Kerley v. Workmen's Comp. App. Bd.

• Citation: 93 Cal.Rptr. 192,4 Cal.3d 223,481 P.2d 200
• Decision Date: 01 March 1971
• Docket Number: S.F. 22778
• Court: California Supreme Court
• Parties: , 481 P.2d 200 Lonnie Eugene KERLEY, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD and General Cable Company, Respondents.

Page 192

93 Cal.Rptr. 192

4 Cal.3d 223, 481 P.2d 200

Lonnie Eugene KERLEY, Petitioner, v. WORKMEN'S COMPENSATION APPEALS BOARD and General Cable Company, Respondents.

S.F. 22778.

Supreme Court of California In Bank.

March 1, 1971.

Levy & Van Bourg, San Francisco and Barry J. Williams, Oakland, for petitioner.

Sumner J. Spielman, Ventura, as amicus curiae on behalf of petitioner.

Rupert A. Pedrin, Richard E. Ryan and Lloyd A. Carlson, San Francisco, for respondents.

BURKE, Justice.

Petitioner Lonnie Eugene Kerley seeks review of a decision, after reconsideration, of the Workmen's Compensation Appeals Board, refusing to assess a ten percent penalty against respondent employer, General Cable Company, for unreasonable delay in paying compensation. (Lab.Code, § 5814.) ¹ We have concluded that the appeals board's decision lacks the support of substantial evidence and must therefore be annulled.

In 1959 petitioner began his employment with General Cable Company, a permissibly self-insured employer. In February 1967 he underwent back surgery for a nonindustrial injury. On September 6, 1967, after several months of recuperation, he returned to work. Eight days later, while forcibly attempting to cut a thick power cable, petitioner felt a pain which started in his back and went down through his hip, as well as a burning pain in his neck. ² He reported the injury to his supervisor who immediately assigned him to a job which would put no further strain on his back. Upon leaving the plant that afternoon, petitioner noticed stiffness in his upper back and numbness in his left leg. The following day, Friday, in the absence of Dr. King, the orthopedist who performed the February surgery, petitioner consulted Dr. Branick. The following Monday, he was examined by respondent employer's company physician, Dr. Murphy. Upon Dr. King's return from vacation petitioner consulted him and was thereafter under his care. Petitioner did not return to work after September 14 and has not worked since that date.

On February 9, 1968, petitioner was awarded temporary disability compensation of $67.93 per week, commencing September 15, 1967. On December 1, 1968, General Cable discontinued the payments and on December 11 filed a petition to terminate compensation for temporary disability, alleging that temporary disability had ceased as of November 11. Petitioner, through his new attorneys, objected to the petition, requested a hearing, and at the same time requested that respondent employer begin advancing $52.50 per week (the maximum permanent disability rate) pursuant to section 4650. ³ Apparently there was no reply to petitioner's request; in any event, no compensation was advanced.

On February 19, 1969, a hearing was held at which petitioner was the only witness. At the conclusion of the hearing, the referee indicated that he intended to find petitioner's condition permanent and stationary. On March 17, 1969, after reviewing the testimony and the medical reports submitted prior to the February hearing, the referee served a recommended rating of 43 percent permanent disability on the respective parties. Respondent employer filed no objections to the rating (Cal.Admin.Code, Title 8, § 10904), with respect to either the percentage of disability or the lack of any apportionment, but simply continued in its refusal to provide any benefits. On June 10, 1969, the referee filed his findings and award which provided permanent disability benefits based on a rating of 43 percent total disability; in addition, he assessed a 10 percent penalty against respondent employer for unreasonable refusal to pay benefits. On the employer's petition, the appeals board granted reconsideration. In an En banc opinion, the board held that respondent employer's refusal to advance benefits was not unreasonable and reversed the award of the 10 percent penalty. Petitioner's request for reconsideration was denied and the petition for review followed.

As we have recently stated, our review is confined to the question of whether, under applicable principles of law the award of the appeals board is supported by substantial evidence. (LeVesque v. Workmen's Comp. App. Bd. (1970) 1 Cal.3d 627, 637, 83 Cal.Rptr. 208, 463 P.2d 432.) The application of section 5814 has been the subject of a number of appellate decisions. A review of those cases clearly reveals that, although denominated a 'penalty,' the section is to be interpreted liberally, in accordance with the general purpose of the workmen's compensation laws. ⁴ (E.g., Langer v. Workmem's Comp. App. Bd. (1968) 258 Cal.App.2d 400, 65 Cal.Rptr. 598; Davison v. Industrial Acc. Com. (1966) 241 Cal.App.2d 15, 50 Cal.Rptr. 76; Argonaut Ins. Co. v. Industrial Acc. Com. (1962) 210 Cal.App.2d 267, 26 Cal.Rptr. 470 (hg. den.).) In Davison, supra (241 Cal.App.2d p. 18, 50 Cal.Rptr. p. 77), the court held that section 5814 authorized imposition of more than one penalty in cases of successive refusals to provide compensation, stating that 'We think a rule of liberal construction is applicable to all aspects of workmen's compensation, including penalties.' We agree.

