Smith v. Workers' Comp. Appeals Bd

• Decision Date: 10 November 1986
• Citation: 186 Cal.App.3d 1451,231 Cal.Rptr. 364
• Parties: Walter G. SMITH, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD of the State of California; Victorville-Barstow Truck Lines and Zenith Insurance Company, Respondents. E002660.
• Court: California Court of Appeals

Page 364

231 Cal.Rptr. 364

186 Cal.App.3d 1451

Walter G. SMITH, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD of the State of California; Victorville-Barstow Truck Lines and Zenith Insurance Company, Respondents.

E002660.

Court of Appeal, Fourth District, Division 2, California.

Nov. 10, 1986.

Review Denied Feb. 18, 1987.

[186 Cal.App.3d 1452] Toohey & Traw and Thomas J. Toohey, for petitioner.

Chernow & Lieb and Alan Steinhardt, Encino, for respondent Zenith Ins. Co.

No appearance for respondent W.C.A.B.

OPINION

KAUFMAN, Associate Justice.

Petitioner Walter G. Smith (the applicant) seeks review of an order of the Workers' Compensation Appeals Board (WCAB or Board) denying his request for a 10 percent penalty against Zenith Insurance Company (Zenith) for unreasonable delay in making payment under an approved compromise and release. (Lab.Code, § 5814.)

We conclude the Board's order finding there was no unreasonable delay is fully supported by the evidence. Accordingly, we affirm.

Facts

The essential facts were stipulated by the parties at the time of the hearing and are taken largely from the minutes of hearing to which neither party has taken exception. The applicant filed three separate applications: in 83 SBR 97031 he alleged industrial injury to his neck on or about January 1983; in 83 SBR 97032 he alleged industrial injury to his back and left leg on July 12, 1983; and in 83 SBR 97033 he alleged a continuous trauma industrial injury to his back and neck from July 12, 1982 to July 12, 1983.

On or about August 24, 1984, by telephone the parties negotiated a compromise and release covering all three cases. It is now agreed that the amount of the settlement was to be $24,750. However, Zenith's representative O.D. Richardson represented at the hearing it was his understanding that the case could be settled for $23,750 and that his notes, dated August 24, 1984, at 2:40 p.m. show " 'Accepted by Tom Toohey' [applicant's attorney] and 'shows original figures and shows Compromise & Release, $20,000.00 plus $3,750.00, which is $23,750.00.' "

Consistent with Mr. Richardson's understanding and notes a compromise and release for $23,750 was forwarded by Zenith to applicant's attorney on September 14, 1984. The proposed compromise and release was returned by applicant's attorney to Zenith on or about October 23, 1984, with an indication the amount was in error and should be changed to $24,750. This change was made and on or about November 12, 1984, the compromise and release, as corrected, was submitted to the Board for approval. An order approving the compromise and release was issued November 14, 1984.

Upon receipt of the order approving the settlement, an employee of Zenith "instead of paying pursuant to the Order, paid pursuant to the original Compromise & Release, which [had been] prepared by [Zenith's] representative and payment was made on November 19, 1984, except that the payment was $1,000.00 short of that which was ordered."

Nothing further occurred until January 16, 1985, at which time the applicant first notified his attorney that he had been shorted $1,000. The applicant's attorney then made a demand on defendants to pay the additional $1,000, but according to the statement of facts in the applicant's petition for review it was not until January 23, 1985, that the applicant's attorney notified Zenith's representative of the shortage, whereupon he was told that the representative would consult the claims department.

On February 1, 1985, a clerical employee of Zenith wrote a memorandum to O.D. Richardson which read: " 'Please review. Compromise & Release you drew up was for $23,750.00. Approval came in $24,750.00. Please advise which is correct.' "

On February 6, 1985, applicant's attorney filed a "Declaration of Readiness," in effect requesting adjustment of the matter. After review of the Board's file on February 7, 1985, Mr. Richardson instructed Zenith to make immediate payment. On February 14, 1985, Zenith paid the remaining $1,000.

The Workers' Compensation Judge (WCJ) who conducted the hearing subsequently issued an order based on his "Opinion on Decision" which read as follows: "Finding is made that payment of sums pursuant to Order Approving Compromise and Release issued on November 14, 1984 was not unreasonably delayed. [p] Nevertheless defendant insurance carrier has agreed to pay applicant the sum of $500.00 for his inconvenience and it is ordered that defendant pay applicant that sum less $150.00 attorneys fee. In the event that applicant files a Petition for Reconsideration this order will be automatically vacated."

Applicant filed a petition for reconsideration which was denied by a two to one decision of the Board for the reasons stated in the report of the WCJ which the Board adopted.

