Opinion
For Opinion on Hearing, see 100 Cal.Rptr. 149, 493 P.2d 877.
Opinion on pages 1026 to 1033 omitted
HEARING GRANTED
See 6 Cal.3d 687 for Supreme Court opinion.
Marcus & Ury, Inc., by Frank Ury, Pleasant Hill, for petitioner.
Rupert A. Pedrin, Jon L. Gateley, San Francisco, for respondent Workmen's Compensation Appeals Board.
ELKINGTON, Associate Justice.
We have granted petitioner Garcia's application for writ of review in order to determine the question: 'Does a prior finding of unreasonable delay in the furnishing of Workmen's Compensation temporary disability benefits result in an increase of 10% in subsequently awarded permanent disability benefits?'
The subject statute is Labor Code, section 5814 which as relevant to our opinion states: '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 [97 Cal.Rptr. 338] order, decision or award shall be increased by 10 percent * * *.'
Garcia had suffered an industrial injury. At a hearing on February 13, 1969, respondent Workmen's Compensation Appeals Board determined that his employer, respondent Fibreboard Corporation (or its compensation insurance carrier), had unreasonably delayed in making payment of his temporary disability compensation. A 10 percent penalty on the amount of that compensation was levied under section 5814.
Later Garcia petitioned for permanent disability, alleging that his condition had become permanent and stationary. An award of permanent disability compensation was thereafter ordered, to which award the referee added the 10 percent penalty. There had been neither delay nor refusal as to the permanent disability award; the penalty, as indicated, was based on the earlier delay. On reconsideration, the board ordered the 10 percent penalty stricken from the permanent disability award. This action has resulted in the proceedings here under review.
Garcia contends that the words of the statute (section 5814) assessing a penalty on the 'full amount of the order, decision or award,' refer to the 'full amount' of compensation payable to him as a result of his industrial injury, whether by way of temporary or permanent disability, or both.
Respondents, on the other hand, argue that the words at issue relate only to Garcia's award of temporary disability, as to which there had been delay or refusal, and not to other compensation ordered paid to him.
The exact question before us--the legality of an assessment of a section 5814 penalty on a permanent disability compensation award because of an earlier unreasonable refusal or delay in complying with an order for temporary disability payments--appears never to have been considered by the courts of this state. Nevertheless, closely related issues have been decided, and are of assistance to us in our inquiry.
In Hockett v. Industrial Acc. Com., 170 Cal.App.2d 155, 157, 338 P.2d 604, 606 the Industrial Accident Commission (now Workmen's Compensation Appeals Board) found that payment of temporary disability payments had been unreasonably delayed and refused. A 10 percent penalty was accordingly added to the amount of those payments. The penalty, however, was not applied by the commission to a companion award covering medical and hospital treatment as to which no delay or refusal was found.
The appellate court found error in the commission's failure to also assess the penalty against the medical and hospital treatment award. The rationale: the court interpreted the language of section 5814 (which we here italicize)--'When payment of compensation has been unreasonably delayed or refused, * * * the full amount of the * * * award shall be increased by 10 percent'--to mean the full amount of compensation to which the injured workman was entitled, whether that compensation was based on one, or on multiple, awards. (Emphasis added.) The court stated (p. 157, 338 P.2d p. 606): 'Section 5814 of the Labor Code is not ambiguous and expressly provides that 'When payment of compensation has been unreasonably delayed or refused, * * * the full amount of the * * * award shall be increased by 10 percent.' (Emphasis added.) The award referred to is the award of compensation. 'Compensation' includes every benefit or payment conferred upon an injured employee by Division IV of the Labor Code * * *.'
