Appeals Board Decides On When 4650 (D) Penalty Is Due

The Workers’ Compensation Appeals Board (WCAB) issued an En Banc decision on November 8,2002, clearing up some controversy in regards to when the self executing penalty of Labor Code section 4650 (d) is payable.

There were two cases that the WCAB combined for this decision. In the first case the Workers’ Compensation Judge (WCJ) awarded two penalties.  The first penalty was a Labor Code section 5814 penalty for the late payment of a commutation award.  The second penalty was for failure to calculate a Labor Code section 4650 (d) penalty on the payment of this commuted award.

The second case that was part of this decision was Crump v. Los Angeles Unified School District. This case involved the untimely payment of a Compromise and Release in a Death Benefit case. In that case the WCJ indicated that a Labor Code section 4650 (d) penalty may have applied, but the applicant waived it by not timely asserting it. This article will not deal with the waiver issue although the Board indicated in its opinion that the issue of4650 could properly be raised for the first time at trial.

The Board in its opinion of reconsideration of both cases indicated that 4650 only applies to periodic payments of temporary and permanent disability indemnity.

The Board looked at Miner v. WCAB (1993) 4 Cal.4th 1213 that indicated that 4650 is a self-executing provision that only applies to delay in payments of temporary and permanent disability.  They then looked at Farris v. WCAB 65 CCC 824 (en banc) that indicated that 4650 (d) is not a separate class of benefit.

The WCAB then determined that the 4650(d) penalty applies only to periodic payments. It does not apply to the lump sum proceeds of C&R’s and commutations. In each of these cases the payments became a single lump sum payment. In these situations there are no periodic payments, therefore, 4650 is inapplicable. If there is a delay in this type of situation, it is not considered a delay in the timing of payments as required by this section.

The Board indicated mat a 4650 penalty would apply to the periodic payments in the death benefit case if the payments were being made periodically. However, if the death benefit is commuted to a lump sum C&R 4650 would not be applicable.

Even though it was not raised the Board indicated that 4650 would apply to the late payments of vocational rehabilitation maintenance allowance payments (VRMA). They considered VRMA a periodic payment to be covered by Labor Code section 4650 (d).

Penalty Must Be Assessed On Entire Class Of Benefits

The Court of Appeal in a case not certified for publication has reviewed a principle that keeps confusing practitioners in regards to payment of penalties. This case deals with the calculation of a penalty on attorney’s fees.

A Workers’ Compensation Judge (WCJ) determined that the applicant in this case was entitled to temporary disability, permanent disability, and future medical care treatment. The WCJ also determined that the County unreasonably delayed both temporary and permanent disability. A 10% penalty was assessed against the entire specie of benefit unreasonably refused or delayed. The attorneys were awarded $8,696 plus 15% of the total amount of penalties awarded.

There was then a subsequent hearing alleging the county unreasonably delayed medical treatment The parties entered into a stipulation with request for reward, settling this penalty issue.  This stipulation called for an attorney fee of $900.00. On the same date the judge approved a settlement of $2850.00 for the prior attorney fees on the prior penalty. The settlement indicated there would be no penalty or interest if paid within 30 days.

The check for attorney’s fees was not paid within 30 days. The WCJ imposed a penalty on the amount of ail medical treatment. The County’s petition for reconsideration was denied and the Workers’ Compensation Appeals Board (WCAB) also awarded reasonable attorney fees under Labor Code section 5814.5. This amount was $1000.00 plus 2% of medical treatment expense.

The issue presented to the appellate court was the correct computation of the payment for the penalty on the attorney’s fee award. The court analyzed the major cases, Gallamore v. WCAB (1979), 23 Cal. 3d 81$, Miner v. WCAB (1993) 4 Cal. 4th 1213. The court also looked at Avalon Bay Foods V. WCAB (1998) 18 Ca. 4th 1165.

The court determined that under Labor Code section 5814 a penalty is not a separate class of benefits. A penalty related to medical treatment goes against all of the medical treatment and is increased by any prior penalty awards. However, the award of attorney’s fees is a separate class of benefits for calculation of penalty purposes.

The court determined that the County must be assessed a penalty on the entire attorney’s fees awarded not just the portion delayed. Thus, the penalty ‘was awarded on (1) $2850.00 plus 15% of the total amount of penalties; (2) award of $900.00; (3) award of $2,850.00; and the (4) award of $1000.00

A Student Injured In Class Is Not An “Employee”

The Court of Appeal in a certified opinion has ruled that a student at California Polytechnic State University, San Luis Obispo (Cal Poly) is not an “employee” or entitled to Workers’ Compensation benefits.

The applicant was a full time student at Cal Poly. The applicant enrolled in a course in animal husbandry that involved obtaining experience in commercial cattle breeding. The animals, tools and equipment were provided to the applicant who paid tuition for the class.

