HOLLINGER v. WORKERS COMPENSATION APPEALS BOARD

Reset A A Font size: Print

Court of Appeal, First District, Division 2, California.

Kathie F. HOLLINGER, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and San Mateo County Transit District, Respondents.

No. A041063.

Decided: January 19, 1989

Steven W. Siemers, Neyhart, Anderson, Nussbaum, Reilly and Freitas, San Francisco, for petitioner Kathie F. Hollinger. Michael C. Johnston, Law Offices of William F. Pagano, Redwood City, for respondent San Mateo County Transit Dist. Richard W. Younkin, William B. Donohoe, Charles E. Finster, San Francisco, for respondent W.C.A.B.

The Workers' Compensation Appeals Board rescinded the assessment of a 10 percent penalty against a self-insured public employer for unreasonable delay in paying a compensation award pending an unsuccessful petition for writ of review found by this court to be without reasonable basis. For the reasons set forth below, we shall annul the Board's decision.

Petitioner Kathie F. Hollinger, a bus driver employed by respondent San Mateo County Transit District during 1976 through August 6, 1983, sustained industrial injuries to her neck and right shoulder for which findings and award issued on June 30, 1986.

Respondent filed a 43–page petition for reconsideration accompanied by a 52–page transcript. The Board denied reconsideration on August 21, 1986, and, on October 7, 1986, respondent filed a petition for writ of review. On December 23, 1986, this court denied review and remanded the matter to the Board for an award of attorney's fees pursuant to Labor Code section 5801,1 which authorizes such fees only if the court finds “there is no reasonable basis for the petition.”2 By check dated January 6, 1987, respondent paid the $6,476.50 award to petitioner. On February 4, 1987, the Board, on remand, made an award of $1,000 to petitioner's attorney for defending the petition.

On February 7, 1987, petitioner filed a petition pursuant to section 5814,3 seeking a 10 percent penalty against respondent, as well as reimbursement of his costs. Petitioner contended that the delay from the date of the order denying reconsideration, August 21, 1986, to the actual payment of the award, January 6, 1987, due solely to the filing of a petition for writ of review found by the court to be without reasonable basis, was ipso facto unreasonable within the meaning of section 5814.

The workers' compensation judge (judge) concluded that respondent had no “genuine doubt” as to its liability for benefits in view of the appellate court finding that its petition for writ of review was without reasonable basis. Emphasizing that respondent offered no evidence “that would give rise to even an inference of doubt” as to its liability for payment of benefits, he imposed a 10 percent penalty and awarded costs to petitioner under section 5811.

Respondent sought reconsideration, insisting that it could not be penalized for exercising its legal right to review. Over the dissent of one member, reconsideration was granted and the Board rescinded the penalty award, specifically finding that respondent had “a reasonable doubt” as to its liability for benefits until after the court denied its petition for writ of review on December 23, 1986.

I.

Petitioner asserts that as a matter of law a delay in paying benefits is unreasonable and subject to the statutory 10 percent penalty where, as here, the sole justification offered for the delay is a petition for writ of review found to be without reasonable basis. Respondent insists, as it did before the Board, that it had a genuine doubt as to liability during the pendency of its petition, that it should not be penalized for exercising a legal right and that the remand for attorney's fees under section 5801 is not indicative of a finding by the court that the petition was without reasonable basis.

In Kerley v. Workmen's Comp.App. Bd. (1971) 4 Cal.3d 223, 93 Cal.Rptr. 192, 481 P.2d 200, the leading case regarding the proper interpretation and application of section 5814, the Supreme Court explicitly recognized that the “only satisfactory excuse for delay in payment of disability benefits, whether prior to or subsequent to an award, is genuine doubt from a medical or legal standpoint as to liability for benefits.” (Id., at p. 230, 93 Cal.Rptr. 192, 481 P.2d 200.) The burden is on the employer to present substantial evidence on which a finding of such doubt may be based. (Ibid., Jensen v. Workers' Comp. Appeals Bd. (1985) 170 Cal.App.3d 244, 247, 216 Cal.Rptr. 33; Johnson v. Workers' Comp. Appeals Bd. (1985) 163 Cal.App.3d 770, 774, 210 Cal.Rptr. 28.) Unquestionably, the purpose of section 5814 is to safeguard employees', not employers', rights. (Jardine v. Workers' Comp. Appeals Bd. (1984) 163 Cal.App.3d 1, 8, 209 Cal.Rptr. 139.) Its intent is to encourage employers to make voluntary, timely payments of benefits by making delay costly. (Ibid.) Application of section 5814 must also be consistent with the legislative mandate that workers' compensation laws shall be liberally construed with “ ‘the purpose of extending their benefits for the protection of persons injured in the course of their employment.’ “ (§ 3202; Jensen, supra, 170 Cal.App.3d at p. 247, 216 Cal.Rptr. 33.)