The report of the WCJ read in pertinent part: "In the opinion of the Workers' Compensation Judge, there were extenuating circumstances which made the delay in payment of the $1,000.00 not unreasonable. There was a misunderstanding to begin with as to the total amount of the Compromise and Release and defendant's representative prepared a settlement in the sum of $23,750.00, which he sent to applicant's attorney but which was returned by applicant's attorney indicating that the settlement should be changed to $24,750.00. A new document was prepared and submitted. An Order was issued accordingly. Upon receiving the Order, defendant's employees in error paid pursuant to the original Compromise and Release, in the sum of $23,750.00, which document was apparently still in the defendant's file. Applicant did not notify his attorney (or the defendants) that the payment was $1,000.00 short until January, 1985. At that time on January 23, 1984 applicant's attorney made a demand for payment. On February 1, 1985 defendant's employee asked defendant's representative to review the matter, indicating that the Compromise and Release drawn for $23,750.00 and that approval came in for $24,750.00. A Declaration of Readiness was filed on February 7 [sic], 1985. Defendant's representative, apparently on February 7, 1985, reviewed the Appeals Board file, after which he instructed his firm to make immediate payment, which was made on February 14, 1985. [p] The delay was indirectly caused by an apparent misunderstanding as to the amount of the settlement between applicant's attorney and defendant's representative and it would hardly seem fair to award applicant the sum of $2,475.00 for the inadvertent delay."

Contentions and Discussion

Relying on Kerley v. Workmen's Comp. App. Bd. (1971) 4 Cal.3d 223, 93 Cal.Rptr. 192, 481 P.2d 200 and Jensen v. Workers' Comp. Appeals Bd. (1985) 170 Cal.App.3d 244, 216 Cal.Rptr. 33, applicant urges on review, as he did before the Board, that the only satisfactory excuse for delay in payment of disability benefits is genuine doubt from a medical or legal standpoint as to liability for benefits; that a delay in paying benefits cannot be justified by inadvertence; that the delay here from notification of the underpayment on January 23, 1985, to the date the remaining $1,000 was paid on February 14, 1985, a total of 22 days, "was deliberate, and in defiance of the Order Approving Compromise and Release's explicit provision. [Zenith] could have taken a Petition [for reconsideration], as it was aware of these questions. It chose not to do so and it should pay the penalty on the entire amount of the Compromise and Release." Applicant is wrong on the law and, worse, mischaracterizes the facts as found by the WCJ and the Board.

Turning first to the law, it is of course correct that in Kerley v. Workmen's Comp. App. Bd., supra, 4 Cal.3d 223, 230, 93 Cal.Rptr. 192, 481 P.2d 200, it was stated in relevant part: "[T]he only satisfactory excuse for delay in payment of disability benefits, whether prior to or subsequent to an award, is genuine doubt from a medical or legal standpoint as to liability for benefits...." However, that statement was made in the context of a case in which a request for advance payments against permanent disability benefits had been denied because the precise percentage of permanent disability had not yet been adjudicated. In reversing an order denying a 10 percent penalty the California Supreme Court pointed out "[T]he plain fact is that in the case before us there is absolutely no evidence on which a finding of reasonable doubt [as to liability for permanent disability benefits] can be supported." (Id., at p. 229, 93 Cal.Rptr. 192, 481 P.2d 200, fn. omitted.)

Here, although Zenith asserts, perhaps correctly, that it entertained a genuine doubt as to its legal liability for the extra $1,000, the WCJ and the Board did not find on that issue. They found the delay in payment was attributable indirectly to a misunderstanding between the parties as to the correct amount of the compromise and release and, otherwise, to normal administrative processing. They simply found the delay asserted by applicant, from January 23 to February 14, 1985, not an unreasonable delay.

Applicant contends Jensen v. Workers' Comp. Appeals Bd., supra, 170 Cal.App.3d 244, 216 Cal.Rptr. 33 stands for the proposition that a delay of 22 days cannot be justified on that basis. Applicant is mistaken as to the law and to the extent the Jensen decision stands for that proposition it is simply wrong.

The precedent most closely resembling the case at bench is Kampner v. Workers' Comp. Appeals Bd. (1978) 86 Cal.App.3d 376, 150 Cal.Rptr. 222. In Kampner there was a 26-day delay in making payment after an order approving a compromise and release. The delay was caused in part by the fact the payment was originally mailed to a wrong address and in part by normal processing time. In upholding the WCAB's order denying a 10 percent penalty, the Kampner court quoted with approval portions of the Board's opinion in pertinent part as follows:

" '... There is no question on this record that defendan...