GALVIN v. WORKERS COMPENSATION APPEALS BOARD (1990)

 The issue in this case is whether an employer who pays federal longshore temporary disability benefits is entitled to a credit for those payments against a state award of permanent disability benefits.   We determine that no credit is due.

Petitioner Richard Galvin (applicant) seeks review of a decision of the Workers' Compensation Appeals Board (Board) which held that respondent Sea–Land Services, Inc. (Sea–Land) is entitled to a credit for temporary disability paid to applicant pursuant to the Longshore and Harbor Workers' Compensation Act (LHWCA) (33 U.S.C. §§ 901–950), to be applied against applicant's California permanent disability award.   The credit was allowed for the difference between the greater LHWCA temporary disability rate and the statutory maximum rate of temporary disability under California law.   The Board overturned the decision of workers' compensation judge (WCJ) Christopher Hamilton.   In a well researched and reasoned decision, the WCJ allowed Sea–Land a credit against applicant's temporary disability award, but declined to allow a credit against the permanent disability award payable under California law.

For the reasons discussed below, we annul the Board decision.   Further, we hold that an employer is not entitled to a credit against a permanent disability award due under California law for the difference between temporary disability indemnity payable under California law and the higher rate of temporary disability indemnity previously paid pursuant to the LHWCA.

FACTUAL AND PROCEDURAL BACKGROUND

On March 15, 1985, applicant sustained an industrial injury to his head, neck and left shoulder while employed by Sea–Land as a utility worker.   There is no dispute that concurrent jurisdiction exists and that applicant is entitled to workers' compensation benefits under both the California Act and the LHWCA.

From March 16, 1985, to June 9, 1985, applicant was totally disabled as a result of the industrial injury.   During this period, Sea–Land paid him temporary disability indemnity, totaling $4,756.78, as required under the LHWCA (33 U.S.C. § 908, subd. (b)).  By virtue of concurrent jurisdiction, applicant received a total of $2,004.78 more in temporary disability benefits under the LHWCA than he would have received solely under California law.¹

On September 27, 1985, applicant filed an application for state workers' compensation benefits.   On June 22, 1988, the matter proceeded to hearing before WCJ Hamilton.   On September 9, 1988, findings and award issued.

The WCJ awarded Sea–Land a credit for the temporary disability indemnity paid under the LHWCA against that recoverable under California law.   However, because applicant had been fully compensated under the LHWCA, no further temporary disability was owing.   Applicant also was awarded permanent disability of 111/212 percent, the monetary equivalent of $5,075.²  The WCJ denied Sea–Land's request for a credit of $2,004.78 against applicant's permanent disability award.

The WCJ found, as pertinent:  (1) the payments under the LHWCA were not in the nature of permanent disability indemnity;  (2) Sea–Land's labor contract with applicant did not require it to pay benefits under the LHWCA;  (3) applicant did not intend the payment of temporary disability indemnity under the LHWCA to be an advance on permanent disability indemnity compensable under California law;  and (4) Sea–Land was not required to make said payments under its negotiated agreement with applicant's labor representative.

On October 4, 1988, Sea–Land petitioned for reconsideration.   On December 5, 1988, against the recommendation of WCJ Hamilton, the Board granted reconsideration and rescinded his decision.

Relying solely on Labor Code 3 section 4909, the Board awarded Sea–Land a credit for the temporary disability paid under the LHWCA in the amount of $2,004.78 against both applicant's temporary and permanent disability awards under California law.   Accordingly, applicant's permanent disability award was reduced from $5,075 to $3,070.

