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Court of Appeal, Third District, California.

AVALON BAY FOODS et al., Petitioners, v. Robert MOORE and Worker's Compensation Appeals Board, Respondents.

No. C025275.

Decided: September 22, 1997

Frederick J. Gibbons and Manda G. Olmstead, Marysville, for Respondents. McMurchie, Brandenburger, Weill, Lenahan & Lee; and Teresa Armstrong, Lancaster, for Petitioners.

When an insurance carrier unreasonably delays reimbursing a workers' compensation claimant for travel expenses to obtain medical treatment, should the 10 percent penalty mandated by Labor Code section 5814 1 be calculated on the basis of the total cost of all medical treatment or should it apply only to travel expenses?   We issued a writ of review from a decision of the Workers' Compensation Appeals Board (Board) to answer that question.

In the published portion of this opinion, we shall conclude, contrary to the decision of the Board, that the penalty should have been imposed only on the class of benefit which was unreasonably delayed-in this case travel reimbursement expenses.   Accordingly, we shall reverse and remand.


Viewed most favorably to the decision below, the record reveals the following facts:

On February 7, 1995, while employed as a food production worker, Robert Moore (applicant) sustained an injury to his left leg.   On May 23, 1996, (all further calendar references are to the 1996 calendar year), through his attorney, Frederick Gibbons, applicant submitted to ITT Hartford Underwriters Insurance, Inc. (carrier), a mileage log showing that he made 12 trips from his home to Sacramento to receive medical treatment, totaling 1,270 miles.   A handwritten notation at the bottom of the log stated:  “Had to pay $20.00 every trip to get a ride down to Sacramento.”   The cover letter sent to carrier requested reimbursement “at the appropriate rates.”

Carrier received the mileage log on May 28, but its adjuster was uncertain whether applicant was using his own vehicle for the trips or simply paid a third party $20 per trip to transport him to Sacramento.  (In fact, applicant's own vehicle was used and he also had to pay $20 per trip for the services of the driver.)   Consequently, the adjuster paid nothing, believing she had 60 days to act on the claim.   On May 29 and June 12, Gibbons sent faxes to carrier requesting expedited payment of the travel claim.   An employee of the Gibbons law office spoke with the adjuster, who told her carrier would not pay either the mileage rate or the $20 per trip, and demanded the names, addresses and social security numbers of all persons who drove applicant.

On June 26 carrier made payment in the sum of $240, representing reimbursement for 12 trips at $20 per trip.   A few weeks later, applicant received a mileage check for $68.40.

The worker's compensation judge (WCJ) found carrier's refusal to pay either the chauffeur's fee or the mileage expense was “unreasonable” within the meaning of section 5814.   The judge assessed a 10 percent penalty pursuant to that statute, on “all past, present and future medical costs, including mileage․ ”  (Italics added.)   Carrier's petition for reconsideration of this decision was denied by the Board, and we granted review.


ISubstantial Evidence-Unreasonable Delay**


The 10 Percent Penalty

Although the WCJ found that carrier delayed payment only as to applicant's transportation expenses to receive medical treatment, he imposed a 10 percent penalty on all past, present and future medical benefits.   The underlying rationale appears to be that medical mileage expenses are but a “subspecies” of the class of medical expenses, warranting a global penalty on the entire cost of medical treatment.

In the landmark case of Gallamore v. Worker's Comp. Appeals Bd. (1979) 23 Cal.3d 815, 153 Cal.Rptr. 590, 591 P.2d 1242, the insurance carrier committed three separate acts which the employee asserted were unreasonable:  (1) it delayed permanent disability benefit payments by six weeks, (2) it improperly took a credit of overpayment of temporary disability benefits against permanent disability, and (3) it did not promptly pay travel reimbursement expenses to attend medical examinations.   The compensation judge awarded a single 10 percent penalty on permanent disability benefits, and the Board affirmed.  (23 Cal.3d at pp. 819-821, 153 Cal.Rptr. 590, 591 P.2d 1242.)

The California Supreme Court held that section 5814 “properly construed, requires the imposition of a separate penalty whenever compensation benefits have been unreasonably delayed or refused.”  (Gallamore, supra, 23 Cal.3d at p. 823, 153 Cal.Rptr. 590, 591 P.2d 1242.)   However, the court rejected the argument that each section 5814 penalty should be imposed on the entire award.   Instead, “․ if, as in the usual case, an award is readily severable into the different classes or categories of compensation as defined in the Workers' Compensation Act (Lab.Code, § 3200, et seq.  (Act)) then the penalty is to be assessed against only the amount awarded for the particular benefit of the kind delayed or refused.”  (23 Cal.3d at p. 824, 153 Cal.Rptr. 590, 591 P.2d 1242.)   The penalty should not “be applied to those types of benefits which were neither delayed nor refused.”  (Id. at p. 826, 153 Cal.Rptr. 590, 591 P.2d 1242.)

