Grant David RHINER, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD, Ted Jones, et al., Respondents.
We review a decision in which respondent Workers' Compensation Appeals Board (Board) determined a penalty under Labor Code section 5814 for unreasonable delay in payment for psychotherapy required to cure or relieve effects of the industrial injury should be imposed solely against the cost of unpaid medical treatment. We conclude the penalty must be imposed against the total award for medical benefits, including preaward payments voluntarily and timely made, and we annul the Board's order denying reconsideration.
Applicant sustained industrial injury to his right leg and right arm when he fell off a roof on January 9, 1988, during his employment by Ted Jones. As a result of the physical injuries, he also sustained an industrial psychiatric injury.
Applicant's plastic surgeon recommended that applicant receive psychiatric treatment by Kimberly McCallum, M.D., at the UCLA Neuropsychiatric Institute. Applicant lives in Arroyo Grande. Dr. McCallum provided antidepressant medication and recommended applicant receive psychotherapy from a clinical psychologist in his community. Dr. McCallum diagnosed a posttraumatic stress disorder and major depressive episode. She opined psychotherapy was essential to enable applicant to engage in rehabilitation activities. She noted applicant had been receiving psychotherapy from Dr. Laurie Reifsnyder, a clinical psychologist in Arroyo Grande, and recommended the psychotherapy continue.
Dr. Reifsnyder filed reports, lien claims, and itemized statements in which she asserted she provided psychotherapy to applicant from August 1988 through January 1990. Defendants refused to pay for Dr. Reifsnyder's treatment despite repeated requests for payment. Defendants asserted the treatment was redundant since applicant was receiving psychiatric treatment at UCLA.
The workers' compensation judge (WCJ) found applicant was entitled to reimbursement for the treatment by Dr. Reifsnyder, applicant was entitled to obtain psychotherapy near his home, and defendants unreasonably refused to pay for treatment by Dr. Reifsnyder. The WCJ awarded further medical treatment and reimbursement for self-procured treatment and imposed a 10 percent penalty under Labor Code section 5814 against the cost of all past, present, and future medical treatment in an amount to be adjusted by the parties.
Defendants petitioned for reconsideration.
In a decision after reconsideration dated June 26, 1990, the Board affirmed the finding that defendants unreasonably refused to pay for Dr. Reifsnyder's treatment, but the Board reduced the penalty to 10 percent of “all unpaid medical treatment and future medical treatment, in an amount to be determined by a workers' compensation judge if the parties are unable to adjust the matter among themselves.” The Board opined payments voluntarily made before issuance of an award are not subject to a penalty under Labor Code section 5814.
Applicant petitioned for reconsideration of the Board's decision.
On September 17, 1990, the Board denied reconsideration, adopting its prior decision.
Applicant contends the Board erred in failing to impose the penalty against the entire amount awarded for the class of benefits unreasonably delayed. Applicant further contends that in the order denying reconsideration the Board failed to state the facts relied upon and explain in detail the reasons for its decision as required by Labor Code section 5908.5.
The right to medical treatment reasonably required to cure or relieve the effects of the industrial injury (Lab.Code, § 4600) includes the right to reasonably necessary treatment by a licensed clinical psychologist (Lab.Code, § 3209.3, subds. (a) & (b)). (See 1 St. Clair, Cal. Workers' Compensation Law & Practice (4th ed. 1990) Medical Benefits, § 9.2, pp. 411–412.)
Labor Code section 5814 provides in pertinent part as follows: “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․”
In Gallamore v. Workers' Comp. Appeals Bd. (1979) 23 Cal.3d 815, 153 Cal.Rptr. 590, 591 P.2d 1242, the Supreme Court held that the penalty must be assessed against the entire amount ultimately awarded for the class of benefit unreasonably delayed or withheld. (Id. at pp. 826–827, 153 Cal.Rptr. 590, 591 P.2d 1242.) The court further held preaward andpostaward delinquencies are equally subject to the 10 percent penalty and the penalty is mandatory even if the amount delayed or refused is arguably de minimis. (Id. at pp. 821–823, 827, 153 Cal.Rptr. 590, 591 P.2d 1242.) In rejecting the carrier's contention that the penalty should be applied to the net amount of the benefits remaining unpaid, the court stated: “The statutory language, referring to the ‘full’ amount of an award makes no provision for credit for any partial payments made under compulsion of an award. [Citation.] Thus, if any part of a specific benefit has been delayed or withheld, the penalty is imposed against the entirety of that benefit.” (Id. at p. 827, 153 Cal.Rptr. 590, 591 P.2d 1242.)
