Court Opinion

ID: 9608542
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:14:31.854845+00
Date Added: 2024-06-11T18:02:46.582695
License: Public Domain

ARABIAN, J.
I concur in the judgment.
In the past a number of courts, including our own, have elected to avoid the harsh and inequitable consequences of a literal application of Labor Code section 5814 (section 5814). The majority here, with little concern for these prior decisions, have decided that sound policy shall prevail over plain language no longer; regardless of common sense or fairness, the penalty for late payments of workers’ compensation benefits shall apply to the “full amount of the . . . award” without exception for timely preaward payments.
The majority’s devotion to text is difficult to fault. Yet candor compels that we acknowledge a departure from precedent when it occurs, and recognize that the laudable imperatives which informed such decisions as Gallamore v. Workers’ Comp. Appeals Bd. (1979) 23 Cal.3d 815 [153 Cal.Rptr. 590, 591 P.2d 1242] (Gallamore) have been abandoned. The remedy rests with the Legislature, but only a clear understanding of the breach that we have created by our decision will ensure that it is filled through prompt and effective legislative action.
Discussion
Section 5814 provides, in pertinent part, as follows: “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 reasonableness of the cause therefor shall be determined by the appeals board in accordance with the facts.”
Section 5814 is thus comprised of two parts: one relating to the question whether payment of compensation has been unreasonably delayed, in which *1229case a 10 percent penalty shall be assessed, and a second relating to the formula for computation of that penalty. The second aspect of section 5814 has troubled courts for years, primarily because of its potential for results that are contrary to reason and sound public policy. A number of authorities, including this court, have observed that “[s]ection 5814 of the Labor Code is no model of legislative draftsmanship. Many problems are buried in its language when the realities of workmen’s compensation litigation are considered.” (Langer v. Workmen’s Comp. App. Bd. (1968) 258 Cal.App.2d 400, 406 [65 Cal.Rptr. 598]; accord, Gallamore, supra, 23 Cal.3d at p. 824; Garcia v. Workmen’s Comp. Appeals Bd. (1972) 6 Cal.3d 687, 689 [100 Cal.Rptr. 149, 493 P.2d 877]; Manning v. Workmen’s Comp. App. Bd. (1970) 10 Cal.App.3d 655, 658 [89 Cal.Rptr. 76].)
As a result, this and other courts have consistently declined to adopt a literal construction of the statute. Although the text provides that the “full amount of the order, decision or award shall be increased by 10 percent,” we have nevertheless held that some benefits timely provided should be excluded from the penalty assessment. In Garcia v. Workmen’s Comp. Appeals Bd., supra, 6 Cal.3d 687, we held that the 10 percent penalty for delay in the payment of temporary disability benefits should not be assessed against compensation for a different type of benefit, in that case permanent disability. We adopted this rule notwithstanding the fact that section 5814 by its terms makes no provision for separating the decision or award into separate classes of benefits. Interestingly, we also observed in Garcia, albeit in dictum, that the penalty imposed for delay in providing compensation for a particular class of benefits should not be applied to timely preaward payments of the same class. (Id. at p. 690, fn. 2.)
Gallamore, supra, 23 Cal.3d 815, presented the converse of Garcia', the applicant argued that an unreasonable delay in the payment of permanent disability benefits required assessment of the 10 percent penalty against the aggregate award, including other classes of benefits. We rejected the contention and reaffirmed Garcia’s holding that “the phrase ‘full amount of the . . . award’ in section 5814 refers to the full amount of the award for the particular class of benefit delayed or withheld.” (Id. at p. 826.) Any other construction, we observed, “would, in our view, lead to harsh and unfair results.” (Ibid.)
The majority make much of our subsequent observation in Gallamore that, “if any part of a specific benefit has been delayed or withheld, the penalty is imposed against the entirety of that benefit.” (23 Cal.3d at p. 827, italics added.) However, this statement was preceded by the sentence: “The statutory language, referring to the ‘full’ amount of an award makes no provision *1230for credit for any partial payment made under compulsion of an award.” (Ibid., italics added.) Thus, Gallamore could be read to mean simply that no credit shall be provided in the penalty assessment for timely payments made pursuant to an award, but that a credit is proper for timely payments made before an award. In either event, it is: apparent that the Gallamore court was focused primarily on the question whether the statutory penalty should be assessed against the aggregate award or merely the class of benefits in which the delinquency occurred. The issue before us here, whether timely preaward payments for one type of benefit should be excluded from the penalty assessment for subsequent delays in the same class of benefits, was not clearly framed or thoughtfully considered in Gallamore. It serves little useful purpose, therefore, to engage in g hypertechnical analysis over the significance of which Court of Appeal decisions Gallamore cites with approval, where in the opinion it cites them, or to what end.