The language of the statute makes it abundantly clear that an employer or carrier has no absolute right to delay the provision of benefits until a formal hearing. Section 5814 provides, in part, that '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.' (Italics added.) The statute does not distinguish between the refusal to pay prior to and the refusal to pay subsequent to the award, and no persuasive reasons have been advanced why any such distinction should be made. In either case, the burden is on the employer or carrier to establish the existence of a genuine doubt, from a medical or legal standpoint, as to its liability for the benefits to be advanced. ⁵ (Ramirez v. Workmen's Comp. App. Bd. (1970) 10 Cal.App.3d 227, 234--235, 88 Cal.Rptr. 865; Berry v. Workmen's Comp. App. Bd., Supra, 276 Cal.App.2d 381, 384, 81 Cal.Rptr. 65 (hg. den.); Giltner v. Workmen's Comp. App. Bd. (1970) 35 C.C.C. 269; see Reynolds Elec. etc. Co. v. Workmen's Comp. App. Bd. (1966) 65 Cal.2d 438, 445--446, 55 Cal.Rptr. 254, 421 P.2d 102, and cases cited therein.) With these principles in mind, we turn now to the evidence which was before the appeals board.

At the February 19 hearing, petitioner testified substantially as follows: Since the time of the accident, he had had continuing pain in his hip, upper back, and around the shoulder and neck area; the pain increased with increased activity such as walking, riding, lifting, bending, etc., and became sharp if he coughed or exercised to any substantial extent; he had been subject to constant headaches which became more severe with increased physical activity. Petitioner recounted a number of efforts to keep himself active, but all activity (e.g., yard work, sawing lumber, riding a motorcycle) ultimately resulted in his feeling greater pain. At the time of the hearing he was taking prescribed medication for the pain, as well as prescribed sleeping pills, on a regular basis. On cross-examination no contradictory information was elicited, petitioner testifying that his condition had not improved since November 1968 (the month of his last visit to Dr King), and that he had had no other injury since the industrial accident. Respondent employer presented no testimony.

In addition to the testimony of petitioner, the referee considered a number of medical reports which had been filed. At the time of the hearing, the referee had before him seven reports from Dr. King, one report from Dr. Calanchini, a neurologist, two reports of Dr. Colton, a neurological surgeon, and one report of Dr. Gordon, an orthopedic surgeon consulted most recently by petitioner. Those reports, which covered the period between April 1968 and February 1969, made it abundantly clear that petitioner had suffered a substantial disability and that his condition was not improving. ⁶

Dr. King, after examining petitioner on November 11, 1968, reported that 'he had not improved in any way whatsoever. He has multiple complaints, which include headaches, pains in the right side of the neck, pain in the right arm, pain between the shoulder blades, and pain in the lower part of the back with radiating pain into the extremity.' After confessing his inability to explain the condition, Dr. King went on to say that 'the time has come when his condition should be declared permanent, stationary and rateable, or if you so desire, perhaps you would like to refer him to some other orthopedic surgeon with the hope that some satisfactory explanation of his complaints can be found, and hopefully eliminated.' No such reference was made by respondent employer.

Petitioner, however, consulted Dr. Gordon, an orthopedic surgeon, who, in a January 7, 1969, report, opined that petitioner's condition was not yet permanent and suggested continued treatment. At the request of respondent's attorneys, Dr. King commented on this report, terming it 'fair and straightforward,' but holding to his previous opinion that petitioner's condition was permanent and stationary. In that letter Dr. King suggested that 25 percent of petitioner's permanent disability could be attributed to his previous back trouble and 75 percent to the industrial injury. Other reports essentially confirmed the facts set forth in Dr. King's reports and testified to by petitioner.

It is abundantly clear that petitioner had suffered an injury which left him seriously disabled; that his physicians were unable to explain the condition or confidently prescribe any regimen which would improve it; and that petitioner was unable to do any work which...