DISCUSSION

Section 4909

Section 4909 provides in pertinent part:  “Any payment, allowance, or benefit received by the injured employee during the period of his incapacity, ․ which by the terms of this division was not then due and payable or when there is any dispute or question concerning the right to compensation, shall not, in the absence of any agreement, be an admission of liability for compensation on the part of the employer, but any such payment, allowance, or benefit may be taken into account by the appeals board in fixing the amount of the compensation to be paid․”

The purpose of section 4909 is to encourage the voluntary and prompt payment of workers' compensation benefits to injured employees.  (1 Herlick, Cal. Workers' Compensation Law (4th ed. 1990) § 6.16, pp. 6–19.)   It is generally true that in paying compensation, the employer or its carrier thereby does not admit any legal obligation to pay or to continue to pay benefits, and later may contest liability.  (§ 4909;  Huston v. Workers' Comp. Appeals Bd. (1979) 95 Cal.App.3d 856, 866, 157 Cal.Rptr. 355.)   When, for example, voluntary payments are made in error or exceed the employer's actual liability, the Board has discretion under section 4909 to allow for a credit.   (Ibid.)

An employer is entitled to credit against compensation liability for any wages or payments in excess of compensation liability which are clearly intended by both employer and employee as an advance on compensation to become due.  (2 Hanna, Cal. Law of Employee Injuries and Workmen's Compensation (2d rev. ed. 1990) § 13.03[8], p. 13–20;  accord Ott v. Workers' Comp. Appeals Bd. (1981) 118 Cal.App.3d 912, 920, 173 Cal.Rptr. 648.)   Here, there was no such agreement.   The parties did not agree that Sea–Land's payment of LHWCA temporary disability indemnity pursuant to the higher LHWCA rate would entitle it to a credit against applicant's potential permanent disability benefits payable under California's workers' compensation laws.

 However, even in the absence of an agreement as to their purpose, if wage payments are voluntarily made by an employer during a period of temporary disability, the allowance of a credit is still within the Board's discretion under section 4909.  (Herrera v. Workmen's Comp. App. Bd. (1969) 71 Cal.2d 254, 258, 78 Cal.Rptr. 497, 455 P.2d 425;  Ott v. Workers' Comp. Appeal Bd., supra, 118 Cal.App.3d at p. 921, 173 Cal.Rptr. 648.)   Thus, the Board must determine initially whether a payment is voluntary before it may exercise its discretion and allow a credit under section 4909.   The employer has the burden of proving the voluntary nature of the wage payments so as to gain entitlement to a credit against its workers' compensation liability.  (Ott v. Workers' Comp. Appeals Bd., supra, 118 Cal.App.3d at pp. 921–922, 173 Cal.Rptr. 648.)

 Here, the WCJ found that Sea–Land's payments of temporary disability indemnity pursuant to the requirements of the LHWCA were not voluntary because they were statutorily required.   The Board, however, completely disregards this pivotal issue.   Relying solely on a 1953 Board panel decision (Pride v. Industrial Accident Commission (1953) 18 Cal.Comp.Cases 285 [review denied] ), the Board simply concludes that Sea–Land is entitled to a credit under section 4909 because the LHWCA benefits were due under federal law and not by the terms of Division 4 of the California Labor Code, an analysis that is shallow at best.⁴

Both applicant and amicus California Applicants' Attorneys Association argue that Sea–Land's payments of temporary disability were not voluntary because they were statutorily required by the LHWCA (33 U.S.C. § 908(b)).⁵  We agree.   Sea–Land did not, as a matter of company policy, voluntarily pay applicant temporary disability indemnity in an amount greater than the maximum required under California law.  (See Ott v. Workers' Comp. Appeals Bd., supra, 118 Cal.App.3d at p. 921, 173 Cal.Rptr. 648.)⁶  It did so because it was compelled by federal law to pay temporary disability indemnity at the LHWCA rate.  (See Sun Ship, Inc. v. Pennsylvania (1980) 447 U.S. 715, 719–722, 100 S.Ct. 2432, 2436–2437, 65 L.Ed.2d 458.)

Temporary disability payments made under compulsion of the LHWCA, in excess of those required under California's Labor Code, are not voluntary, as contemplated by section 4909.  (Cf. City etc. of San Francisco v. Workmen's Comp. App. Bd. (1970) 2 Cal.3d 1001, 1010, 88 Cal.Rptr. 371, 472 P.2d 459;  Ott v. Workers' Comp. Appeals Bd., supra, 118 Cal.App.3d at p. 921, 173 Cal.Rptr. 648.)   The Board clearly abused its discretion under section 4909 by awarding Sea–Land a credit against applicant's state permanent disability benefits for temporary disability indemnity paid under compulsion of federal law.

