Daniel W. STOWERS, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD, Hahn Distributing, Inc. and Insurance Company of North America, Respondents.
The question before us on review is whether the 10 percent penalty imposed by the Workers' Compensation Appeals Board (Board) pursuant to Labor Code section 5814 1 for unreasonable delay in paying an award for medical travel expenses should be calculated on the basis of the total cost of medical treatment, including travel, rather than on the basis of the travel expenses alone. We conclude that medical travel expenses are not a separate benefit distinct from the underlying costs of medical treatment. Accordingly, the penalty must be computed on the basis of the total cost of medical treatment.
FACTUAL AND PROCEDURAL BACKGROUND
Petitioner Daniel W. Stowers (applicant) sustained a cumulative industrial injury to his back while working as a truck driver for Hahn Distributing, Inc., insured by respondent Insurance Company of North America (INA). Findings and award issued on December 5, 1986. Applicant was awarded a period of temporary disability, a permanent disability of 59–1/2 percent, future medical care, and reimbursement of travel expenses incurred in obtaining medical treatment.
INA admittedly delayed reimbursement of travel expenses incurred during the period of June 14, 1984, through September 27, 1984. Applicant had submitted reimbursement requests for this period of time on October 31, 1984, May 7, 1985, and again on January 9, 1986. INA did not reimburse applicant until a date in 1987, three years after the initial request.
Applicant petitioned for penalty under section 5814. The Workers' Compensation Judge (WCJ) issued supplemental findings and award on July 19, 1988, finding, as pertinent, that INA had unreasonably delayed reimbursement of travel expenses incurred for previously awarded medical treatment. Granting applicant's penalty petition, the WCJ ordered the entire amount of awarded medical treatment increased by 10 percent.
INA represents that applicant's total travel expenses, at issue, are $3,769.96. INA further represents that as of December 22, 1988, the accrued total for medical treatment was $24,608.80. Pursuant to the WCJ's calculation, applicant would receive a penalty payment of $2,837.88, representing 10 percent of the total cost of medical treatment and the travel expenses. The WCJ awarded applicant's attorney a fee of 15 percent which by our calculations is approximately $425.
INA petitioned for reconsideration. In his report and recommendation on reconsideration, the WCJ maintained that there are only a few broad classes of benefits recognized by the Board, such as, temporary and permanent disability, death benefits, and medical treatment. Acknowledging that Gallamore v. Workers' Comp. Appeals Bd. (1979) 23 Cal.3d 815, 153 Cal.Rptr. 590, 591 P.2d 1242, suggested “in passing” that transportation expenses incurred for medical treatment are a separate class of benefits (id., at p. 827, 153 Cal.Rptr. 590, 591 P.2d 1242), the WCJ was nevertheless of the opinion that travel expenses should not be considered a distinct class of benefits, separate from medical treatment. Gallamore, he noted, “largely redefined the scope of Section 5814 penalties and, as I was once reminded on appellate argument, the ‘misperceptions' of the Supreme Court may be binding on us still.” He recommended that the Board grant reconsideration and clarify the matter.
The Board granted reconsideration and issued its decision on October 18, 1988. Relying on dictum in Gallamore v. Workers' Comp. Appeals Bd., supra, 23 Cal.3d 815, 827, 153 Cal.Rptr. 590, 591 P.2d 1242,2 the Board held that medical travel expenses are a separate class of benefits distinct from the underlying medical treatment, and assessed a penalty only against the total travel expenses incurred. Citing two writ denied cases (Fountain v. Workers' Comp. Appeals Bd. (1985) 50 Cal.Comp.Cases 13; Hiser v. Workers' Comp. Appeals Bd. (1977) 42 Cal.Comp.Cases 927), the Board opined that this view had been tacitly approved by the Court of Appeal.
It is uncontested that INA unreasonably delayed payment of applicant's medical travel expenses, and that section 5814 requires a 10 percent penalty for the unreasonable delay. However, the parties disagree as to whether Gallamore requires assessment of the penalty against the travel expenses alone or against the total cost of medical treatment.
In Gallamore, the Supreme Court construed the relevant phrase in section 5814, and concluded that the “ ‘full amount of the ․ award’ ” upon which the 10 percent penalty was to be assessed was restricted to the particular class of benefit delayed where the award is otherwise readily severable into different classes or categories of compensation. (Gallamore v. Workers' Comp. Appeals Bd., supra, 23 Cal.3d at p. 826, 153 Cal.Rptr. 590, 591 P.2d 1242.) Because a single decision or award embodied severable classes of benefits, including those which had been timely paid, any other construction of the statute, reasoned the court, would lead to harsh and unfair results. (Ibid.)
