Current Penalty May Be Assessed For Prior Acts

This newsletter has devoted many issues to the issue of penalties. The appellate courts keep addressing this issue with regularity. This most recent case also deals with a Compromise and Release (C&R) and a penalty, which is this newsletter has discussed in a previous issue.

The applicant stipulated to a 31-1/2 per cent permanent disability with need for further medical treatment for a cumulative trauma. The employer agreed to adjust reasonable treatment liens and pay $1088 in full and final settlement of all penalties incurred to date pursuant to section 5814. The applicant required and incurred further medical care after the stipulation was approved.

The applicant later entered into a C&R for $25,000. The C& R contained the normal language that disputes of unpaid costs of self-procured medical treatment, medication costs or claims of penalty and interest were resolved.  However, the employer did agree to adjust certain outstanding medical bills.

Eleven months later the applicant requested the employer to immediately pay an unpaid pharmacy bill. When the employer did not pay the bill the applicant filed for a penalty. The employer indicated mat they paid the pharmacy $341.23 and considered the remaining balance of $78.39 an appropriate official medical fee schedule reduction for which they were not liable.

The workers’ compensation judge found the employer liable for a penalty against all medical treatment subsequent to the C&R. The judge found it unreasonable that the employer had waited eleven months to pay the pharmacy. The applicant petitioned for reconsideration contending that the penalty should attach to all medical benefits paid voluntarily without delay or prior to a C&R The Appeals Board ruled in favor of the employer stating that the C&R settled all prior claims and the parties now had to operate with a “clean slate”.

The appellate court disagreed. The appellate court stated that “once the C&R was approved by the WCJ, it resulted in an award. Included in the award were other medical treatment costs, some of which had been paid and some of which had not. Delay in paying even a de minimus amount is subject to a 5814 penalty. The section 5814 penalty should have been assessed against the entire amount ultimately awarded for the class of compensation in which the payment was delayed-medical treatment costs-including those benefits paid prior to and in anticipation of an award.”

So the penalty applies to the medical costs prior to the C&R (including the medical benefits on which a prior penalty was paid settling that penalty issue). This decision requires the employer or carrier to expeditiously negotiate liens prior to or immediately after a settlement.

Case: Neel V. W.C.A.B.

Harvey Brown
3501 Jamboree Rd. Suite 602
Newport Beach, CA 92660

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