Double Recovery

Sea–Land argues that to disallow its credit against applicant's permanent disability award will result in an impermissible double recovery for applicant in violation of both federal and state law.   We disagree.

1. Federal Law

 Citing language from a footnote in Sun Ship, Inc. v. Pennsylvania, supra, 447 U.S. 715, 100 S.Ct. 2432, 65 L.Ed.2d 458, Sea–Land contends that federal law, as a condition of concurrent jurisdiction, requires a dollar-for-dollar offset without regard to either the class of benefits involved or state law and policy.   Sea–Land refers to a Supreme Court statement made in response to Sun Ship's concern that concurrent jurisdiction would leave employers with uncertain liability.   The Supreme Court stated, as follows:  “[T]here is no danger of double recovery under concurrent jurisdiction since employers' awards under one compensation scheme would be credited against any recovery under the second scheme.”  (Id. at p. 725, fn. 8, 100 S.Ct. at p. 2439, fn. 8.)   This language, contends Sea–Land, requires the Board to allow, as a matter of federal law, a credit against Sea–Land's state liability for permanent disability for the LHWCA temporary disability indemnity paid in excess of the state maximum.   This argument fails for several reasons.

As a prefatory point, the issue of double recovery was not before the Supreme Court in Sun Ship.   There was not any indication that the Sun Ship maritime employees had applied for or received LHWCA benefits before they sought state compensation benefits under Pennsylvania law.  Sun Ship's remarks regarding double recovery are dicta and, as such, have no force as precedent.

We note that at least one other state has read the Sun Ship footnote in strict economic terms.   At oral argument, counsel for Sea–Land directed our attention to McGowan v. General Dynamics Corp. (1988) 15 Conn.App. 615, 546 A.2d 893, a Connecticut case which interpreted the Sun Ship footnote as a general statement of law that any award under a state act necessarily constitutes a double recovery if it is paid for the same injury for which LHWCA benefits were received, irrespective of the class of benefits involved.   The McGowan court, as a mandatory condition of concurrent jurisdiction pursuant to Sun Ship, awarded the employer a dollar-for-dollar credit against its state liability for all benefits paid under the LHWCA.  (Id. at p. 896.)   Notwithstanding our displeasure at counsel's year-plus delay in citing McGowan, we have reviewed it.   We find its reasoning unpersuasive and differ with its application of the Supreme Court's double recovery comment in Sun Ship.  McGowan's conclusion that neither the Supreme Court nor Congress, in articulating a scheme of concurrent jurisdiction, envisioned that an injured maritime employee could receive a greater recovery than that available under either act alone is unwarranted.  (See Bouford v. Bath Iron Works Corp. (Me.1986) 514 A.2d 470, cert. denied, (1987) 479 U.S. 1065, 107 S.Ct. 951, 93 L.Ed.2d 1000.)   A close examination of Sun Ship confirms this conclusion.

The LHWCA is a federal workers' compensation statute designed to provide compensation for injuries sustained by persons engaged in maritime employment.  (See 33 U.S.C. § 902(3).)   The dispute in Sun Ship concerned the 1972 amendment to the LHWCA extending its jurisdiction inland beyond the shoreline of the navigable waters of the United States.  (Pub.L. No. 92–576, § 2(c), 86 Stat. 1251, 1265 (1972), codified at 33 U.S.C. § 903(a) (1982).)  As a result, the LHWCA became “a source of relief for injuries which had always been viewed as the province of state compensation law.”   (Sun Ship, Inc. v. Pennsylvania, supra, 447 U.S. at p. 719, 100 S.Ct. at p. 2436.)   The central issue in Sun Ship was whether Congress intended the LHWCA's landward extension as a preemption of state compensation laws where coverage overlapped.   The employees of Sun Ship, a ship repair and rebuilding corporation doing business in Pennsylvania, were entitled to benefits under the LHWCA as a result of industrial injuries.   However, they applied for and were awarded state benefits.   On appeal to the Supreme Court, Sun Ship argued that the 1972 amendment was intended to mitigate the disparities in recovery by maritime employees established by their actual location at the time of injury.   Concurrent jurisdiction sanctioning state and LHWCA recovery, claimed Sun Ship, would subvert this purpose.

