STATE COMPENSATION INSURANCE FUND v. WORKERS COMPENSATION APPEALS BOARD OF STATE OF CALIFORNIA (1984)

OPINION

I

Margaret Murphy claims to have injured her back and leg on April 23, 1982 while working for Tomar Enterprises, a company she owned with her husband.   She filed an application for workers' compensation benefits on August 26, 1982.

On January 19, 1983, she filed a second application for benefits claiming a previous injury to her back resulting from an incident occurring while employed by Tomar on August 24, 1981.¹

The workers' compensation judge found Murphy sustained injuries to her back arising out of and occurring in the course of her employment on both August 24, 1981 and April 23, 1982.   The benefits on both claims were increased by the 10enalty provision of Labor Code section 5814.²

II

 Section 5405 provides claims for the collection of workers' compensation benefits must be filed within one year from (1) the date of injury (2) the expiration of disability payments or (3) the date of last receipt of medical and hospital treatment.   The employer may be estopped from relying on the statute of limitations when the employer has notice or knowledge of an injury and does not notify the claimant of his or her workers' compensation rights.  (8 Cal.Admin.Code, § 9816;  Reynolds v. W.C.A.B. (1974) 12 Cal.3d 726, 117 Cal.Rptr. 79, 527 P.2d 631.) ³

The fund argues the workers' compensation judge erred in finding Murphy's claim for the 1981 injury timely.   We agree.   The claim was not filed until 17 months after the injury.

Murphy argues the continued receipt of wages, when she was not “rendering services to the corporation employer,” qualifies as a payment of compensation benefits under section 5405(b).   Our Supreme Court has addressed this issue in Kaiser Foundation Hospitals v. Workers' Compensation Appeals Board (1977) 19 Cal.3d 329, 137 Cal.Rptr. 878, 562 P.2d 1037:  “Several courts have considered the meaning of ‘compensation’ or ‘benefits' as used in section 5405, subdivisions (b) and (c), and their predecessor sections.   The interpretation of these terms has been judicially related to the legislative purpose behind the ‘tolling’ provisions of subdivisions (b) and (c).   This purpose, as we develop below, ‘is the protection of the injured employee from being lulled into a sense of security by voluntary payments of benefits until the time to commence formal proceedings with the commission has expired.’  [Citations.]  [¶] Consistent with the foregoing legislative goal, several older cases have held that if an employer or its compensation carrier, knowing of a potential claim, furnishes treatment or advances sums for purposes bearing a clear relationship to an industrial injury, such benefits will be deemed to have been given under the Act thus tolling the statute.  [Citations.]  [¶] The foregoing cases indicate that the underlying purpose of the ‘tolling’ provisions of section 5405 and its predecessors is to prevent a potential claimant from being misled by an employer's voluntary acts which reasonably indicate an acceptance of responsibility for the employee's injury.   This concept has been variously phrased.  (E.g., Bulger v. Industrial Acc. Com., [1935] 218 Cal. [716] at p. 724 [24 P.2d 796] [‘evidence ․ inferentially tended to create a belief in the mind of petitioner that he would be cared for by his employer ․’];  Morrison v. Industrial Acc. Com., [1938] 29 Cal.App.2d [528] at p. 537 [85 P.2d 186] [statute should not become a ‘trap to defeat just claims;’  payment may ‘lull (the claimant) ․ into false hopes and cause him to delay presenting his claim ․’];  London G. & A. Co. v. Indus. Acc. Com., [1928] 92 Cal.App. [298] at p. 301 [268 P. 670].)”  (Id., at pp. 333–334, 137 Cal.Rptr. 878, 562 P.2d 1037.)

 Thus, the continued receipt of wages even when the employee is not working does not per se qualify as a payment of disability compensation.   In the circumstances of this case, it cannot be argued Murphy was confused or misled by the receipt of her wages when she herself was the payor.   Further, the evidence shows Murphy was aware of her workers' compensation benefits but chose, for business reasons, not to make a claim.   Cross examination of Murphy indicated she didn't file for workers' compensation because her business was new and she and her husband were afraid their rates might go up.   They chose instead to rely on their Blue Cross coverage.

We conclude, therefore, the claim for the 1981 injury is barred by the statute of limitations contained in section 5405 and annul that portion of the order.   Having so found, we need not consider the validity of the 10% penalty.⁴

III

 We asked for further briefing on the applicability of section 5410.   This section allows institution of proceedings for the collection of benefits within five (5) years after the date of injury if the original injury has caused new or further disability.   This section applies, however, only if compensation benefits have been furnished by the employer or carrier.   (Nicky Blair's Restaurant, et al. v. Workers' Compensation Appeals Board, et al. (1980) 109 Cal.App.3d 941, 167 Cal.Rptr. 516.)   Having found compensation benefits were not furnished by the employer or carrier, we find section 5410 inapplicable to these proceedings.

The order for the 1981 inquiry is annulled.   In all other respects the order is affirmed.

FOOTNOTES

1.   The application referred to the date of injury as “8–81.”   At the hearing, the date of injury was amended to read “about August 24, 1981.”

2.   All statutory references are to the Labor Code unless otherwise indicated.

3.   The judge considered the absence of notice by the employer significant, but respondent does not now rely on this.   The purpose of the exception “is to protect and preserve the rights of an injured employee who may be ignorant of the procedures or, indeed, the very existence of the workmen's compensation law.   Since the employer is generally in a better position to be aware of the employee's rights, it is proper that he should be charged with the responsibility of notifying the employee, under circumstances such as those existing here, that there is a possibility he may have a claim for workmen's compensation benefits.”  (Reynolds v. Workmen's Compensation Appeals Board, supra, 12 Cal.3d 726, 729, 117 Cal.Rptr. 79, 527 P.2d 631.)   Thus, in Hurwitz v. Workmen's Compensation Appeals Board (Esposito) (1979) 97 Cal.App.3d 854, 158 Cal.Rptr. 914, the claimant was precluded from filing her late claim even though the employer had not given her notice.   The court found she had timely knowledge of her benefits and the lack of notice by the employer was not the reason for her delay.   The employer did not give the employee notice, but the evidence shows she was a co-owner of Tomar Enterprises Inc., and had knowledge of her workers' compensation rights.   The giving of notice by the corporation would have served no purpose.Respondent argued at oral argument that the receipt of Blue Cross benefits qualified as “medical payments” and tolled the statute pursuant to section 5405(c).   However, the judge did not make findings as to the receipt of benefits and this was not argued in the briefs.

4.   Murphy also argues the insurance carrier never intended to pay the claim and the statute should therefore be tolled.   No authority is cited for what could be labeled “carrier induced confusion” nor do we find the argument convincing.   Even if the insurance carrier did not intend to pay the claim, Murphy was not misled or confused in any way.

SONENSHINE, Associate Justice.

WALLIN, Acting P.J., and CROSBY, J., concur.