Turning to the Gallamore dictum,3 relied upon by the Board in delineating medical travel expenses as a distinct class of benefits, we conclude that it is not persuasive in the matter before us. The dictum in Gallamore, although explicit, was nonetheless incidental and unnecessary to the Supreme Court's holding, and therefore not binding precedent. (9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, § 783, p. 753; Simons v. Young (1979) 93 Cal.App.3d 170, 188, 155 Cal.Rptr. 460.) The Gallamore court did not carefully consider the specific issues; nor did it engage in a review of the authorities that are before this court. We do not agree with the dictum, and under these circumstances, we are not bound by it. (9 Witkin, supra, § 785, p. 756; Bekins Moving & Storage Co. v. Prudential Ins. Co. (1985) 176 Cal.App.3d 245, 252, 221 Cal.Rptr. 738.)
We do recognize that as a general rule dicta of the Supreme Court should not be disregarded by an intermediate court without a compelling reason. (See United Steelworkers of America v. Board of Education (1984) 162 Cal.App.3d 823, 835, 209 Cal.Rptr. 16.) However, as will be discussed below, we are confronted with such compelling reasons herein.
Applicant argues that medical travel expense is by statutory definition (§ 4600 4 ) an element of the underlying benefit of medical treatment. To delay payment of travel expense, contends applicant, is to effect delay in the provision of medical treatment itself.
We agree with applicant. Section 4600 requires the provision of reasonable and necessary travel expense as part of the cost of medical treatment when the employee must undergo treatment or examination elsewhere than at his or her residence. (Caldwell v. Workmen's Comp. App. Bd. (1969) 268 Cal.App.2d 912, 917, 74 Cal.Rptr. 517; see 2 Hanna, Cal. Law of Employee Injuries and Workmen's Comp. (2d rev. ed. 1988) § 16.02, p. 16–24—16–24.1.)
Moreover, we emphasize that the purpose of the penal aspect of section 5814 is to compel employers or carriers to provide benefits to injured employees in a timely manner so as to assist them in returning to employment as quickly as possible after an industrial injury. (Bauer v. Workers' Comp. Appeals Bd. (1979) 94 Cal.App.3d 250, 258, 156 Cal.Rptr. 400; Davison v. Industrial Acc. Com. (1966) 241 Cal.App.2d 15, 18, 50 Cal.Rptr. 76.) Essential to this goal is the expeditious provision of medical treatment. Prompt receipt of adequate medical treatment for an industrial injury is a fundamental premise and requirement of the workers' compensation system. (§ 4600; 2 Hanna, supra, § 16.05[c], p. 16–40.1.) Without prompt payment of medical travel expenses, the right of injured employees to prompt and adequate medical treatment is seriously jeopardized. Transportation—either by private or public means—can be difficult to obtain in today's society absent sufficient monetary means. Clearly, payment of medical travel expenses within a reasonable period of time is vital to the provision of prompt and adequate medical care.
We have no dispute with INA's contention that the Board should strive to fairly balance the injured employee's right to prompt payment with the avoidance of harsh sanctions inflicted upon the employer or carrier. (Gallamore v. Workers' Comp. Appeals Bd., supra, 23 Cal.3d at p. 828, 153 Cal.Rptr. 590, 591 P.2d 1242.) However, as we emphasized in Gellie v. Workers' Comp. Appeals Bd. (1985) 171 Cal.App.3d 917, 217 Cal.Rptr. 630, such equilibrium must be achieved within the broader policy objectives requiring liberal interpretation of the penalty provision in favor of the injured employee. (Id., at p. 921, 217 Cal.Rptr. 630; citing Adams v. Workers' Comp. Appeals Bd. (1976) 18 Cal.3d 226, 229, 133 Cal.Rptr. 517, 555 P.2d 303; Viegas v. Workers' Comp. Appeals Bd. (1983) 148 Cal.App.3d 423, 427, 196 Cal.Rptr. 10.) We note that INA is protected from potentially unfair penalties by section 5814 itself which only allows the assessment of penalties when payment has been “ ‘unreasonably’ delayed.” (Gallamore, supra, 23 Cal.3d at pp. 822–823, 153 Cal.Rptr. 590, 591 P.2d 1242.)