Conceding that more generous state benefits could result in higher payments for employees than under exclusive LHWCA jurisdiction, the Court found “no evidence that Congress was concerned about a disparity between adequate [LHWCA] benefits and superior state benefits.”  (Sun Ship, Inc. v. Pennsylvania, supra, 447 U.S. at p. 724, 100 S.Ct. at p. 2438.)   The Court stated:  “Concurrent jurisdiction for state and federal compensation laws is in no way inconsistent with this policy of raising awards to a federal minimum.   When laborers file claims under the LHWCA, they are compensated under federal standards.   And workers who commence their actions under state law will generally be able to make up the difference between state and federal benefit levels by seeking relief under the Longshoreman's Act, if the latter applies.”  (Id. at pp. 723–724, 100 S.Ct. at p. 2438.)

In Sun Ship, the employees, unlike applicant herein, first sought state compensation benefits.   If double recovery had become an issue, it would have been in the context of an award of subsequent federal benefits under the LHWCA, which is covered by a 1984 amendment.  (33 U.S.C. § 903(e) (Supp. III 1985).) ⁷  On its face, 33 United States Code section 903(e) requires that only LHWCA awards be offset by previously received amounts paid to maritime employees under state compensation acts.   It is silent regarding situations where supplemental state awards follow payment of LHWCA benefits.   Certainly, this strongly suggests an intent to defer the definition of double recovery to state law where state benefits are sought after receipt of LHWCA benefits.  (See, generally, “Bouford v. Bath Iron Works:  Defining Double Recovery Under State and Federal Compensation Laws for Maritime Workers,” (1987) 39 Maine L.Rev. 465, 484–486.)   Thus, even if this court were to accept the Sun Ship dicta regarding double recovery as a statement of federal law, it necessarily must be limited by reference to the facts of the case.

To elevate Sun Ship's double recovery dicta to a binding principle of federal law, as Sea–Land urges, would require an erroneous assumption that the Supreme Court departed from its preemption doctrine in the same opinion in which it held that Pennsylvania was not preempted from applying its compensation laws where state coverage overlapped with the LHWCA.   Furthermore, to do so would directly contradict the Supreme Court's declaration that the “extension of federal jurisdiction supplements, rather than supplants, state compensation law.”  (Sun Ship, Inc. v. Pennsylvania, supra, 447 U.S. at pp. 719–720, 100 S.Ct. at p. 2436.)

In Bouford v. Bath Iron Works Corp., supra, 514 A.2d 470, cert. denied, (1987) 479 U.S. 1065, 107 S.Ct. 951, 93 L.Ed.2d 1000, the Maine Supreme Judicial Court held that an employer is not entitled to offset disability payments made under the LHWCA against a subsequent obligation to pay a permanent impairment award for the same injury under the Maine Workers' Compensation Act.  (Id. at p. 474.)   Interestingly, Bouford, unlike applicant, had received a permanent partial disability award under the LHWCA.   The Bouford court opined:  “Unlike the permanent partial disability benefits Bouford received under the LHWCA intended to compensate him for his loss of earning capacity, permanent impairment benefits awarded pursuant to [Maine law] are based exclusively on loss of function of a bodily part․  [¶] That Congress requires that an employer be given credit for any payments made under a state act does not require that any payments made under the LHWCA be necessarily offset when benefits are paid under Maine's Act.   Under concurrent jurisdiction, states are free to provide for more favorable benefits.   When those superior benefits provide compensation that is separate and distinct from the compensation awarded under the federal act, we find no public policy supporting an offset.”  (Id. at pp. 473, 474;  italics added.)

