Court Opinion

ID: 9747158
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:59:09.373694+00
Date Added: 2024-06-11T12:43:32.343039
License: Public Domain

PHELAN, J.
I respectfully dissent. By allowing the 50 percent compensation increase to be calculated on the entire amount of the award, including nonindemnity payments such as vocational rehabilitation and medical-legal costs, the majority effectively give an injured employee in a willful misconduct case the functional equivalent of a tort action, save only the opportunity to collect punitive damages. I do not believe the Legislature intended Labor Code section 45531 to be read so generously.
In reaching their decision, the majority rely primarily on the broadly worded definition of “compensation” in section 3207 as well as the Supreme Court’s decision in Adams holding that the 10 percent penalty under section 5814 for delayed payments applied to medical/legal expenses as well as to temporary disability indemnity. (Adams v. Workers’ Comp. Appeals Bd. (1976) 18 Cal.3d 226 [133 Cal.Rptr. 517, 555 P.2d 303].) Additionally, they conclude that the Legislature’s removal of the $10,000 cap on the amount by which compensation could be increased under section 4553 indicated “. . . the Legislature intended no restriction on the basis upon which the increased compensation award is to be calculated.” (Maj. opn., ante, at p. 1620.) The majority’s analysis is fatally flawed.
First, the focus on section 3207 fails to take into account the long-standing interpretation of section 4553 and the Legislature’s obvious acquiescence in that interpretation. Secondly, their attempt to analogize the 50 percent “compensation” increase under section 4553 to the 10 percent delayed *1627payment penalty under section 5814 fails. Next, the majority read too much into the Legislature’s removal of the $10,000 cap on the amount by which compensation can be increased. Finally, the majority fails to consider the impact their decision will have in the converse situation, that is where there is serious and willful misconduct by an employee. To be consistent, the majority must concede that the employee’s entire compensation package must be reduced by 50 percent if he or she has been found to have sustained an industrial injury as a result of his or her own serious and willful misconduct. (§ 4551.)
I.
Section 4553 provides in relevant part, “The amount of compensation otherwise recoverable shall be increased one-half . . . where the employee is injured by reason of the serious and willful misconduct of [the employer]
In E. Clemens Horst Co. v. Industrial Acc. Com. (1920) 184 Cal. 180 [193 P 105, 16 A.L.R. 611] (hereafter Horst), after upholding a finding of serious and willful misconduct, the Supreme Court addressed the employer’s argument that the monetary award for serious and willful misconduct provided for in the newly enacted statute, which was the predecessor to section 4553,2 provided for an unconstitutional penalty. The constitutional authority for a workers’ compensation system had authorized, and still authorizes, payment of “compensation” for work-related injuries; it does not authorize punitive damages. (Cal. Const. former art. XX, §21; see now id., art. XIV, §4.) Therefore, the court agreed with the employer that if the award for serious and willful misconduct is a penalty, “. . . it is beyond the legislative power and void.” (Horst, supra, 184 Cal. at p. 192.)
The court upheld the constitutionality of the award, finding that it was compensation and not a penalty. The court reasoned as follows. Although the workers’ compensation system fully compensates the worker for medical expenses, it compensates the worker only partially for lost wages. Thus some of the burden of lost wages is on the employee and some is on the employer. Section 4553 forces the employer to pay a greater proportion of the compensation burden because of its misconduct.
The court said, “It is ... to be presumed the legislature found that the actual injury by loss of earnings and other elements of damage, not including *1628expenses for costs of treatment and the like, would be at least fifty per cent more than the fixed schedule would come to, and that it was deemed just if the injury was caused by willful misconduct of the employer he should be made to pay a greater proportion of the burden, and that the allowance in such a case should be increased by adding fifty per cent thereto. Thus considered, the additional allowance is really for additional compensation in the strict sense, and not for exemplary damages.” (Horst, supra, 184 Cal. at p. 193, italics added.) Thus, from the time of the statute’s first enactment, its validity was viewed by the Supreme Court as depending, at least in part, on the fact that the increase was of compensation only and not of medical costs and “like” costs.
The majority dismisses the Horst analysis as “dicta we do not find relevant and compelling.” (Maj. opn., ante, at p. 1624.) I do not believe Horst can be so easily dispatched. The language and holding of Horst have never been questioned by the Supreme Court. Rather, the court has quoted and relied on the decision and cited it with approval. (See Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465, 478, fn. 12 [165 Cal.Rptr. 858, 612 P.2d 948, 9 A.L.R.4th 758] (Rudkin); State Dept. of Corrections v. Workmen’s Comp. App. Bd. (1971) 5 Cal.3d 885, 888-889 [97 Cal.Rptr. 786, 489 P.2d 818] (Jensen).)
