VEILLEUX v. WORKERS COMPENSATION APPEALS BOARD (1985)

Petitioner Richard Veilleux (applicant) seeks review of the decision of respondent Workers' Compensation Appeals Board (Board) affirming its decision on reconsideration rescinding the finding of the workers' compensation judge (WCJ) that applicant is entitled to a 10 percent penalty on all rehabilitation temporary disability pursuant to Labor Code section 5814.¹

We hold that the Board erred in rescinding the WCJ's penalty finding.

Applicant sustained an industrial injury to his back from July 22, 1981 to July 22, 1982 while employed as a custodian by respondent City of San Luis Obispo (City).   He subsequently commenced a program approved by the Rehabilitation Bureau (Bureau) providing for instruction as an electronic technician in a class in Oxnard from September 1983 through May 1984.   City was ordered to pay tuition fees, living expenses, food allowance and mileage during the program period, as well as vocational rehabilitation temporary disability indemnity (VRTD).

In November 1983 applicant's wife was diagnosed as having cancer, and he was no longer able to commute from his home in San Luis Obispo to the program classes in Oxnard.   Consequently, he stopped attending the classes.

According to applicant's rehabilitation counselor job placement attempts continued ninety days after applicant discontinued the educational program, whereupon she recommended case closure because she believed that ninety days of job placement was sufficient and that he had not gone for interviews on his last three job leads.

On March 5, 1984, City filed a request for case closure with the Bureau.   On March 8, 1984, applicant objected and requested a formal conference.   Nevertheless, City unilaterally terminated applicant's VRTD benefits on March 11, 1984.   Subsequently, the parties had an informal rehabilitation conference wherein City purportedly requested case closure.   The Bureau took no action, apparently because no request for case closure by the City had been received by the Bureau.

Applicant then filed a declaration of readiness with the Board requesting a section 5814 penalty for City's failure to provide VRTD.²  The parties stipulated that City ceased payment of VRTD on March 11, 1984, despite the fact that the Bureau did not hear the case closure request, order closure or specifically determine that City was relieved of its obligation to pay VRTD.   A Bureau employee testified no request for case closure was received from City.

The WCJ found that City unreasonably delayed VRTD payments and applicant and his attorney were each entitled to a 10 percent penalty.   The WCJ opined that “[w]hile it is clear that defendant had a good faith belief that applicant wished to terminate rehabilitation, it is nevertheless responsible for a 10 percent penalty on all rehabilitation temporary disability pursuant to Laird [v. Workers' Comp. Appeals Bd. (1983) 147 Cal.App.3d 198, 195 Cal.Rptr. 44] for terminating temporary disability without a formal order of the Rehabilitation Bureau.   The result is equitable since applicant, in fact, did not wish to terminate rehabilitation.”

The Board granted reconsideration and rescinded the WCJ's findings and award.   The Board opined that since applicant voluntarily withdrew from the rehabilitation program, City was no longer obligated to pay rehabilitation benefits in accordance with the rehabilitation plan and thus was not subject to a penalty assessment pursuant to section 5814.

Preliminarily, we note that vocational rehabilitation benefits, which include temporary disability payments, additional living expenses and vocational training, are among the benefits included in compensation to be provided by employers to injured workers.  (Lab.Code, § 3207;  LeBoeuf v. Workers' Comp. Appeals Bd. (1983) 34 Cal.3d 234, 242, 193 Cal.Rptr. 547, 666 P.2d 989;  Laird v. Workers' Comp. Appeals Bd., supra, 147 Cal.App.3d at p. 201, 195 Cal.Rptr. 44.)   Also section 139.5 imposes on employers a mandatory duty to provide rehabilitation benefits to employees who choose them and vests in injured workers a statutory entitlement to those benefits.  (Laird, supra, at pp. 201–202, 195 Cal.Rptr. 44.)

 The legislative purpose in enacting section 139.5 was to enable injured workers to participate in rehabilitation training to the fullest extent possible.  (LeBoeuf v. Workers' Comp. Appeals Bd., supra, 34 Cal.3d at p. 244, 193 Cal.Rptr. 547, 666 P.2d 989.)   In furtherance of this goal, the administratively promulgated regulations governing rehabilitation specifically provide contested issues which may arise between employer and employee must first be resolved by the Bureau as a condition precedent to further procedure.  (Cal.Admin.Code, tit. 8, § 10007, subd. (a).)  The Bureau, not the employer, is vested with the authority to modify, interrupt or terminate a vocational rehabilitation plan (Cal.Admin.Code, tit. 8, § 10007, subd. (c));  and the regulations do not condone unilateral termination of VRTD benefits by the employer without a pretermination hearing or Bureau order.   (Laird v. Workers' Comp. Appeals Bd., supra, 147 Cal.App.3d at pp. 203–204, 195 Cal.Rptr. 44.)