Each student had to sign an agreement that indicated that if they worked a certain number of hours they would be eligible to receive a portion of the net profits when the cattle were sold.  There was also an insurance provision in the agreement for the student’s medical or dental bills as a result of an accident.

The applicant spent between six and twelve hours a week performing her course work. While performing her class assignment she had a vehicle accident and suffered injury to her knees. She filed an application for benefits for workers’ compensation.

The defendant denied she was an employee. The case was tried before a Workers’ Compensation Appeals Board Judge. (WCJ) The WCJ determined the applicant was not an employee because she was not paid wages. The applicant filed a petition for reconsideration. The Workers’ Compensation Appeals Board (WCAB) denied the petition. The applicant filed for a writ of review with the appellate court which was denied. The applicant petitioned the Supreme Court which granted review and transferred the case back to the appellate level for an opinion.

When the facts are undisputed, as in this case, the determination of whether one is an employee is a question of law.

The court looked at Labor Code section 3351 for the definition of an employee. They next analyzed the case of Coburn v. WCAB (1989) 54 CCC 129. This was a writ denied case. Both the WCJ and the WCAB relied on this case.

The applicant cited two other cases but the court differentiated them as not being similar to the case in chief.  The court recognized that students may be employees of a school.  However, the students of a school are not employees. Students are merely consumers of a product, the university’s education. The key question is whether the student is “rendering service” to the university to be classified as an employee. This court ruled the university was the one “rendering service” to the student. Therefore, the applicant was found not to be an employee.

Section 1542 Release Discharges Civil Action

The California Supreme Court has ruled in a landmark decision that a Workers’ Compensation Compromise and Release (C& R) will settle a civil claim when the language of the C&R intends to include civil claims.

The applicant filed a claim form for workers’ compensation benefits for sexual harassment. The applicant also filed a claim with the Department of Fair Employment and Housing (DEFH). The allegations were essentially the same as those in the workers’ compensation claim.

The applicant was given a right-to-sue letter by DFEH on October 10,1995.  The applicant settled her workers’ compensation claim on July 9,1996.  The settlement was on the mandatory form used for a compromise and release by the workers compensation appeals board (WCAB).

The preprinted compromise and release indicates that the applicant “releases and forever discharges (employer) from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of the (claimed) injury.” In attachment to the compromise and release it indicated that the applicant agrees the compromise and release applied to all unknown and unanticipated injuries and damages, and all rights under Section 1542 of the Civil Code. The attachment then went on to quote Section 1542 of the Civil Code.

The WCAB approved the C&R. Li the case for the violation of FEHA the defendant filed for a motion for summary judgement citing the settlement in the workers’ compensation case. The trial court granted summary judgment. The Court of Appeal affirmed the judgement. The California Supreme Court evaluated the settlement language of the compromise and release. They determined that the language was enforceable as written. They drew their conclusion on two points. The first was that the addendum made clear their intent to settle all matters, even if that included matters outside the workers compensation arena. The second point was that the applicant did not offer any evidence that she did not intend to exclude her FEHA claim in the compromise and release.

The court indicated that you may have a boilerplate attachment releasing all claims without it specifically referring to the cause of action that is being released. The intent was to release all civil claims. Here the FEHA case had not actually been filed yet and the court only determined on this factual basis and not if a civil case had already actually been filed.

CIGA Cannot Be Dismissed Prior To Determination Of Date Of Injury

In a pair of cases that were determined by the Workers’ Compensation Appeals Board (WCAB) it was determined that the California Insurance Guarantee Association (CIGA) could not be dismissed before underlying issues were determined.

This involves two cases that were combined into a single Decision After Reconsideration by the WCAB. Both cases stem around the same issue.

One case involved a cumulative trauma in which there was an insurance carrier as well as CIGA during the period of alleged cumulative trauma. CIGA petitioned to be dismissed on the basis there was “other coverage” within the meaning of Insurance Code section 1063.1 ©(9).  The Workers’ Compensation Judge (WCJ) issued a Notice of Intention to dismiss CIGA and then dismissed CIGA from which the insurer moved to vacate.

In the second case with a different applicant the WCAB reviewed two specific injuries. In one of the specific injuries there was a potential for a general and special employment issue. The insurance company involved alleged that the employee was provided by a temporary agency for a temporary assignment. Therefore, the insurance carrier alleged that a special employment issue existed under Insurance Code section 11663. CIGA asserted that the applicant was an employee of the personnel agency and should therefore be dismissed under Insurance Code 1063.1 © (9).

The WCJ in this case dismissed CIGA on the basis that Insurance Code 11663 applied only between “insurers” and not between employers.