In Gallamore the Board had awarded a single penalty for delay in commencement of permanent disability indemnity. Noting the applicant also alleged the carrier unreasonably delayed reimbursement for travel expenses and unreasonably reduced permanent disability payments by taking an unauthorized credit for asserted overpayments of temporary disability indemnity, the court indicated additional penalties might be warranted. (Ibid.) The court then stated: “We express no opinion on the question whether carrier's alleged acts were unreasonable within the meaning of section 5814. [¶] In penalty cases the board should proceed with a view toward 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.” (Id. at pp. 827–828, 153 Cal.Rptr. 590, 591 P.2d 1242.)
In support of the Board's decision to reduce the penalty award in the present case, the Board relied on the sentence in Gallamore regarding a fair balance between the employee's right to prompt payment and the avoidance of unreasonable penalties. That sentence must be viewed in context. Since that sentence was immediately preceded by a discussion regarding the possible imposition of additional penalties for other assertedly unreasonable delays, we do not view the court's discussion of a fair balance between the right to prompt payment and the avoidance of unreasonable penalties as nullifying or limiting the court's express holding that if any part of a benefit has been unreasonably delayed or withheld, “the penalty is to be computed by assessing 10 percent of the entire amount ultimately awarded for the particular class of benefit which has been unreasonably delayed or withheld.” (Gallamore v. Workers' Comp. Appeals Bd., supra, 23 Cal.3d at p. 827, 153 Cal.Rptr. 590, 591 P.2d 1242.)
In Consani v. Workers' Comp. Appeals Bd. (1991) 227 Cal.App.3d 12, 277 Cal.Rptr. 619, the court stated: “Gallamore recognized that unreasonable preaward delays in compensation payment merit penalties, and approved penalties for ‘ “de minimis” ’ delinquencies as well as multiple penalties for successive delinquencies. The Supreme Court's holding, per se, defined the ‘fair balance’ formula to be mandatorily applied in assessment of penalties under section 5814 for unreasonable delay in payment of benefits. Gallamore clearly reached its result after balancing the parties' interests by avoiding either of the two extremes urged, to wit, a penalty only on benefits actually delayed or a penalty on all categories of benefits. Rather, Gallamore adopted a more moderate construction of the statutory language and held the phrase ‘full amount of the ․ award’ in section 5814 refers to the full amount of the award for the particular class of benefits delayed or withheld. [Citation.]” (Id. at p. 24, 277 Cal.Rptr. 619, emphasis in original.) Consani 's interpretation is supported by the following language in Gallamore: “The seeming severity of the foregoing rule, requiring a 10 percent penalty for unreasonable delay in payments regardless of the amount involved, is mitigated by application of the further rule ․ that the penalty is to relate only to that class of benefits which were delayed or refused.” (Gallamore v. Workers' Comp. Appeals Bd., supra, 23 Cal.3d at p. 823, 153 Cal.Rptr. 590, 591 P.2d 1242.)
In Gallamore the court quoted from Laucirica v. Workmen's Comp. Appeals Bd. (1971) 17 Cal.App.3d 681, 95 Cal.Rptr. 219 as follows: “As the Laucirica court properly observed, ‘We recognize, of course, that a broad requirement of additional award upon every delay in payment of interest could work mischief and inequity. There may be an entirely reasonable excuse for delay. Normal or unavoidable delays in delivery of payment could allow time for accrual of minor sums of interest which would be but de minimis. Such problems, however, may be met by the board in determining reasonableness of the delay. Addition of a penalty is expressly limited by section 5814 to payments which are “unreasonably” delayed. The section expressly vests determination of this largely factual issue in the board.’ (P. 684, 95 Cal.Rptr. 219 italics added.)” (Gallamore v. Workers' Comp. Appeals Bd., supra, 23 Cal.3d at pp. 822–823, 153 Cal.Rptr. 590, 591 P.2d 1242.) In view of the Gallamore court's emphasis of language in Laucirica regarding determination of the reasonableness of delay in payment and the placement of the sentence regarding fair balance immediately after a discussion of the possibility of additional penalties, we understand the fair balance sentence in Gallamore to be a guideline for determining whether a delay was reasonable.