We conclude that Sun Ship cannot be read logically to stand for the principle that a state is prevented from applying its workers' compensation scheme to land-based injuries that are also covered by the LHWCA.  (Sun Ship, Inc. v. Pennsylvania, supra, 447 U.S. at pp. 719–722, 100 S.Ct. at pp. 2436–2437;  accord Bouford v. Bath Iron Works Corp., supra, 514 A.2d at p. 472.)   When maritime employees apply for state workers' compensation benefits after receipt of LHWCA benefits, the definition of double recovery and its application regarding an employer's right to a credit or an offset is a matter of state law.  (See, generally, 9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, § 781, p. 751.)

2. State Law

 A basic premise of compensation law in California is that there shall be but a single recovery of benefits on account of a single injury or disability.  (Herrera v. Workmen's Comp. App. Bd., supra, 71 Cal.2d 254, 259, 78 Cal.Rptr. 497, 455 P.2d 425.)   Here, applicant was not entitled under California law to additional temporary disability benefits duplicating his LHWCA benefits.   There is no dispute that an award of state temporary disability benefits, without an offset, would have provided applicant an impermissible double recovery.  (Ibid.)  Appropriately, WCJ Hamilton allowed Sea–Land a credit against its state liability for temporary disability.

 Neither Duong v. Workers' Comp. Appeals Bd. (1985) 169 Cal.App.3d 980, 215 Cal.Rptr. 609, nor Bobbitt v. Workers' Comp. Appeals Bd. (1983) 143 Cal.App.3d 845, 192 Cal.Rptr. 267, cited by Sea–Land, are convincing authority for allowing Sea–Land a credit against applicant's permanent disability award.⁸  In both of these cases, the courts' passing references to double recovery clearly are dicta.   Neither applicant had received any state benefits prior to each appellate decision.   In Duong, as well as in Bobbitt, the only issue addressed was whether the Board had subject matter jurisdiction to entertain a claim for state workers' compensation benefits where the injured employee also was entitled to federal LHWCA benefits.   Following the mandate of Sun Ship, both courts held that the Board had jurisdiction to award state compensation benefits to maritime employees who also are entitled to LHWCA benefits.  (Duong v. Workers' Comp. Appeals Bd., supra, 169 Cal.App.3d at p. 981, 215 Cal.Rptr. 609;  Bobbitt v. Workers' Comp. Appeals Bd., supra, 143 Cal.App.3d at p. 849, 192 Cal.Rptr. 267.)   The particular issues of credit and double recovery were not before the courts, and it is pure speculation to interpret the dicta as an indication that either court would allow a credit under the same facts that are before this court.

Finally, and most importantly, we emphasize that it is axiomatic under California law that an injured employee is entitled to receive both temporary and permanent disability indemnity.   Each is designated by the Legislature as a separate and distinct class of benefit, designed to compensate for a different type of loss.  (See §§ 4650–4663;  Granado v. Workmen's Comp. App. Bd. (1968) 69 Cal.2d 399, 405, 71 Cal.Rptr. 678, 445 P.2d 294;  Russell v. Bankers Life Co. (1975) 46 Cal.App.3d 405, 415–416, 120 Cal.Rptr. 627;  Pennington v. Workmen's Comp. Appeals Bd. (1971) 20 Cal.App.3d 55, 58, 97 Cal.Rptr. 380;  Manning v. Workmen's Comp. App. Bd. (1970) 10 Cal.App.3d 655, 658, 89 Cal.Rptr. 76.)