The WCAB combined both of these cases for this decision. CIGA relied on Industrial Indemnity Co. V WCAB (Garcia) (1997) 62 CCC 1661. However, the WCAB indicated that case did not involve a dispute regarding the date of injury versus the date of last injurious exposure, or other threshold issue.

In these two cases the WCAB determined that there are underlying issues which if determined adversely against CIGA would establish liability against CIGA. The date of injury under Labor Code section 5412 needs to be determined before Labor Code section 5500.5 can be applied. Likewise, the issue of employment must be determined before CIGA can be dismissed.

Labor Code 3208.3 (h) Good Faith Personnel Action

The court of appeal, in a published decision, has given a definition to a “good faith personnel action” under Labor Code section 3208.3 (h).

The applicant was employed by the City of Oakland for 30 years and rose through the ranks to a supervisor. The director of the department that the applicant worked in informed the applicant his position was going to be eliminated.  The applicant accepted a position and was later demoted. The applicant filed a stress claim and left work.

The Workers’ Compensation Judge (WCJ) concluded after trial that the employer did not prove that its personnel actions were in good faith.  The WCJ found the injury industrial.  The employer petitioned for reconsideration and the Workers’ Compensation Appeals Board (Board) upheld the WCJ.

Since there was no prior case that defined what a “lawful, nondiscriminatory, good faith personnel action” the appellate court looked at a wrongful termination case Cotran v. Rollins Hudig Hall Internal. Inc. (1998) 17 Cal 4th 93 (Cotran). This case described that there must be a “objective good faith standard” in determining the employers conduct.  This appellate court concluded that 3208.3 has a similar meaning to the objective good faith standard.

The employer is allowed a certain freedom in making its regular and routine personnel decisions. “To be in good faith, the personnel action must be done in a manner that is lacking outrageous conduct, is honest and with a sincere purpose, and is without intent to mislead, deceive, or defraud, and is without collusion or unlawful design.”

The appellate court indicated that the Board was trying to use a “no fault” concept for 3208.3 which is not the proper test.

This court concluded that even if mistakes were made in the process of the demotion of the applicant it was still a good faith personnel action within the meaning of section3208.3.  Based on the particular facts of this case the appellate court indicated that the only conclusion is that this was a good faith personnel activity according to 3208.3. “Good faith personnel action” they indicated may elude a precise set of rules or definitions. But here a regular and routine employment event was carried out in a reasonable manner with no hint of improper motive. Therefore, the WCJ and the Board were overturned.

In this case the applicant’s own testimony proved the good faith personnel action.

Workplace Gossip Is Not Enough To Establish A Psychiatric Injury

This is a Certified Opinion and is therefore, a citeable case. It establishes specifically what is not a compensable psychiatric case.

The applicant was a bus driver for the School District. She admitted having an affair with a coworker while each was married to someone else. After the affair ended, gossip took place at the workplace. This included name calling like “tramp”.  The applicant asked the supervisor to stop the name calling, which he did. The applicant filed a psychiatric claim.

Her psychiatrist find the injury industrial and the defense found it nonindustrial. At trial, the workers’ compensation judge (WCJ) found the injury nonindustrial. The applicant filed a petition for reconsideration. The Workers’ Compensation Appeals Board (WCAB) overruled the WCJ.

The Court of Appeal reviewed several prior cases. It is not sufficient that an applicant’s duties merely provides a stage for their injury. The employment cannot be a mere passive element that a nonindustrial condition focuses on.  The industrial injury must take an “active” or “positive” role in the development of the psychiatric condition.

Here the source of the applicant’s problems were the rumors and gossip about the applicant. These stemmed from acts about the applicant’s personal life that all occurred off the job and no connection with her employment.

The court stated that gossip about an employee’s personal life is not part of the employment relationship. The court agreed with the WCJ that the employee’s personal life is not part of the employee-employer relationship and therefore is not compensable.

Tyler And McLune Decisions Extended In New Decision

The Workers’ Compensation Appeals Board (WCAB) has answered a lot of questions in an en banc decision regarding when the evidence is not sufficient.

The applicant was a bus operator from 1976 until June 30,1999. The applicant files a cumulative trauma for an injury to the knees and hypertension. Both the applicant and defendant obtained medical evaluations.

The case proceeded to trial. The applicant was the only witness. The Workers’ Compensation Judge (WCJ) determined that the medical record was lacking. Therefore, the WCJ appointed a medical evaluator to augment the record. Defendant filed a petition for reconsideration.

The WCAB granted the petition and issued this en banc decision. The Board reviewed Tyler v. WCAB (1997) 62 CCC 924 and McLean v. WCAB (1998) 63 CCC 261. The Board agreed with the WCJ that the medical record was incomplete in this case and required further development. However, they disagreed that the best alternative was the appointment of a new medical examiner.

