COUNTY OF LOS ANGELES v. WORKERS COMPENSATION APPEALS BOARD (1979)

Petitioner County of Los Angeles (County) contends respondent Workers' Compensation Appeals Board) (Board) erred in the method it calculated a ten percent penalty against County pursuant to Labor Code section 5814¹ for County's unreasonable delay in providing permanent disability payments to respondent injured worker, Charles Crowe. In light of Gallamore v. Workers' Comp. Appeals Bd. (1979) 23 Cal.3d 815, 153 Cal.Rptr. 590, 591 P.2d 1242, we find merit to County's contention.

I

The issue here is not whether a penalty should be assessed but rather how the ten (10) percent penalty should be calculated.

While employed by County on November 7, 1971 Crowe sustained injury arising out of and occurring in the course of employment to both his hips and lower extremities.

County concedes that it unreasonably delayed in voluntarily making permanent disability payments to Crowe from January 25, 1977 to July 11, 1977. (See Lab.Code, s 4650; Kerley v. Workmen's Comp. App. Bd. (1971) 4 Cal.3d 223, 93 Cal.Rptr. 192, 481 P.2d 200; Berry v. Workmen's Comp. App. Bd. (1969) 276 Cal.App.2d 381, 81 Cal.Rptr. 65.) However, in March 1977 the parties settled by an appeals board approved compromise and release the claim for penalty for any delay by County on or before March 28, 1977. On July 11, 1977, all delayed permanent disability payments were brought up to date and thereafter all permanent disability payments were paid by County to Crowe in a timely manner. No other type of workers' compensation benefits owed to Crowe was delayed by County.

The matter proceeded to hearing on May 24, 1978. The issues at the hearing were permanent disability, whether Crowe was in need of further medical treatment, and the penalty claim. Per findings and award issued on June 9, 1978, the workers' compensation judge found Crowe to be permanently totally disabled and in need of further medical care as the result of the industrial injury herein. The judge accordingly awarded Crowe permanent disability benefits of $21,000, payable at $52.50 per week for 400 weeks, and thereafter a life pension of $48.46 per week. The judge also found that as County had unreasonably delayed in making permanent disability payments to Crowe a ten percent penalty should be assessed against County on the awarded permanent disability (including the life pension) and on the awarded future medical treatment. The judge, however, applied no penalty to permanent disability accrued up to and including March 28, 1977 in light of the settlement agreement.

The Board denied County's petition for reconsideration on the penalty issue, relying upon the judge's analysis. The judge rejected County's contention that the penalty only applied to benefits actually delayed. The judge observed that Adams v. Workers' Comp. Appeals Bd. (1976) 18 Cal.3d 226, 133 Cal.Rptr. 517, 555 P.2d 303, as interpreted in Sierra Pac. Industries v. Workers' Comp. Appeals Bd. (1977) 67 Cal.App.3d 413, 136 Cal.Rptr. 649, required that the penalty apply to both the awarded permanent disability and future medical care. Sierra Pac. Industries held that even if only one type of benefit was delayed the penalty applied to all awarded benefits. Subsequent to the judge's decision and the denial of reconsideration by the Board, the Supreme Court in Gallamore v. Workers' Comp. Appeals Bd., supra, 23 Cal.3d 815, 153 Cal.Rptr. 590, 591 P.2d 1242 disapproved this holding of Sierra Pac. Industries. (Gallamore, supra, 23 Cal.3d at pp. 826-827, 153 Cal.Rptr. 590, 591 P.2d 1242.)

II

Gallamore expressly held that “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.” (23 Cal.3d at p. 827, 153 Cal.Rptr. at p. 596, 591 P.2d at p. 1248.) Accordingly, the assessment of the penalty against the awarded future medical treatment must be annulled. Permanent disability and medical care are clearly different classes of benefits.² Crowe now concedes this point.