Significantly, section 4661 requires that “[w]here an injury causes both temporary and permanent disability, the injured employee is entitled to compensation for any permanent disability sustained by him in addition to any payment received by such injured employee for temporary disability․”  (Italics added.)   There is no statutory provision permitting an offset of a state permanent disability award where an injured employee has received LHWCA temporary disability benefits.   WCJ Hamilton insightfully observed that “[t]he fortuitous occurrence of applicant's injury in a location and in a type of work which enabled him to make a federal claim and not to lose as much in wages as he would have lost had he suffered an injury falling solely under California jurisdiction should not be turned against him to deprive him of compensation available under the California scheme for his diminished capacity for work in the open labor market, at least not without clear statutory or case authority.”   Clearly, the lack of statutory authority for the credit sought by Sea–Land and the unequivocal statutory mandate of section 4661 require a determination that the Board has erred.

CONCLUSION

Sea–Land is not entitled to a credit against applicant's permanent disability award under California law for the higher rate of temporary disability indemnity paid pursuant to the LHWCA.   Accordingly, the Board's decision dated December 5, 1988, is annulled and the matter is remanded for further proceedings consistent with the views expressed herein.

FOOTNOTES

1.   Applicant's average weekly earnings at the time of his injury were $580.72.   This entitled him to weekly temporary disability benefits under the LHWCA in the amount of $387.18 (two-thirds of his earnings).   Under California law, applicant would have been limited to a maximum weekly temporary disability benefit of $224, which would have totalled $2,752 for the same period of temporary disability.  (Lab.Code, § 4453, subd. (a)(2).)

2.   Sea–Land notes that applicant was not entitled to a permanent partial disability award under the LHWCA because the industrial injury did not result in a loss in applicant's wage earning capacity as set forth in 33 United States Code sections 908(c)(21) and 908(h).

FN3. All further statutory references are to the Labor Code unless otherwise specified..  FN3. All further statutory references are to the Labor Code unless otherwise specified.

4.   In Pride, the applicant, a California highway patrol officer, was entitled to full salary under section 4800 for up to one year in lieu of temporary disability while he was totally temporarily disabled as a result of an industrial injury.   Due to clerical error, the state, applicant's employer, overpaid applicant his one-year full salary in an amount totaling $1,710.99.   The Board allowed the state a credit against applicant's permanent disability award for the overpayment.   In the matter before us, unlike Pride, Sea–Land did not make an overpayment to applicant of temporary disability indemnity.   Rather, Sea–Land paid applicant temporary disability indemnity as required under the LHWCA.

5.   As pertinent, 33 United States Code section 908 requires:  “Compensation for disability shall be paid to the employee as follows:  ․ [¶] (b) Temporary total disability:  In case of disability total in character but temporary in quality 662/323 per centum of the average weekly wages shall be paid to the employee during the continuance thereof.”  (Fn. omitted.)

6.   In Ott v. Workers' Comp. Appeals Bd., supra, 118 Cal.App.3d 912, 173 Cal.Rptr. 648, the court was unable to determine whether payments made by Pacific Telephone in excess of its compensation liability, but pursuant to a company plan, were voluntarily made—“i.e., it is unclear whether the Plan was a statement of company policy about benefit disbursements (voluntary) or was a binding agreement resulting from negotiations with the employees or their bargaining representative (involuntary).”  (Id. at p. 921, 173 Cal.Rptr. 648.)

7.   Section 903(e) provides, as pertinent:  “Notwithstanding any other provision of law, any amounts paid to an employee for the same injury, disability, or death for which benefits are claimed under this chapter pursuant to any other workers' compensation law ․ shall be credited against any liability imposed by this chapter.”

8.   In Duong, the court noted that “there is no danger of double recovery because an employer's contributions under one will be credited against the other.”  (Duong v. Workers' Comp. Appeals Bd., supra, 169 Cal.App.3d at p. 982, 215 Cal.Rptr. 609.)In Bobbitt, the court noted that “[t]he fact that petitioner also has a pending claim for benefits under LHWCA does not preclude prosecution of his claim before the WCAB, since any benefits he might receive in the federal proceeding may be credited against benefits he might receive in the instant proceedings.”  (Bobbitt v. Workers' Comp. Appeals Bd., supra, 143 Cal.App.3d at p. 849, 192 Cal.Rptr. 267.)

STEIN, Associate Justice.

RACANELLI, P.J., and NEWSOM, J., concur.