Clearly the courts in Gallamore and Garcia elected to transcend the literal language of section 5814 in favor of “achieving a fair balance between the right of the employee to prompt payment of compensation benefits, and the avoidance of imposition upon the employer or carrier of harsh and unreasonable penalties.” (Gallamore, supra, 23 Cal.3d at p. 828.) These goals have prompted a number of lower courts to conclude that timely preaward payments should be excluded from the penalty assessment under section 5814.
Two early decisions in this line are Langer v. Workmen’s Comp. App. Bd., supra, 258 Cal.App.2d 400 and Vogh v. Workmen’s Comp. App. Bd. (1968) 264 Cal.App.2d 724 [70 Cal.Rptr. 722], Unencumbered by the compulsion to tease meaning from Gallamore (since they predate it) both cases considered and rejected the argument that the 10 percent penalty should be assessed against timely paid preaward benefits. “ ‘It is obviously an incentive to the making of voluntary payments that any future penalty will not extend to them. ... It would do little violence to section 5814 to hold that payments voluntarily made are not part of a later award, even though the order making the award purports to cover the period during which such payments are made and to give credit therefor.’ ” (Vogh v. Workmen’s Comp. App. Bd., supra, 264 Cal.App.2d at pp. 728-729, quoting Langer v. Workmen’s Comp. App. Bd., supra, 258 Cal.App.2d at p. 406, fn. 3; accord, Garcia v. Workmen’s Comp. Appeals Bd., supra, 6 Cal.3d at p. 690, fn. 2.)
This rule was subsequently adopted and applied in Ramsey v. Workmen’s Comp. App. Bd. (1969) 2 Cal.App.3d 693 [83 Cal.Rptr. 51], the court observing: “Section 5814 requires the penalty to be imposed on the ‘full amount of the order, decision or award’ and thus must be applied to prior *1231payments of compensation made under compulsion of an award. [Citation.] But payments voluntarily made before a hearing on a claim are not deemed to be a part of the award for penalty purposes ‘even though the order making the award purports to cover the period during which such payments are made. . . (Id. at p. 698, quoting Langer v. Workmen’s Comp. App. Bd., supra, 258 Cal.App.2d at p. 406, fn. 2.) Other courts have also adopted this construction of section 5814. (See Kaminski v. Workers’ Comp. Appeals Bd. (1981) 126 Cal.App.3d 778, 782 [179 Cal.Rptr. 125] [“[T]he penalty applies to payments made under compulsion of award but not to payments voluntarily provided before an award is made.”]; County of Los Angeles v. Workers’ Comp. Appeals Bd. (Crowe) (1980) 103 Cal.App.3d 877 [163 Cal.Rptr. 246].)
As explained in Vogh v. Workmen’s Comp. App. Bd., supra, 264 Cal.App.2d 724, it is obviously an incentive to employers to the making of preaward payments and to remaining current with those payments that any future penalty will not extend to them. Conversely, if the penalty extended to timely preaward payments, an employer would have little incentive to be current because the penalty would be same whether or not the employer continued to delay. The majority’s response that the possibility of multiple penalties is sufficient incentive misses the mark. As we explained in Gallamore, supra, 23 Cal.3d 815, “[Additional penalties must be preceded by the imposition of ‘a first penalty’ and follow a further unreasonable delay.” (Id. at p. 823.) A single, uninterrupted failure to make preaward payments would constitute a “single act of misconduct” (id. at p. 824) and therefore would not be subject to multiple penalties.
The rule urged herein is not only sound from a policy perspective, as noted above, but also strikes the “fair balance” mandated in Gallamore between the employee’s right to prompt payment and the employer’s interest in the “avoidance of. . . harsh and unreasonable penalties.” (23 Cal.3d at p. 828.) In Consani v. Workers’ Comp. Appeals Bd. (1991) 227 Cal.App.3d 12 [277 Cal.Rptr. 619], for example, the court adopted the construction urged by the majority herein. The result was a $4,453.78 penalty on timely preaward medical payments of $44,537.81, because of a delayed payment of $1,244 for a weight-loss program. In my estimation, such a result is plainly harsh and unreasonable. Moreover, it does not effectuate the purpose of the rule—to assure the timely payment of compensation.
Nevertheless, as the majority correctly observe, when the language of a statute is clear and unambiguous its meaning should be strictly observed. Although we departed from this rule in Gallamore, supra, 23 Cal.3d 815, that is not sufficient reason to do so here. We have no license to correct an *1232unfair law, even where, as here, the inequity does not clearly reflect a conscious and considered legislative choice. As the realities of the workers’ compensation system come under increasing public scrutiny, the Legislature would do well to consider the inherent injustice of section 5814.