We now turn to the application of the penalty to the permanent disability and life pension. In Gallamore one of the claimed penalties involved the failure to voluntarily pay permanent disability advances prior to the issuance of an award. The carrier for the employer failed to make any permanent disability advances until after the injured had filed a petition for assessment of a penalty. At the hearing the parties stipulated to permanent disability of 421/2 percent, equivalent to a total of $13,702.50 in weekly payments. The Board assessed the penalty as $1,370. The court first rejected the distinction in computing the penalty between pre-award and post-award delinquencies in the payment of benefits as there was “no reason why the Amount of the penalty should vary depending on whether the delinquency occurred prior or subsequent to the award.” (Gallamore, supra, 23 Cal.3d at p. 822, 153 Cal.Rptr. at p. 593, 591 P.2d at p. 1245.) Commenting upon the computation of the penalty the court stated:

“Carrier argues that the penalty should be applied to the Net amount of benefits remaining unpaid, thereby permitting credit to the employer or carrier for amounts previously paid without delay on the specific benefit awarded. (See Adams v. Workers' Comp. Appeals Bd., Supra, 18 Cal.3d 226, 229, fn. 2, 133 Cal.Rptr. 517, 555 P.2d 303; State Comp. Ins. Fund v. Workmen's Comp. Appeals Bd., supra, 35 Cal.App.3d 374, 376, 110 Cal.Rptr. 757.) 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. (See Ramsey v. Workmen's Comp. App. Bd. (1969) 2 Cal.App.3d 693, 698, 83 Cal.Rptr. 51.) Thus, if any part of a specific benefit has been delayed or withheld, the penalty is imposed against the entirety of that benefit.” (Gallamore, supra, 23 Cal.3d at p. 827, 153 Cal.Rptr. at p. 596, 591 P.2d at p. 1248.)

Thus, it is clear from Gallamore that the penalty applies to the entire permanent disability award except for that portion of the penalty covered by the March 1977 settlement. There remains a question, however, whether the penalty applies to permanent disability payments voluntarily and timely made prior to the issuance of the award.

It has been said that Gallamore appears to make a distinction between voluntary payments and payments under compulsion of award. Thus, “While the penalty is to be assessed according to the class of benefit delayed, no penalty is to be assessed against benefits already provided voluntarily.” (1 Herlick, California Workers' Compensation Law Handbook (2d ed. Supp.1979) s 11.12, pp. 40-41; in apparent accord is 2 Hanna, California Law of Employee Injuries and Workmen's Compensation (2d ed. 1979) s 17.06(1), p. 17-47.)

The weight of prior appellate authority is that for the class of benefits delayed which is subject to a penalty that portion of such benefit class Voluntarily and Timely paid prior to the issuance of an award is not subject to a penalty. (Garcia v. Workmen's Comp. Appeals Bd. (1972) 6 Cal.3d 687, 690, fn. 2, 100 Cal.Rptr. 149, 493 P.2d 877; State Comp. Ins. Fund v. Workmen's Comp. Appeals Bd. (Sturm) (1973) 35 Cal.App.3d 374, 110 Cal.Rptr. 757; Ramsey v. Workmen's Comp. App. Bd., supra, 2 Cal.App.3d 693, 698, 83 Cal.Rptr. 51; disapproved on another point in Adams v. Workers' Comp. Appeals Bd., supra, 18 Cal.3d at p. 231, 133 Cal.Rptr. 517, 555 P.2d 303; Vogh v. Workmen's Comp. App. Bd. (1968) 264 Cal.App.2d 724, 728-729, 70 Cal.Rptr. 722; disapproved on another point in Adams, supra, 18 Cal.3d at p. 231, 133 Cal.Rptr. 517, 555 P.2d 303; see also, Langer v. Workmen's Comp. App. Bd. (1968) 258 Cal.App.2d 400, 406, fn. 3, 65 Cal.Rptr. 598.)

Exempting payments timely and voluntarily paid prior to the issuance of the award encourages the employer (or his carrier) to correct his error in payment by bringing payments up to date and continue to pay promptly. If voluntary and timely payments were not so exempt the employer has no incentive to correct his error. While there may be multiple penalties for separate and distinct acts of delay or non-payment, a single act of misconduct may only result in one penalty. (Gallamore, supra, 23 Cal.3d at pp. 823-824, 153 Cal.Rptr. 590, 591 P.2d 1242.)

Here, while County admittedly initially delayed in making permanent disability advances, County voluntarily brought the payments up to date on July 11, 1977, and continued to make timely payments thereafter. The penalty does not apply to the permanent disability advances voluntarily and timely paid commencing on July 11, 1977 until the issuance of the findings and award. The penalty does apply to the permanent disability payments actually delayed and those which are payable pursuant to the issued findings and award of June 9, 1978.