In support of its contention that by the very fact of filing a petition for writ of review respondent sustained its burden of establishing the necessary “genuine doubt” under section 5814, respondent relies on Jensen v. Workers' Comp. Appeals Bd., supra, 170 Cal.App.3d 244, 216 Cal.Rptr. 33, and Ulrich v. Workmen's Comp. Appeals Bd. (1975) 50 Cal.App.3d 643, 123 Cal.Rptr. 435. The cases do not support the argument. In Ulrich, payment of the award was delayed by the actual pendency of a petition for writ of review that was denied by the appellate court. In deciding not to assess a penalty, the court stated: “It has long been recognized that the exercise of a right accorded by law, at least in a case where there is a reasonable basis to seek reconsideration and review on a legal issue as to which there is a genuine doubt, cannot give rise to the imposition of a 10 percent penalty under the provisions found in section 5814.” (Ulrich, supra, at p. 652, 123 Cal.Rptr. 435, emphasis added.)4 The determinative factor in Ulrich, which distinguishes it from the present case, is that denial of the petition for writ of review did not include a finding under section 5801 that the petition was without reasonable basis.

In Jensen, which was decided by this court, a penalty was assessed against the employer who delayed the payment of an award for 50 days while it “evaluated” the possibility of an appeal. Like respondent herein, the employer argued that to penalize it for utilizing the statutory period to consider and research an appeal would be inimical to the appellate right afforded by section 5950, regardless whether an appeal was actually filed. We rejected this argument, finding that there was no evidence to support a genuine doubt to pay “other than the bald assertion that an appeal was under consideration.” (Jensen, supra, 170 Cal.App.3d at p. 249, 216 Cal.Rptr. 33.)5

In our opinion, Jensen and Ulrich direct the imposition of a 10 percent penalty against respondent. The only evidence respondent offers to meet its burden as to a genuine doubt is simply the self-serving assertion that its petition had a reasonable basis. This is clearly insufficient. As earlier noted, an order denying a petition for writ of review, coupled with a remand for attorney's fees under section 5801, necessarily implies a judicial finding that the petition lacked a reasonable basis. (Employers Mut. Liab. Ins. Co. v. Workmen's Comp. Appeals Bd. (1975) 46 Cal.App.3d 104, 108, 120 Cal.Rptr. 48.)

We turn now to the implication of the Board's decision that it is not bound by a finding made by the Court of Appeal under section 5801 in a subsequent section 5814 penalty proceeding in the same case. Section 5814 expressly vests determination of the factual issue of delay in the Board. The Board focused its inquiry on respondent's petition for writ of review, determining it had a reasonable basis and concluding there was no unreasonable delay under section 5814. To reach this result, the Board disregarded the actual record and confused the issues. Whether respondent's petition for writ of review had a reasonable basis was not before the Board, as it had been previously decided. The sole issue then presented was whether respondent's delay in payment of the award was unreasonable where the only possible justification was the pendency of a petition found to be without reasonable basis under section 5801.