We note that in County of Los Angeles v. Workers' Comp. Appeals Bd. (Crowe) (1980) 103 Cal.App.3d 877, 163 Cal.Rptr. 246, Division Five of this court held that the penalty should be limited to the amount actually delayed if the employer voluntarily brought all payments up to date and thereafter voluntarily made timely payments before the award. (Id. at pp. 882–884, 163 Cal.Rptr. 246.) We also note that in Kaminski v. Workers' Comp. Appeals Bd. (1981) 126 Cal.App.3d 778, 782, 179 Cal.Rptr. 125, the court stated in dictum that a penalty for preaward delay should not be assessed against payments voluntarily provided before the award was made. We agree with Toccalino v. Workers' Comp. Appeals Bd. (1982) 128 Cal.App.3d 543, 180 Cal.Rptr. 427 and Consani v. Workers' Comp. Appeals Bd., supra, 227 Cal.App.3d 12, 277 Cal.Rptr. 619 that the Crowe holding and Kaminski dictum are irreconcilable with the holding in Gallamore. (Consani v. Workers' Comp. Appeals Bd., supra, 227 Cal.App.3d at pp. 21–24, 277 Cal.Rptr. 619; Toccalino v. Workers' Comp. Appeals Bd., supra, 128 Cal.App.3d at pp. 554–556, 180 Cal.Rptr. 427.)
“Section 5814 is the goad for securing timely payment of compensation to injured working men and women without delay. [Citation.] One of its principal purposes is to encourage employers or their workers' compensation insurance carriers to make payments of compensation in a reasonable and timely fashion to speed the recovery and return to work of injured employees as rapidly as possible. [Citation.] An equally important purpose of section 5814 is to encourage timely payments of compensation to injured working people to promptly ameliorate economic hardship because of the interruption of their employment and concomitant loss of income.” (Consani v. Workers' Comp. Appeals Bd., supra, 227 Cal.App.3d at p. 23, 277 Cal.Rptr. 619.)
Even were we to conclude that the holding in Gallamore was qualified by the sentence regarding a fair balance between the employee's right to prompt payment and the avoidance of harsh and unreasonable penalties, we would nonetheless conclude the Board erred in limiting the penalty to the amounts actually delayed and future medical treatment. Although the precise amount of benefits delayed has not yet been determined by the Board, the present case is not one in which the amount delayed is arguably de minimis. In view of Dr. McCallum's recommendation that applicant receive psychotherapy from a clinical psychologist in his community, her assertion that psychotherapy was essential to enable applicant to participate in rehabilitation, and our Legislature's recognition of the importance of prompt rehabilitation (see LeBoeuf v. Workers' Comp. Appeals Bd. (1983) 34 Cal.3d 234, 242–246, 193 Cal.Rptr. 547, 666 P.2d 989; Webb v. Workers' Comp. Appeals Bd. (1980) 28 Cal.3d 621, 628–630, 170 Cal.Rptr. 32, 620 P.2d 618), a penalty solely against the amounts actually delayed and future medical treatment does not achieve the fair balance described in Gallamore.
Because the Board erred in failing to assess the penalty against the total amount of the award for medical benefits, the Board's order denying reconsideration must be annulled. In view of our conclusion as to the penalty issue, we need not discuss applicant's contention that the Board failed to comply with Labor Code section 5908.5.
The September 17, 1990 order of respondent Workers' Compensation Appeals Board denying reconsideration is annulled, and the matter is remanded to the Board with directions to grant applicant's petition for reconsideration and affirm the penalty award assessed by the workers' compensation judge.
STEVEN J. STONE, Presiding Justice.
GILBERT and YEGAN, JJ., concur.