The final question is whether the penalty should apply to the life pension.

In Manning v. Workmen's Comp. App. Bd. (1970) 10 Cal.App.3d 655, 89 Cal.Rptr. 76, the carrier failed to timely make permanent disability payments under an award and the penalty was also applied by the Board to the life pension. The sole issue before the court in Manning, however, was “whether the penalty should have been computed by applying the penalty to temporary disability benefits previously paid under an earlier award as well as on the award of permanent (disability) benefits.” (Id., at p. 656, 89 Cal.Rptr. at p. 76.) Temporary disability had been awarded to the injured per award dated October 26, 1966. The carrier made no delay in the payment of the awarded temporary disability. On February 19, 1969, the referee issued a permanent disability award of 100 percent, equivalent to $21,000 with weekly payments of $52.50 to commence on August 20, 1968, and a life pension thereafter. In July 1969, a penalty claim was made by the injured for delay in payment of permanent disability. The Board applied the penalty to the “permanent disability benefits, including the life pension” but not to the previously paid temporary disability. (Id., at p. 657, 89 Cal.Rptr. at p. 77.) The court upheld the refusal of the Board to apply the penalty to the temporary disability stating: “In the present case the Board correctly applied section 5814 by imposing the penalty on the full amount of the permanent disability benefits, including the life pension . . . and properly denied applicant's request to impose the penalty on previously paid temporary (disability) benefits.” (Id., at p. 659, 89 Cal.Rptr. at p. 78.)

While not a case where a life pension was awarded, in Garcia, supra, 6 Cal.3d 687, 100 Cal.Rptr. 149, 493 P.2d 877, Manning was characterized as a case where the penalty was correctly applied to the Single class of benefits delayed. More significantly, Gallamore cites Manning as one of the cases (the others being Garcia; Sturm, supra, 35 Cal.App.3d 374, 110 Cal.Rptr. 757, and Daniels v. Workmen's Comp. Appeals Bd. (1972) 27 Cal.App.3d 504, 104 Cal.Rptr. 129) which “developed the rule that the penalty should not be applied to those types of benefits which were neither delayed nor refused.” (Gallamore, supra, 23 Cal.3d at p. 826, 153 Cal.Rptr. at p. 596, 591 P.2d at p. 1248.) Thus, both Garcia and Gallamore treat Manning as a case where the penalty was applied to but one class of benefit to wit: permanent disability, which includes the life pension.

Further, in looking at Labor Code sections 4658 and 4659, as they existed both at the time of injury herein³ and the present,⁴ one can only conclude that the life pension is merely a part of permanent disability. Accordingly, even though no payments of the life pension were here delayed, the penalty applies to the life pension since it falls within the permanent disability class of benefits.

The penalty is annulled as it applies to the award of further medical care and to the timely, voluntary permanent disability benefits paid prior to the issuance of the permanent disability award. The cause is remanded to the Board for such further proceedings as are consistent with this opinion.

FOOTNOTES

1.  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. Such delay or refusal shall constitute good cause under Section 5803 to rescind, alter or amend the order, decision of award for the purpose of making the increase provided for herein.”

2.  In the recent case of Lorenz Bauer v. Workers' Comp. Appeals Bd. (1979) 94 Cal.App.3d 250, 156 Cal.Rptr. 400, the court commented that “It seems reasonably safe to conclude that there may be an exception to the Gallamore rule where the benefit which is unreasonably delayed (e. g., medical treatment) is not a direct monetary payment to the injured worker and, to be effective, the penalty must be assessed against some reasonably related benefit (e. g., temporary disability) which is part of the same award.” It has been argued that this statement in Lorenz Bauer “appear(s) contrary to the explicit holding in Gallamore that the penalty applies against the class of benefits ultimately awarded in which the delay occurred.” (10-Percent Penalty Under Labor Code s 5814 Court Redrafts Opinion Assessing Penalty Against Delayed Benefits, in Light of Gallamore (1979) 7 Cal.Workers' Comp.Rptr. 111, 112; compare, however, Davison v. Industrial Acc. Com. (1966) 241 Cal.App.2d 15, 50 Cal.Rptr. 76 and Ramsey v. Workmen's Comp. App. Bd. (1969) 2 Cal.App.3d 693, 83 Cal.Rptr. 51.)Here, however, we need not reach the correctness of this point as even under Lorenz Bauer the penalty would not apply to the future medical care as permanent disability payments are a “direct monetary payment to the injured worker.”