Upon expiration of the time to petition the Supreme Court for review, our decision denying respondent's petition, together with a remand for attorney's fees under section 5801, became final and binding on the Board. (Cal. Rules of Court, rule 24; 9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, §§ 594–595, pp. 582–584.) The doctrine of law of the case does not permit the Board to reach conclusions at variance with the law as pronounced in the same proceeding. (Messner v. Industrial Acc. Com . (1963) 216 Cal.App.2d 536, 540–542, 30 Cal.Rptr. 898; United Dredging Co. v. Industrial Acc. Com. (1930) 208 Cal. 705, 712–714, 284 P. 922; see Richer v. Superior Court (1976) 63 Cal.App.3d 748, 757–758, 134 Cal.Rptr. 52.) Denial of a petition for writ of review relates to the merits to the extent of being res judicata or law of the case if the record is susceptible of the inference that the court reviewed the dominant legal issue. (Messner, supra, at pp. 541–542, 30 Cal.Rptr. 898.) The only possible inference arising from the denial of such a petition with a remand directing the granting of attorney's fees under section 5801 is that the court determined there was “no reasonable basis for the petition.” (§ 5801.) Accordingly, the Board is bound by this court's determination that respondent's petition for writ of review was without reasonable basis.

The pendency of a petition for writ of review previously found by the court to be without reasonable basis provides no justification for delay in the payment of benefits to an injured worker. Furthermore, an employer's subsequent failure to timely comply with an order to pay a 10 percent penalty under section 5814 constitutes a separate and distinct delay, thus warranting consideration of an additional penalty. (See Gallamore v. Workers' Comp. Appeals Bd. (1979) 23 Cal.3d 815, 827, 153 Cal.Rptr. 590, 591 P.2d 1242.)

Respondent cannot sustain its burden of demonstrating genuine doubt as to its liability to timely pay the award. The Board's determination that respondent entertained such doubt is unsupported by substantial evidence.

II.

We now address petitioner's request for attorney's fees under section 5814.5.6 Respondent, a permissibly self-insured employer as defined under Labor Code section 3700, subdivision (c),7 has unreasonably delayed the payment of an award in violation of section 5814. Section 5814.5, which reflects legislative awareness of the widespread failure of self-insured public employers to promptly pay awards (Stats.1984, ch. 806, § 1; see 14 Cal. Workers' Comp.Rptr. 136), was specifically designed to deter such delays. When a penalty is imposed upon such an employer under section 5814, section 5814.5 requires the Board to additionally award reasonable attorneys' fees incurred in enforcing the payment of compensation awarded.

The Board contends that petitioner's request for attorney's fees should be rejected because it was not raised at the trial level before the judge nor in a petition for reconsideration before the Board. Both claims are without merit. The record indicates petitioner sought an award of attorney's fees from the judge and, thereafter, from the Board. In his report and recommendation on reconsideration dated October 15, 1987, the judge recommended that the case be returned to him to determine the attorney's fee upon disposition of the petition for reconsideration. The Board declined to do so, relying on Cedillo v. Workmen's Comp. Appeals Bd. (1971) 5 Cal.3d 450, 456, 96 Cal.Rptr. 471, 487 P.2d 1039; and U.S. Auto Stores v. Workmen's Comp.App. Bd. (1971) 4 Cal.3d 469, 477, 93 Cal.Rptr. 575, 482 P.2d 199. It is correct, as these two cases hold, that issues not raised in a petition for reconsideration may not subsequently be raised in a petition for writ of review. (§ 5904.) However, respondent, not petitioner, sought Board reconsideration. When the Board reversed the judge, petitioner could have petitioned for reconsideration (§ 5902; Goodrich v. Ind. Acc. Com. (1943) 22 Cal.2d 604, 611, 140 P.2d 405), but a petition for reconsideration was not a condition precedent to appellate review under section 5950. (Lamb v. Workmen's Comp. Appeals Bd. (1974) 11 Cal.3d 274, 279, fn. 5, 113 Cal.Rptr. 162, 520 P.2d 978; Nelson & Sloan v. Workers' Comp. Appeals Bd. (1978) 79 Cal.App.3d 51, 54, 144 Cal.Rptr. 614; see Harlan v. Industrial Acc. Com. (1924) 194 Cal. 352, 364–365, 228 P. 654.)

Accordingly, we find petitioner's request for attorney's fees under section 5814.5 now properly before us, and remand the cause to the Board for the purpose of making a supplemental award of fees to petitioner's attorney based upon services rendered in connection with the enforcement of payment of the compensation award. In determining the fee under section 5814.5, the Board should consider the same factors it considers in section 5801 fee determinations: a reasonable hourly rate as well as reasonable recompense for the amount of time expended. (See 1 Hanna, Cal. Law of Employee Injuries and Workmen's Comp. (2d ed.1988) § 6.07[5], p. 6–38.)