In Jensen, the question before the court was whether an award under section 4553 assessed against the Department of Corrections violated Government Code section 818, which proscribed awards of punitive damages against public entities. The court quoted from Horst at length and reaffirmed its holding, stating, “It is manifest from the analysis in Horst that section 4553 ... is designed to provide more nearly full compensation to an injured employee rather than to penalize an employer; otherwise the section would be unconstitutional.” (Jensen, supra, 5 Cal.3d at p. 889.) After distinguishing other decisions which seemed to support a contrary conclusion, the court held that the section 4553 award did not violate Government Code section 818, in view of, inter alia, “the long prevailing rationale of Horst . . . .” (Jensen, supra, 5 Cal.3d at p. 891.)
In Rudkin the court held that a worker injured by asbestos who had filed a workers’ compensation claim could later bring a civil action against his employer for fraudulent concealment of asbestos disease. The court characterized the employer’s actions in the case as so egregious as to justify an award of punitive damages, which could “be afforded only in an action at law.” (Rudkin, supra, 27 Cal.3d at p. 478.) At this point the court’s footnote reads, “The 50 percent increase in the award authorized by section 4553 is additional compensation and does not represent exemplary damages. [Citing Horst and Jensen.]” (Id. at p. 478, fn. 12.)
*1629The majority’s rationale under section 3207 is also not persuasive. Workers’ compensation statutes have always defined “compensation” as including “every benefit or payment” conferred by the Workmen’s Compensation Act. (Stats. 1917, ch. 586, § 3, subd. (3), p. 833.) Today section 3207 provides, “ ‘Compensation’ means compensation under Division 4 [Workers’ Compensation and Insurance] and includes every benefit or payment conferred by Division 4 upon an injured employee, including vocational rehabilitation, or in the event of his [or her] death, upon his [or her] dependents, without regard to negligence.” The Horst, Rudkin, and Jensen courts, presumably were aware of the broad general statutory definition of “compensation,” but found that they were compelled to narrow the definition for purposes of section 4553 so that the constitutional prohibition of punitive damages could be honored. The Legislature has revisited section 4553 by reenactment or amendment on seven separate occasions since Horst was decided in October 1920. (See Historical Note, 44A West’s Ann. Lab. Code (1989 ed.) § 4553, p. 399.) We must assume that, in doing so, the Legislature had full knowledge of the Horst interpretation of the word “compensation” found in the former version of section 4553. Jones v. Keppeler (1991) 228 Cal.App.3d 705, 711 [279 Cal.Rptr. 168].) “ ‘There is a strong presumption that when the Legislature reenacts a statute which has been judicially construed it adopts the construction placed on the statute by the courts.’ [Citation.]” (Wilkoff v. Superior Court (1985) 38 Cal.3d 345, 353 [211 Cal.Rptr. 742, 696 P.2d 134]; People v. Gangemi (1993) 13 Cal.App.4th 1790, 1797 [17 Cal.Rptr.2d 462].) Therefore, under this long-standing decisional authority, I conclude there is a particular definition of “compensation otherwise recoverable” as used in section 4553 which prevails over the general usage in section 3207.
II.
The attempt by the majority to draw an analogy to the method for calculating the 10 percent penalty for unreasonably delayed payment of benefits under section 5814 is inapposite. The majority conclude: “If medical-legal fees are ‘compensation’ for calculating increased compensation under section 5814, as determined by the Supreme Court in Adams [Adams v. Workers’ Comp. Appeal Bd., supra, 18 Cal.3d 226], then surely the cost of medical treatment, a more immediate and significant benefit to an injured employee, must also be treated as ‘compensation’ within the meaning of section 4553.” (Maj. opn., ante, at p. 1619, fns. omitted.) Adams, of course, held that section 5814 should be construed in the light of the definition of “compensation” set forth in section 3207. There is simply nothing in Adams, however, which undermines the long-standing interpretation of the word “compensation” in section 4553 first announced by the Supreme Court in Horst. Moreover, even the reach of Adams has been restricted. In Gallamore *1630v. Workers’ Comp. Appeals Bd. (1979) 23 Cal.3d 815, 826 [153 Cal.Rptr. 590, 591 P.2d 1242], the Supreme Court observed, “We stress that in Adams we did not suggest that the penalty should be applied to any benefits, such as the permanent disability award, which had not been delayed, despite the fact that such benefits arguably were part of the ‘full’ award to which the penalty could apply.” The court held that the penalty should not be applied to categories of benefits which were neither delayed nor refused. Thus, I find nothing in Adams which supports the expansive definition of “compensation” which the majority seeks to infuse into section 4553. The penalty calculation under section 5814 is simply not comparable to the compensation indemnity increase which section 4553 authorizes. Section 5814 is a “penalty statute” which was “enacted as an inducement to prompt payment on the part of private employers and their insurers . . . .” ([DuBois v. Workers’ Comp. Appeals Bd. (1993) 5 Cal.4th 382, 396-397 [20 Cal.Rptr.2d 523, 853 P.2d 978].) Section 4533, on the other hand, does not impose a penalty but rather provides an increase in compensation to the employee for an injury. (Fermino v. Fedco, Inc. (1994) 7 Cal.4th 701, 713-714 [30 Cal.Rptr.2d 18, 872 P.2d 559].)