3.  At the time of injury Labor Code section 4658 provided:“If the injury causes permanent disability, the percentage of disability to total disability shall be determined and the disability payment computed and allowed according to the following schedule:c3Percentage of averagec3weekly earningsc3allowed for remainderc2Number of weeksof life after periodc1Percentage ofc2for which 65 percentc3for which 65 percentc1permanentc2of average weeklyc3of average weeklyc1disability incurredc2earnings allowedc3earnings allowed   1  4 0 10 40 0 20 80 0 30120 0 40160 0 50200 0 60240 0 7028015 8032030 903604510040060”(Stats.1937, c. 90, p. 283, s 4658. Amended by Stats.1949, c. 1583, p. 2883, s 1; Stats.1959, c. 1189, p. 3280, s 13.)At the time of injury, Labor Code section 4659 provided:“The payment for permanent disabilities intermediate to those fixed by the forgoing schedule shall be computed and allowed as follows:“(a) Sixty-five percent of the average weekly earnings for four weeks for each 1 percent of disability.“(b) If 70 percent or over, 1.5 percent of the average weekly earnings for each 1 percent of disability in excess of 60 percent to be paid during the remainder of life, after payment for the maximum number of weeks specified in the foregoing schedule has been made.”(Stats.1937, c. 90, p. 283, s 4659. Amended by Stats.1949, c. 1583, p. 2833, s 2; Stats.1959, c. 1189, p. 3280, s 14.)

4.  Labor Code section 4658, as amended by Statutes 1971, chapter 1750, section 5, operative April 1, 1972, and Statutes 1973, chapter 1023, section 6, operative April 1, 1974, presently provides:“If the injury causes permanent disability, the percentage of disability to total disability shall be determined, and the disability payment computed and allowed, according to subdivision (a). However, in no event shall the disability payment allowed be less than the disability payment computed according to subdivision (b).l1  (a)l2  Column 2—Number of weeks forl2  which two-thirds of averagel2  weekly earnings allowed forColumn 1—Range of percentagel2  each 1 percent of permanent  of permanent disabilityl2  disability within percentage  incurred:l2  range:  Under 10․3  10-19.75․4  20-29.75․5  30-49.75․6  50-69.75․7  70-99.75․8“The number of weeks for which payments shall be allowed set forth in column 2 above based upon the percentage of permanent disability set forth in column 1 above shall be cumulative, and the number of benefit weeks shall increase with the severity of the disability. The following schedule is illustrative of the computation of the number of benefit weeks:Column 1—Percentage ofl2Column 2—Cumulative number  permanent disability incurred:l2  of benefit weeks:       5․15.00      10․30.25      15․50.25      20․70.50      25․95.50      30․120.75      35․150.75      40․180.75      45․210.75      50․241.00      55․276.00      60․311.00      65․346.00      70․381.25      75․421.25      80․461.25      85․501.25      90․541.25      95․581.25     100․for life“(b) Two-thirds of the average weekly earnings for four weeks for each 1 percent of disability, where, for the purposes of this subdivision, the average weekly earnings shall be taken at not more than seventy-eight dollars and seventy-five cents ($78.75).”Labor Code section 4659 as added by Statutes 1971, chapter 1750, section 5.7, operative April 1, 1972, and amended by Statutes 1973, chapter 1023, page 2030, section 7, operative April 1, 1974, presently provides:“(a) If the permanent disability is at least 70 percent but less than 100 percent, 1.5 percent of the average weekly earnings for each 1 percent of disability in excess of 60 percent is to be paid during the remainder of life, after payment for the maximum number of weeks specified in Section 4658 has been made. For the purposes of this subdivision only, average weekly earnings shall be taken at not more than one hundred seven dollars and sixty-nine cents ($107.69).“(b) If the permanent disability is total, the indemnity based upon the average weekly earnings determined under Section 4453 shall be paid during the remainder of life.”

ASHBY, Associate Justice.

STEPHENS, Acting P. J., and HASTINGS, J., concur.