Metropolitan News-Enterprise


Monday, September 22, 2003


Page 3


Lawyer for Compensation Fund Seeks Publication of Penalty Ruling


By DAVID WATSON, Staff Writer


The State Compensation Insurance Fund asked this district’s Court of Appeal Friday to order publication of its ruling that the fund’s delay in paying less than $1,000 in medical mileage benefits cannot support a penalty of $350,000.

In a letter addressed to the Div. Six justices who issued the unpublished decision last week—Justice Paul Coffee, who authored it, and Justice Steven Perren and Presiding Justice Arthur Gilbert, who concurred—fund lawyers said publication would “help to resolve future cases” involving the scope of Labor Code Sec. 5814.

That section 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.”

The appellate court last Tuesday, citing its own 2001 decision in County of San Luis Obispo v. Workers’ Comp. Appeals Bd. (Barnes), 92 Cal.App.4th 869, overturned a Workers Compensation Appeals Board ruling assessing a 10 percent penalty on all past and future medical benefits paid to Joseph Mike, who suffered severe brain injuries in a fall from a roof. Since Mike’s estimated lifetime benefits are expected to be about $3.5 million, the penalty would have totaled about $350,000.

Coffee said that was disproportionate, adding that the delay might have been partly Mike’s fault for submitting confusing mileage reimbursement claims.

Fund Senior Appellate Counsel Don E. Clark, who submitted the request on behalf of the fund, Chief Counsel Richard A. Krimen, and Assistant Chief Counsel Robert W. Daneri, told the METNEWS the Labor Code section has been the basis for “some astronomical penalties over the years.” In the letter, Clark and his superiors asserted that requests for penalties under Sec. 5814 “have become an increasingly common feature of the workers’ compensation legal landscape.”

They added:

“Publishing this court’s opinion will help to resolve future cases. And anything that will help resolve these future cases at the Board level will not only be a boon to the parties but to the appellate courts as well.”

Clark noted that Barnes was also decided by Div. Six, which he said has a reputation for doing “a really good job of writing very concise, right to the point decisions.” The division’s decisions are “usually far shorter than most other courts,” he said.

“They don’t spend a lot of time blowing a lot of smoke,” the attorney commented.

The court’s opinion in Barnes was also authored by Coffee, with Perren and Justice Kenneth T. Yegan concurring.

Citing one of the standards for publication of appellate opinions listed in Rule 976 of the California Rules of Court, the fund’s letter said publication of last week’s ruling is appropriate “because the opinion ‘makes a significant contribution to legal literature’ by explaining the basis for the Barnes decision.”

The letter continued:

“And in explaining that basis, the opinion succinctly summarizes two very important themes in workers’ compensation cases: (1) The Board and the appellate courts must consider equitable principles when reviewing awards to ensure that they are not so excessive and disproportionate as to be fundamentally unfair; and (2) Our California Supreme Court’s consistent command in [Sec.] 5814 cases that the Board strike a ‘fair balance’ between the right of employees to prompt payment of benefits and the right of employers and their insurance carriers to be free from harsh and unreasonable penalties.”

Coffee’s opinion called on the Legislature to consider amending Sec. 5814 “and any other workers’ compensation statutes that seemingly authorize the WCAB to assess exorbitant penalties for delays in paying insubstantial sums.”

The fund’s letter said that call “will sound louder and carry farther if contained in a published opinion.”

The case decided last week also drew an amicus curiae brief from the Los Angeles City Attorney’s Office, in which Deputy City Attorney William W. Koepcke argued the Sec. 5814 penalty scheme “is out of control” and “clearly violates the Constitutional due process rights of employers, insurance carriers, and public entities in California to be shielded from excessive penalty awards.”

Koepcke noted that then-Justice Armand Arabian urged the Legislature to address the “inherent injustice” of Sec. 5814 in a concurring opinion in 1993 in Rhiner v. Workers’ Compensation Appeals Board, 4 Cal.4th 1213.

Legislative attempts to cap penalties under the section have been “thwarted” in the years since, the amicus brief contended. It argued that under the U.S. Supreme Court’s 1996 decision in BMW of North America v. Gore, 517 U.S. 559, a cap of four times the amount of delayed benefits should be placed on penalties on due process grounds.

Last week’s court ruling did not address the due process issues raised in the amicus brief. The justices remanded the case to the WCAB with instructions to consider Barnes and make findings as to the exact amount of benefits unreasonably delayed, the length of the delay, the effect of Mike’s failure to provide correct mileage and other critical information, the SCIF’s history of prompt payment, and whether any penalty assessed is “fair, reasonable, and proportional in the overall scheme of the workers’ compensation law and the purposes sought to be accomplished by that law.”

The case is State Compensation Insurance Fund v. Workers Compensation Insurance Board (Mike), B161566.


Copyright 2003, Metropolitan News Company