We are thus presented with a classification problem.   Is reimbursement for travel expenses to receive medical treatment “readily severable” as an independent class of benefit conferred by the Act, or is it an integral part of medical treatment such that it must be considered merely a subclass of the latter?

As noted, travel expense reimbursement to attend medical examinations is separately mentioned as a form of compensation by section 4600, which is evidence that the Legislature considers it its own class of benefits.   What's more, Gallamore contains language strongly indicating that the Supreme Court views travel reimbursement a distinct and severable class of compensation.   In remanding the case to the Board, the court stated, Additionally, applicant asserted that carrier unreasonably delayed in reimbursing his travel expenses, a further act of misconduct which, if proved, would justify another 10 percent penalty, applied to the total amount of travel expenses for which reimbursement was proper.  (Gallamore, supra, 23 Cal.3d at p. 827, 153 Cal.Rptr. 590, 591 P.2d 1242, italics added.)

The Gallamore comment, albeit dictum, is grounded in common sense.   The cost of furnishing medical care and treatment has long been recognized as a separate compensation benefit for purposes of section 5814.  (See Ramsey v. Workmen's Comp. Appeals Bd. (1971) 18 Cal.App.3d 155, 160, 95 Cal.Rptr. 558 1 Hanna, supra, § 10.40[6][b], p. 10-64.)   Travel expense benefits, however, are not for the care or treatment of an illness or an injury.   They are costs incurred for transportation, usually paid at a mileage rate (see § 4600).   While applicant is undoubtedly correct that travel expenses are necessary in order to obtain treatment, that is not the test for determining whether it is a “readily severable” class of compensation as required by Gallamore.

Treating travel expenses as a separate class of benefit is in harmony with the public policy objectives articulated by the California Supreme Court, which has repeatedly emphasized that the courts must construe section 5814 in a way which aims at “achieving a fair balance between the right of the employee to prompt payment of compensation benefits, and the avoidance of imposition upon the employer or carrier of harsh and unreasonable penalties.”  (Gallamore, supra, 23 Cal.3d at p. 828, 153 Cal.Rptr. 590, 591 P.2d 1242;   Rhiner v. Workers' Comp. Appeals Bd. (1993) 4 Cal.4th 1213, 1230, 18 Cal.Rptr.2d 129, 848 P.2d 244;  Christian v. Workers' Comp. Appeal Bd. (1997) 15 Cal.4th 505, 517, 63 Cal.Rptr.2d 336, 936 P.2d 115.)

In Christian, the court held that an applicant was entitled to only one section 5814 penalty for an unreasonable refusal to pay benefits, not multiple penalties based on the number of missed payments, since there was only one improper act and a contrary rule would produce unduly harsh and coercive results.  (15 Cal.4th at pp. 516-518, 63 Cal.Rptr.2d 336, 936 P.2d 115.)

Here, because reimbursement for transportation is a perceptibly different form of compensation than medical treatment expenses, a rule which calculates the penalty for unreasonable delay in paying travel costs based upon the total cost of all medical treatment (often a vastly greater sum), would upset the balance of fairness and result in a windfall to the applicant out of proportion to the type of conduct which warranted the penalty.

Applicant suggests that to levy the penalty only on mileage expenses would produce such an “inconsequential penalty” as to amount to a slap on the wrist of the carrier, thus eviscerating the policy designed to deter such conduct.   We disagree.   Under current law, the penalty may be calculated not merely on the basis of the sum unreasonably withheld but on the entire amount of travel expenses ultimately awarded, without deduction for amounts already paid.   (Rhiner v. Workers' Comp. Appeals Bd., supra, 4 Cal.4th at pp. 1227-1228, 18 Cal.Rptr.2d 129, 848 P.2d 244;  Gallamore, supra, 23 Cal.3d at p. 827, 153 Cal.Rptr. 590, 591 P.2d 1242.)   The threat of such a sanction still presents a significant deterrent to unreasonable conduct.


The order of the Board denying reconsideration is annulled, and the Board is ordered to render a new decision consistent with the views expressed in this opinion.   Applicant's request for attorney fees for having to oppose a petition with no reasonable basis (§ 5801) is denied.  (State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (1997) 53 Cal.App.4th 579, 586, 61 Cal.Rptr.2d 794.)   Each party shall bear its own costs.


1.   All further unspecified statutory references are to the Labor Code. Section 5814 provides:  “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 question of delay and the reasonableness of the cause therefor shall be determined by the appeals board in accordance with the facts.”

FOOTNOTE.   See footnote *, ante.

CALLAHAN, Associate Justice.

PUGLIA, P.J., and RAYE, J., concur.

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