In striking the balance herein, as mandated by Gallamore, the penalty must be assessed against the total cost of the medical treatment, including the travel expenses. The provision of travel expenses is statutorily required as part of medical treatment under section 4600. Furthermore, to identify medical travel expenses as a separate class of benefits, thereby limiting the penalty for unreasonable delay, leaves little, if any, incentive to the employer or carrier to promptly pay claims for travel expenses.
We addressed this latter policy concern in Gellie v. Workers' Comp. Appeals Bd., supra, 171 Cal.App.3d 917, 217 Cal.Rptr. 630, in holding that interest accrual on an award of permanent disability is not a separate class of benefits when assessing a penalty for the unreasonable delay in payment of the accrued interest. (Id., at p. 922, 217 Cal.Rptr. 630.) We applied the penalty under section 5814 against the entire underlying permanent disability award, even though it was only the interest payment that was delinquent. (Ibid.)
In Gellie we were troubled that confinement of the penalty to the delinquent interest alone would operate to “render payment of interest ‘a practical nullity’ since in virtually every compensation case the small sum involved, together with the inconsequential fees recoverable in enforcement, would operate as an economic disincentive to litigate such questions, a dire prophecy not entirely without factual precedent. [Citation.]” (Gellie v. Workers' Comp. Appeals Bd., supra, 171 Cal.App.3d at pp. 920–921, fn. 4, 217 Cal.Rptr. 630.) We determined that it was “just and reasonable to conclude that calculating the statutory penalty based upon the integrated components of the underlying benefit and accrued interest will promote the legislative policy by providing the employer some economic inducement to make prompt payment of interest due.” (Id., at p. 921, 217 Cal.Rptr. 630.)
We find that the concerns expressed in Gellie are even more compelling in the matter before us. Applicant's travel expenses total $3,769.96. Pursuant to the Board's decision, a 10 percent penalty totaling approximately $377 would be levied against INA, and applicant's attorney would probably receive a fee of approximately $57 (15 percent) for his work. It is stretching the bounds of reason to argue that this insignificant penalty amount will serve either as an economic inducement for prompt payment of benefits or as a deterrent to delay, as envisioned by the Legislature when it enacted section 5814. (See Davison v. Industrial Acc. Com., supra, 241 Cal.App.2d at p. 18, 50 Cal.Rptr. 76.)
In the case before us, INA ignored three requests from applicant for travel reimbursement over a period of approximately three years after the award, including a six-month delay after the penalty petition had been filed. Furthermore, an attorney's fee of $57 is little, if any, economic incentive for attorneys to continue to pursue enforcement of prompt payment of travel expenses on behalf of injured employees. To affirm the Board's decision, in effect, would be to relegate injured employees to a pragmatically meaningless remedy when an employer or carrier unreasonably delays in the payment of medical travel expenses.5
Accordingly, we hold that computation of a section 5814 penalty based upon a finding of unreasonable delay in the payment of medical travel expenses is to be made on the basis of the combined cost of the underlying medical treatment and such travel expenses. The Board's decision is annulled and the matter is remanded for further proceedings consistent with the views expressed herein.
1. As pertinent, 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.”All further statutory references are to the Labor Code unless otherwise specified.
2. The specific language from Gallamore, relied on by the Board, reads as follows: “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.)
3. See fn. 2 ante.
4. As pertinent, section 4600 provides: “Medical ․ treatment ․ which is reasonably required to cure or relieve from the effects of the injury shall be provided by the employer․ [¶] Where at the request of the employer, the employer's insurance carrier, the administrative director, the appeals board or a referee, the employee submits to examination by a physician, he shall be entitled to receive ․ all reasonable expenses of transportation, ․ ‘Reasonable expenses of transportation’ includes mileage fees from the employee's home to the place of the examination and back at the rate of twenty-one cents ($0.21) a mile, plus any bridge tolls.”
5. Section 5814 provides an exclusive remedy when workers' compensation benefits are unreasonably delayed. (Cervantes v. Great American Ins. Co. (1983) 140 Cal.App.3d 763, 767, 189 Cal.Rptr. 761.)
RACANELLI, Presiding Judge.
NEWSOM and STEIN, JJ., concur.