III.
The majority also attach unwarranted significance to the Legislature’s deletion in 1982 of the $10,000 limit on the amount that can be recovered from an employer as a result of serious and willful misconduct. They conclude: “From this it may be inferred that in 1982, the last time it modified section 4553, the Legislature intended no restriction on the basis upon which the increased compensation award is to be calculated.” (Maj. opn., ante, at p. 1620.) I strongly disagree. The amendment neither expressly nor impliedly addresses the “basis” for calculating an increased compensation award. Rather, the amendment appears to be nothing more than a legislative recognition of the effects of inflation—something it had obviously addressed on three prior occasions when it raised the maximum recoverable amount. In 1949 the Legislature raised the ceiling from $2,500 to $3,750; in 1959 the increase went to $7,500; and in 1972 the maximum award amount was increased to $10,000. (See Historical Note, 44A West’s Ann. Lab. Code, supra, § 4553, p. 399.)
Additionally, the majority suggest that, since the Legislature did not remove the $10,000 limit from the 50 percent increase in compensation which can be awarded against an employer for unlawful discrimination under section 132a, this is “compelling evidence of a legislative intent to increase the potential recovery for an employee who suffers an injury caused *1631by the serious and willful misconduct of an employer under section 4553.” (Maj. opn., ante, at p. 1621.) I agree that the Legislature intended to allow an increased recovery for an employee, but that conclusion does not assist at all in answering the question of how the increase is to be calculated. In short, there is nothing in the 1982 amendments which demonstrates the Legislature intended that the increase was to be calculated on the basis of nonindemnity payments as well as compensation indemnity.
IV.
Finally, the majority overlook a direct and immediate consequence of their decision which I believe will defeat one of the basic purposes of the workers’ compensation law in the circumstance where the employee is injured on the job as a result of his or her own serious and willful misconduct. Under section 4551, the amount of “compensation otherwise recoverable” by an injured employee must be “reduced one-half’ (with certain specified exceptions). These statutes were enacted at the same time and use identical terminology. Indeed, the words “serious and willful misconduct” in both sections 4551 and 4553 have been construed as having the same meaning. (Rudkin, supra, 27 Cal.3d 465, 473, fn. 7; Hawaiian Pineapple Co. v. Ind. Acc. Com. (1953) 40 Cal.2d 656, 664 [255 P.2d 431].) Surely the definition of “compensation” in these counterpart statutes must likewise be identical. Thus, under the majority’s interpretation of “compensation,” an employee’s entire award, including vocational rehabilitation and medical-legal benefits, must be cut in half if the employee is injured as a result of his or her own serious and willful misconduct. I cannot believe the Legislature intended such a drastic consequence in this circumstance. It would surely undermine one of the fundamental purposes of the workers’ compensation law—namely, to provide for an injured employee’s early return to the productive work force, regardless of fault.
The California Constitution declares that the “social public policy” of the state includes “full provision for such medical, surgical, hospital and other remedial treatment as is requisite to cure and relieve [the job related injured worker] from the effects of such injury.” (Cal. Const., art. XIV, § 4.) Taking away one-half of an injured employee’s compensation indemnity award because of serious and willful misconduct may make good sense—but certainly it does not when it comes to medical and rehabilitation expenses. To do so would directly undermine the public policy which seeks to assure prompt return of injured employees to the work force regardless of how or why they received their industrial injury.
*1632For the foregoing reasons, I would affirm the opinion and decision of the Workers’ Compensation Appeals Board.
Petitioner’s application for review by the Supreme Court was denied July 13, 1995. Baxter, J., was of the opinion that the application should be granted.

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

Section 6, subdivision (b) of the Workmen’s Compensation Act (Stats. 1917, ch. 586, § 6, subd. (b), p. 834) provided in relevant part, “[W]here the employee is injured by reason of the serious and willful misconduct of the employer, ... the amount of compensation otherwise recoverable for injury or death . . . shall be increased one-half. . . .”