In accordance with the foregoing, the Board's decision is annulled with direction to enter a new award providing for the statutory 10 percent penalty and an additional award for attorney's fee.8

FOOTNOTES

1.  All statutory references are to the Labor Code.

2.  As pertinent, section 5801 provides: “In the event the injured employee ․ prevails in any petition by the employer for a writ of review from an award of the appeals board and the reviewing court finds that there is no reasonable basis for the petition, it shall remand the cause to the appeals board for the purpose of making a supplemental award awarding to the injured employee or his attorney ․ a reasonable attorney's fee for services rendered in connection with the petition for writ of review. Any such fee shall be in addition to the amount of compensation otherwise recoverable and shall be paid as part of the award by the party liable to pay such award.”

3.  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․”

4.  Cf., Conn–Wood Inv. Corp. v. Workmen's Comp. Appeals Bd. (1974) 39 Cal.Comp.Cases 95 (writ denied; unreasonable delay under section 5814 where employer failed to convince Board that appeal to United States Supreme Court involved a substantial federal question).

5.  The Jensen case was questioned in Smith v. Workers' Comp. Appeals Bd. (1986) 186 Cal.App.3d 1451, 1455–1457, 231 Cal.Rptr. 364. Smith concluded that a carrier's 22–day delay in partial payment of an award was not unreasonable under section 5814. Were we to accept the criticism of Jensen and the legal test advocated by Smith to be applied in section 5814 penalty matters, the outcome in the instant case would not be affected. Respondent offers absolutely no evidence to support a finding of reasonable doubt, utilizing the Smith test, as to its liability to pay the award when reconsideration was denied. (Smith, supra, at p. 1455, 231 Cal.Rptr. 364.)We think it appropriate to note, however, that we are unpersuaded by Smith's criticism of Jensen. Smith relied on Kampner v. Workers' Comp. Appeals Bd. (1978) 86 Cal.App.3d 376, 150 Cal.Rptr. 222, in stating that Jensen had misread Kerley, supra, 4 Cal.3d 223, 93 Cal.Rptr. 192, 481 P.2d 200. According to Smith, our opinion in Jensen failed to recognize that Kerley does not preclude the Board from deciding the largely factual question of reasonableness. We did not fail to recognize this in Jensen. (Jensen, supra, 170 Cal.App.3d at pp. 247–248, 216 Cal.Rptr. 33.) In any event, Smith incorrectly concludes its inquiry under section 5814 at this juncture, ignoring the fact that, once a delay has occurred the Board cannot escape the responsibility to determine whether an employer has established a genuine doubt from a medical or legal standpoint before it may conclude that a delay is not unreasonable. (Kerley, supra, at p. 230, 93 Cal.Rptr. 192, 481 P.2d 200; Jensen, supra, at p. 248, 216 Cal.Rptr. 33.) This is precisely why we criticized Kampner in Jensen, and why we now disagree with Smith. As stated in Jensen, by focussing on “inadvertence,” Smith in effect permits a carrier to avoid its burden of establishing a genuine doubt as to liability to pay as mandated by Kerley.

6.  Labor Code section 5814.5 reads: “When the payment of compensation has been unreasonably delayed or refused subsequent to the issuance of an award by an employer which has secured the payment of compensation pursuant to subdivision (c) of Section 3700, the appeals board shall, in addition to increasing the order, decision, or award pursuant to Section 5814, award reasonable attorneys' fees incurred in enforcing the payment of compensation awarded.” (Emphasis added.)

7.  “Employer,” under section 5814.5 includes: “county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state, including each member of a pooling arrangement under a joint exercise of powers agreement․” (Lab.Code, § 3700, subd. (c).)

8.  The Board's award of costs to petitioner under section 5811 is not before us and that portion of the Board's decision of December 7, 1987, is unaffected by this decision.

KLINE, Presiding Justice.

SMITH and BENSON, JJ., concur.