Langer v. Workmen's Comp. App. Bd., 258 Cal.App.2d 400, 65 Cal.Rptr. 598, followed the interpretation given section 5814 by Hockett v. Industrial Acc. Com., supra, 170 Cal.App.2d 155, 338 P.2d 604. There the injured workman was awarded temporary total disability commencing July 2, 1965, payment of which was unreasonably delayed or refused. The board's referee attached a 10 percent penalty to all compensation due from the start, October 13, 1964. This penalty was then modified by [97 Cal.Rptr. 339] the board so as to apply only to compensation payable after November 9, 1966 (why this date was fixed is not clear). Relying on the rule announced by Hockett v. Industrial Acc. Com., the court held that the penalty must be applied to the full amount of the award dating back to October 13, 1964. The court commented on not dissimilar results previously reached by the Board itself in earlier cases. It was said (268 Cal.App.2d pp. 404-405, 65 Cal.Rptr. pp. 601-602): '[I]t appears that for some years the board has been imposing the penalty on the full amount of an award, including payments made previously by the employer. (Christman v. Kaiser-Walsh-Perini-Raymond (1959) 24 Cal. Comp. Cases N.S. 282.) It has also been held that the 10 percent penalty applies prospectively to benefits payable in the future under a continuing award. (Guarantee Ins. Co. v. Industrial Acc. Com. (Stokes), 21 Cal. Comp. Cases N.S. 279; Pacific Employers Ins. Co. v. Industrial Acc. Com. (Summers), 23 Cal. Comp. Cases N.S. 19; Rosenthal v. Industrial Acc. Com. (Williams), 27 Cal. Comp. Cases N.S. 44, all cases in which petition for writ of review was denied.) The following comment appears in California Workmen's Compensation Practice (Cont. Ed. Bar) at page 521: 'The penalty must be applied to the full amount of the award and it is error for the Commission to determine otherwise in view of the express wording of Lab.C. § 5814. Pacific Hawaiian Products Co. v. Industrial Acc. Com. [Campbell] (1961) 26 C.C.C. [N.S.] 68 (petition for writ of review denied March 28, 1961).''
Also following Hockett v. Industrial Acc. Com., supra, the court in Vogh v. Workmen's Comp. App. Bd., 264 Cal.App.2d 724, 728, 70 Cal.Rptr. 722, 725, held that when the penalty of section 5814 is appropriate it 'is properly allowed to the applicant on all compensation awarded, * * *.' (Emphasis added.) The penalty was there assessed against temporary disability payments ordered and paid long before the failure which brought on the stricture of section 5814.
It is notable, although not relevant here, that the court in Vogh v. Workmen's Comp. App. Bd. (pp. 728-729, 70 Cal.Rptr. 722), held that voluntary payments of compensation would not be so penalized. It was pointed out that the incentive to the making of voluntary payments should not be discouraged by applying future penalties retroactively to such payments.
In Ramsey v. Workmen's Comp. App. Bd., 2 Cal.App.3d 693, 83 Cal.Rptr. 51, the Workmen's Compensation Appeals Board concluded that the penalty of section 5814 could not be applied to benefits which had previously been awarded and paid. Citing some of its own reports, the board had stated (p. 696, 83 Cal.Rptr. p. 53), "It is not proper to apply the 10 per cent penalty to payments which are not properly a part of the later award. * * * The delay penalty applies to all compensation awarded in the decision assessing the penalty, but does not apply to a separate decision issued at another time awarding a different species of compensation. * * * The delay penalty does not reach back to benefits timely provided prior to the delay if the benefits are not a part of the later award assessing the penalty * * *.' The Court of Appeal disagreed. Relying heavily on Hockett v. Industrial Acc. Com., supra, 170 Cal.App.2d 155, 338 P.2d 604, it was stated (pp. 697-699, 83 Cal.Rptr. p. 54), 'The word 'award' as used in section 5814 has been construed to mean 'award of compensation' and as such 'includes every benefit or payment conferred upon an injured employee by Division IV of the Labor Code' * * * [p] Section 5814 requires the penalty to be imposed on the 'full amount of the order, decision or award' and thus must be applied to prior payments of compensation made under compulsion of an award * * *. [p] The referee and the Board found that respondents acted unreasonable in delaying [97 Cal.Rptr. 340] and refusing payment of compensation. The Board thus had no alternative but to impose the full penalty required by section 5814 * * *. [p] Section 5814 expressly provides 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.' * * *. [p] Respondents' contention that only payments of 'permanent disability indemnity' were being delayed and legitimately disputed, and that, hence, penalties could not be imposed on the compensation previously awarded is devoid of merit * * *. [p] The contention that a penalty may only be imposed on the compensation awarded in the decision assessing the penalty and not on a previously ordered award is likewise devoid of merit * * *.'
