in section 5814 also should have been applied to the self-procured medical costs and medical-legal costs, payment of which was delayed. The Board granted reconsideration and rendered its decision after reconsideration that the penalty should have been applied to the award of self-procured medical costs but not to the medical-legal costs. The Board stated that if it were free to decide the question, it would have applied section 5814 to delayed medical-legal costs, but it felt constrained to reach a contrary decision by prevailing decisions of the Court's of Appeal. (See, e.g., Hockett v. Industrial Acc. Com. (1959) 170 Cal.App.2d 155, 158, 338 P.2d 604.)

Section 5814 is explicit and clear. It requires that '(w)hen payment of compensation has been unreasonably delayed . . . the full amount of the order, decision or award shall be increased by 10 percent.' We have said that 'although denominated a 'penalty,' the section is to be interpreted liberally, in accordance with the general purpose of the workmen's compensation laws' of affording benefits for the protection of injured employees. (Kerley v. Workmen's Comp. App. Bd. (1971) 4 Cal.3d 223, 227, 93 Cal.Rptr. 192, 195, 481 P.2d 200, 203.) 'The penalty . . . is designed to help an employee obtain promptly the cure or relief he is entitled to under the law, and to compel his employer to provide this cure or relief in timely fashion.' (Davison v. Industrial Acc. Com. (1966) 241 Cal.App.2d 15, 18, 50 Cal.Rptr. 76, 78.) The penalty has been applied to virtually all types of benefits provided by the workers' compensation laws, including temporary and permanent disability indemnity, interest on an award and, as the Board held in this case, amounts awarded as reimbursement for self-procured medical costs. (See 1 Hanna, Cal. Law of Employee Injuries and Workmen's Compensation (2d ed. 1976) § 6.07 (2) (b).) We conclude that section 5814 should be applied to medical-legal costs as well.

The decision and award of June 25, 1975, expressly provided for reimbursement of medical-legal costs of $1,229.13 incurred by petitioner in prosecuting his claim. It is undisputed that payment of compensation was delayed until at least 40 days after filing of the award and that Beaver did not seek reconsideration of the referee's order of penalty made on September 18, 1975, finding that Beaver had delayed in making payments of disability indemnity and also finding that the carrier had not shown that the delay was reasonable. Read literally, section 5814 requires imposition of a 10 percent penalty on medical-legal costs in these circumstances. The section provides that the 'full amount of the order, decision or award shall be increased by 10 percent' when compensation has been unreasonably delayed. (Italics added.) The Full decision and award in the instant case ordered reimbursement of medical-legal costs, and payment of compensation under the award was unreasonably delayed. A literal application of section 5814 would accord with the constructional policy of liberally interpreting workers' compensation laws for the benefit of injured workers and with the policy of encouraging the employer and carrier to provide prompt medical treatment.

Notwithstanding the fact that the most obvious interpretation of section 5814 would require application of a 10 percent penalty to medical-legal costs, decisions of the Courts of Appeal have held to the contrary. The initial and leading decision on the issue is Hockett v. Industrial Acc. Com., supra, 170 Cal.App.2d 155, 158, 338 P.2d 604. There the court concluded that section 5814 refers to an award of 'compensation' in providing that 'the full amount of the . . . Award shall be increased by 10 percent.' (Italics added.) It then held that the 10 percent penalty was properly not applied to medical-legal costs because an award of such costs 'is not in the nature of compensation but is in the nature of costs.' ³ This holding has been followed without question in other decisions...