In Laird (id., at p. 204, 195 Cal.Rptr. 44), the court concluded that rehabilitation benefits may only be terminated prospectively pending determination of the injured worker's appeal where a pretermination hearing analogous to that of section 10007, subdivision (a), is provided by the Bureau.   In reaching that conclusion, the court not only noted the strong policy of this state to encourage the fullest possible participation in rehabilitation training by injured workers (id., at p. 202, 195 Cal.Rptr. 44), but also that when there is threatened deprivation of benefits to which a qualified person is entitled, due process of law requires a timely and meaningful opportunity to be heard.  (Ibid.)

Subsequent to the Laird decision the Bureau issued a written policy on February 14, 1984 delineating the procedure to be followed for closure of a rehabilitation case.  (Silberman, Rehabilitation:  The California System (3d ed. 1984) pp. 197–199.)   This policy memoranda provides that the insurer file a request for case closure with the Bureau, whereupon the employee has twenty (20) days to notify the Bureau of his objection to case closure.   If the employee's objection appears meritorious, the Rehabilitation Consultant may issue a decision and order directing the parties to meet and confer informally and submit written statements to the Bureau within thirty (30) days of the informal conference.   Upon receipt of said statements, the consultant will issue an order either continuing services, honoring the closure request, or setting a formal conference.

 In the instant case, City filed a request for case closure and applicant timely objected thereto.   Despite applicant's objection and without awaiting a conference or decision by the Bureau, City unilaterally discontinued paying VRTD benefits.   City's conduct in so terminating VRTD benefits directly contravened the Bureau's written policy, the Laird decision, and due process of law, thus justifying the WCJ's imposition of the 10 percent penalty pursuant to section 5814.

The Board's reliance on Mathews v. Eldridge (1976) 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 as support for the Board's argument that a hearing afforded after unilateral termination by the employer satisfies due process is misplaced.   The Board's argument overlooks the established internal administrative closure procedure of its own Bureau requiring a pretermination hearing, which available procedure employer City was obligated to follow, especially since City itself instigated the procedure when it requested closure.  (See Holderby v. Internat. Union etc. Engrs. (1955) 45 Cal.2d 843, 846–847, 291 P.2d 463;  Haller v. Burbank Community Hospital Foundation (1983) 149 Cal.App.3d 650, 656–657, 197 Cal.Rptr. 45.)  Labor Code section 5814 “makes it abundantly clear that an employer ․ has no absolute right to delay the provision of benefits until a formal hearing” (Kerley v. Workmen's Comp. App. Bd. (1971) 4 Cal.3d 223, 227, 93 Cal.Rptr. 192, 481 P.2d 200;  Jardine v. Workers' Comp. Appeals Bd. (1984) 163 Cal.App.3d 1, 7, 209 Cal.Rptr. 139);  and, as heretofore stated, the WCJ correctly found that City's unilateral termination of applicant's rehabilitation benefits without awaiting the Bureau hearing contravened the Bureau's established policy and procedure, as well as the Laird decision.

Since the Board's decision rescinding the WCJ's finding and award of the penalty was erroneous as a matter of law, on the undisputed facts, its decision must be annulled.  (See Perez v. Workers' Comp. Appeals Bd. (1984) 152 Cal.App.3d 60, 65, 199 Cal.Rptr. 280.)

The August 2, 1984 decision of respondent Board, and its September 10, 1984 order denying reconsideration are annulled.

FOOTNOTES

1.   All statutory references herein are to the Labor Code unless otherwise indicated.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 or award for the purpose of making the increase provided for herein.”

2.   “By enacting Labor Code section 139.5 the Legislature delegated to the Administrative Director of the Division of Industrial Accidents the duty to establish the administrative process to regulate the mandatory provision of vocational rehabilitation to qualified workers.   To this end the administrative director has established the rehabilitation unit (Bureau) within the Division of Industrial Accidents.”  (County of Santa Barbara v. Workers' Comp. Appeals Bd. (1980) 109 Cal.App.3d 211, 216, 167 Cal.Rptr. 65.)   The construction of section 139.5 by the Bureau, the agency charged with its administration, is thus entitled to great weight.  (Judson Steel Corp. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 658, 668–669, 150 Cal.Rptr. 250, 22 Cal.3d 658.)

STONE, Presiding Justice.

GILBERT and ABBE, JJ., concur.