KAISER FOUNDATION HOSPITALS PERMANENTE MEDICAL GROUP v. WORKERS COMPENSATION APPEALS BOARD (1976)

The petitioner Kaiser Foundation Hospitals seeks a writ to review an order of the Workers' Compensation Appeals Board finding that its claim was barred by the statute of limitations.

The central issue presented is: Did the employer's payment into a union trust fund, which fund was used to purchase the medical coverage under which the injured worker received his treatment, constitute ‘furnising of medical benefits' within the meaning of Labor Code section 5405?

Terry Webb was injured on November 27, 1973, while working as a clerk for Pennysaver market. On December 6, 1973, a Doctor's Report of Work Injury was sent to the employer by petitioner. On December 21, 1973, the employee was examined by a doctor employed by the insurance company who was of the opinion the injury was not work related. On January 2, 1974, the insurance company mailed a Notice of Rejection of Workmen's Compensation Benefits to the employee and to petitioner. On January 28, 1974, the employee entered Kaiser Hospital for surgery to correct the hernia.

During the period of employment, the employer paid no medical benefits directly to the employee, but did contribute to a union health plan which in turn contracted for medical coverage with petitioner.

On January 20, 1975, petitioner filed an application alleging that Webb sustained a left inguinal hernia on November 27, 1973 in the course of and arising out of his employment, and that petitioner was a lien claimant for treatment expense totaling $874.21. That application was filed over one year after the alleged injury, but less than one year following the surgery to correct the condition. Thus the issue raised by the application was whether the employer's contribution towards Webb's medical plan and Webb's treatment under that plan constituted ‘furnishing of benefits' within the meaning of Labor Code section 5405.

We have concluded that by reason of Mihesuah v. Workmen's Comp. Appeals Bd. (1972) 29 Cal.App.3d 337, 105 Cal.Rptr. 561, the finding that petitioner's claim is barred by the statute of limitations must be reversed.

In Mihesuah, this court held that an employer's contributions to a group insurance policy for the benefit of its employees ‘came within the scope of section 4600’ (Labor Code) which defines the compensation benefits for which an employer is liable to its employee. It concluded that ‘Because [the employer's] contributions to [the employee's] insurance coverage came within section 4600, [the employee's] application for workmen's compensation was timely under section 5405.’ (29 Cal.App.3d at p. 340, 105 Cal.Rptr. at p. 563.)

The Mihesuah court based its decision on two separate grounds, the one mentioned above, and the fact that the employer was estopped to claim the statute of limitations by his failure to inform the employee that his injury was not treated as industrial. Respondent attempts to distinguish Mihesuah on the ground that its facts showed estoppel, whereas here the employer notified both petitioner and the employee before surgery that his injury was treated as nonindustrial. This court does not accept that distinction between the cases in light of the Mihesuah court's clear statement that its first ground was an independent ground for decision. When an appellate court bases its decision upon two grounds, each is a ruling on the question involved, and neither is ‘mere dictum.’ (King v. Pauly (1911) 159 Cal.549, 555, 115 P. 210; Bernstein v. Rubin (1957) 152 Cal.App.2d 51, 54, 312 P.2d 755.) We do not feel free to modify Mihesuah, absent some direction by the Supreme Court. That court denied petition for hearing in Mihesuah January 24, 1973. For us to reverse or modify our decision after such denial would seem to violate at least the spirit of Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 20 Cal.Rptr. 321, 369 P.2d 937. (See DiGenova v. State Board of Equalization (1962) 57 Cal.2d 167, 178, 18 Cal.Rptr. 369, 367 P.2d 865.)

We have also concluded that there is no legal distinction between an employer paying directly into a health plan or paying into a union trust fund to accomplish the same objective. Likewise, we are not persuaded that because petitioner is a lien holder rather than the injured employee, we should reach an opposite result. Section 4600 of the Labor Code provides that, in case of the employer's failure to provide necessary care, the employer is liable for the reasonable medical expenses incurred by ‘or on behalf of’ the employee. Any interested person may file an application under Labor Code section 5501. Thus, furnishers of medical treatment may seek payment by filing original applications based upon their lien claims. (See Independence Indem. Co. v. Indus. Acc. Com. (1935) 2 Cal.2d 397, 41 P.2d 320; Dept. of Employment v. Ind. Acc. Com. (1964) 227 Cal.App.2d 532, 38 Cal.Rptr. 739.) Since the employee would not be barred by the statute of limitations, it follows that the petitioner here should not have been barred. Before the board, the employer denied industrial causation of the injury. The board did not reach this issue, and the case must be remanded for consideration thereof.

The opinion and order denying reconsideration by the Workers' Compensation Appeals Board is annulled and the case remanded for further proceedings consistent with the views expressed herein.

I concur, but do so reluctantly. In logic, our decision in Mihesuah compels this result. Here, however, petitioner is not the employee, but is the hospital organization which collected premiums to provide the precise medical benefits whose cost it now seeks to shift to the compensation carrier. There is no question that petitioner has rendered the same service it was required to provide under its contract with the union, regardless of any worker's compensation rights of the patient. I find it difficult to justify delay in claim by the treating group which was in the best position to determine, at the outset, the cause of the injury. This ruling may well authorize innumerable belated claims by this widely used provider of health care.

HAROLD C. BROWN, Associate Justice.

SCOTT, J., concurs.