The preferred procedure is to supplement the medical record with physicians who have already reported in the proceeding. Each side can supplement with supplemental reports and/or depositions in the area requiring further development. It is only when the original reporting physicians cannot cure or do not cure the defects in the medical record that a new physician will be considered.

An agreed medical examiner (AME) can now be considered. The time limits of4061 and 4062 do not apply. These time limits apply only to the initial stages of the proceeding and not once the case has proceeded to trial.  The choosing of an AME is better than choosing new qualified medical examiners (QME’S), since this promotes the goal of expediting the resolution of the case.

It is only when none of the foregoing procedures clarify the record that the WCJ may resort to the appointment of a regular physician or an independent medical examiner (JME), as they used to be called. If this evaluation becomes necessary then this will be considered a medical-legal expense under Labor Code section 4620.

The WCAB states the AME is allowed at this stage of the proceeding even though the parties could not agree to an AME at an earlier stage of the proceeding.

Labor Code 3208.3 Even Applies To Physical Injuries

The court of appeal, in a published decision, has overturned the Board panel decision of Robelo v. Washington Hospital on which many litigants had relied.

The applicant filed three separate claims over the years with the Workers’ Compensation Appeals Board(WCAB). The first ended in an award and apparently they did not file a petition to reopen (although the facts are not specific). The applicant apparently alleged a psychiatric condition in all three cases, in addition to physical complaints. The psychiatric condition was alleged as a consequence of a physical work injury.

The Workers’ Compensation Judge (WCJ) found that the applicant did not suffer any psychiatric injury, in any case, because the applicant did not meet the standard of compensability under Labor Code section 3208.3, subdivision (b) (1).

The applicant petitioned for reconsideration and the WCAB reversed, citing the Rebel case. One defendant filed a petition for review.

The court of appeal reviewed the legislative history of 3208.3. This court reviewed Robelo which held that 3208.3 did not apply to a psychiatric injury that was a compensable consequence of a physical injury. There was no writ of review on Robelo. The court then reviewed two “writ denied” cases that followed Robelo.

This court indicated that until now mere has been no appellate authority on this issue and that they are not bound by two “writ denied” cases or Robelo.

This court then analyzed the various appellate arguments presented by way of briefs on this case. The significance of this case is noted by the presence of the California Applicant’s Attorney Association (CAAA) presenting an amicus curiae brief.  This court concluded, that since 1993, that a consequential psychiatric injury is compensable only if it is more than half attributable to a physical industrial injury. This court found that the WCJ was correct, in this case, that Labor Code section 3208.3 applies to all claims of psychiatric injury, including those resulting form physical work injuries.  The rationale for this decision was that the potential for fraud in psychiatric claims is no less for claims of psychiatric claims as the result of physical injuries as there was the potential for fraud in a straight psychiatric filing.

The matter was remanded to the WCAB for further proceeding. In reality, all this may require is for the parries to clean up there medical opinions consistent with this opinion.

Seasonal Workers TD And VRMA Rates May Differ

The Worker’s Compensation Appeals Board (WCAB) recently issued an en banc decision. The case defines what rate should be paid for temporary disability (T.D.) and vocational rehabilitation maintenance allowance.

The applicant was employed as a seasonal farm laborer when she sustained an industrial injury. The applicant’s earnings were $405.00 per week during the growing season and zero in the off-season. The applicant had no work history in the year proceeding the job on which she was injured.

The defendant paid T.D. at one rate during the growing season and at a different rate when the season was over. After the applicant became permanent and stationary the applicant participated in vocational rehabilitation.

The Workers’ Compensation Judge (WCJ) awarded applicant T.D. at one rate for the in-season earnings and at zero for the non-season earnings. The WCJ awarded the vocational rehabilitation maintenance allowance at the maximum rate.

On a petition for reconsideration the WCAB found that two different compensation rates was allowed for seasonal employees.

The Board reviewed other cases to determine that temporary disability rate is predicated on what the applicant would have earned during the temporary disability period. The object of temporary disability is to replace lost income. If there is no lost income this must be taken into consideration.

The Board concluded that” where the earnings history and reasonably anticipated future earnings of a seasonal employee establish that he or she has two separate and distinct average weekly earnings capacities (i.e., on average weekly earning capacity for the in-season and another for the off-season), it is proper to find two different temporary disability indemnity rates.”

The Board stated mat if the person had no prior work history you should not take the prior year’s earnings and divide by 52 to arrive at the non-season earnings. It is acceptable to award zero in that situation when there is no history of prior earnings.

The vocational rehabilitation maintenance allowance was remanded to the WCJ to determine what the applicant would have received as continuing temporary disability. The Board believed that finding zero for this was an incorrect determination.  Thus, it would appear that the vocational rehabilitation maintenance allowance may be awarded for in-season and non-season rates also.

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