In the case at bench the question is whether the penalty assessment, once levied, operates prospectively on compensation payments ordered in the future. The authorities we have cited generally hold that the 10 percent penalty operates retroactively on all compensation payments previously ordered and made. But the rule established by these cases is clear: when a section 5814 ten percent penalty assessment is levied at any stage of a compensation proceeding, it attaches to the entire compensation due the injured workman, whether the subject of a single award or multiple awards, and whether already paid or to be paid in the future. If this rule is to be applied in the case at bench, it follows that the board's order striking the penalty assessment against Garcia's permanent disability award must be annulled.
Nevertheless, the law relating to the subject before us is not without conflict. In Manning v. Workmen's Comp. App. Bd., 10 Cal.App.3d 655, 89 Cal.Rptr. 76, the board had ordered a section 5814 penalty assessment for delay in payments on Manning's permanent disability compensation award. It refused to apply the same sanction to previously paid temporary benefits. The appellate court affirmed, stating (p. 658, 89 Cal.Rptr. p. 78): '[W]e believe the words 'order, decision or award,' on the full amount of which the penalty must be applied, must be construed to mean the 'order, decision or award' with respect to which payment of compensation has been unreasonably delayed * * *.'
We have concluded that the rule followed by Hockett v. Industrial Acc. Com., supra, 170 Cal.App.2d 155, 338 P.2d 604; Langer v. Workmen's Comp. App. Bd., supra, 258 Cal.App.2d 400, 65 Cal.Rptr. 598; Vogh v. Workmen's Comp. App. Bd., supra, 264 Cal.App.2d 724, 70 Cal.Rptr. 722, and Ramsey v. Workmen's Comp. App. Bd., supra, 2 Cal.App.3d 693, 83 Cal.Rptr. 51, correctly interprets Labor Code, section 5814. Our reasons follow.
Effect is given thereby to the 'rule of liberality' which is expressed by Labor Code, section 3202 as follows:
'The provisions of Division 4 [Workmen's Compensation Act, Labor Code sections 3201-6002] and Division 5 of this code shall be liberally construed by the courts with the purpose of extending their benefits for the protection of persons injured in the course of their employment.'
It has been expressly held that section 3202 is applicable to the construction of Labor Code, section 5814, with which we are here concerned. (Kerley v. Workmen's Comp. App. Bd., 4 Cal.3d 223, 226-227, 93 Cal.Rptr. 192, 481 P.2d 200; Ramsey v. Workmen's Comp. App. Bd., supra, 2 Cal.App.3d 693, 697, 83 Cal.Rptr. 51; Davison v. Industrial Acc. Com., 241 Cal.App.2d 15, 17-18, 50 Cal.Rptr. 76.)
Our conclusion seems the more reasonable, a consideration entitled to great weight in the construction of statutes. (Freedland v. Greco, 45 Cal.2d 462, 467, 289 P.2d 463.) The Legislature by enacting section 5814 has shown concern that a disabled worker, and perhaps his family, [97 Cal.Rptr. 341] not be exposed to the hardship and frustration that must often attend a delayed or withheld compensation check. The section is obviously calculated to discourage such practices by the employer or his compensation insurance carrier. Assessment of the 10 percent penalty on the entire compensation payable seems better designed to accomplish the legislative purpose; yet this percentage does not seem unreasonable or oppressive where there has been an unreasonable delay or refusal.
The language of section 5814 imposing the penalty for delay or refusal 'either prior to or subsequent to the issuance of an award' (emphasis added), seems designed to cover the context of the instant case, where the delay in Garcia's temporary disability payments was prior to the permanent disability award to which the penalty assessment is sought to be attached.
The rule argued for by respondents would operate unfairly in favor of one whose entire compensation resulted from but one award on which some payment is unreasonably delayed or refused, and against another, although otherwise in like circumstance, whose total compensation by happenstance, results from multiple awards on one of which payment is so delayed or refused. Such a disparate result was hardly intended by the Legislature whose intent is here our prime concern. (See Mercer v. Perez, 68 Cal.2d 104, 112, 65 Cal.Rptr. 315, 436 P.2d 315.)
Further, the weight of authority seems to support the conclusion we have reached.
The award of the Workmen's Compensation Appeals Board, insofar as it purports not to apply the Labor Code, section 5814 penalty to Garcia's permanent disability award is annulled; the board will take further proceedings not inconsistent herewith.
MOLINARI, P. J., and SIMS, J., concur.