Court Opinion

ID: 9531896
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:15:48.880256+00
Date Added: 2024-06-11T13:28:37.029344
License: Public Domain

OPINION
DRUKE, Chief Judge.
In this statutory special action, the No Insurance Section/Special Fund Division (Special Fund) challenges an award entered by the Industrial Commission ordering the Special Fund to pay an injured employee, Lori Leanza, a $500 bad faith penalty that the Commission had previously assessed against her uninsured employer. We affirm the award.
On August 24, 1992, Leanza filed a workers’ compensation claim for a back injury she suffered when she lifted a keg of beer while working at the Home Plate Pub. The employer objected to her claim, alleging fraud. Following hearings, the administrative law judge (ALJ) determined the employer was uninsured, found Leanza’s claim compensable, and entered an award in June 1993. The next month, Leanza filed a complaint for bad faith against her employer pursuant to AR.S. § 23-930. In March 1994, the Commission found bad faith and ordered the employer to pay Leanza a penalty of $500. Because the employer had “closed down,” Leanza asked the Special Fund to pay the penalty. When it refused, she requested a hearing pursuant to § 23-1061(J), and the ALJ ordered the Special Fund to pay the penalty by award dated March 16,1995.
The Special Fund argues on appeal that, while § 23-907(B) authorizes it to pay com*132pensation to employees who are injured while working for uninsured employers, the statute does not authorize it to pay bad faith penalties assessed against those employers pursuant to § 23-930(B).
This case presents a question of statutory interpretation, which we review de novo. Salt River Project v. Industrial Comm’n, 179 Ariz. 280, 877 P.2d 1336 (App.1994). We determine a statute’s intent from its language, the general purpose of the act in which it appears, and the language of the act as a whole. Id. Because this case involves the Workers’ Compensation Act, we interpret its provisions liberally in favor of the worker to advance the Act’s purpose of placing the burden of industrial injuries on industry rather than the injured worker. Bill Breck Dodge, Inc. v. Industrial Comm’n, 138 Ariz. 388, 675 P.2d 275 (1983); Peter Kiewit Sons’ Co. v. Industrial Comm’n, 88 Ariz. 164, 354 P.2d 28 (1960).
The first statute we consider is § 23-907(B). It allows an employee of an uninsured employer to
file his application with the commission for compensation in accordance with the provisions of this chapter____ The compensation ... shall be paid from the special fund established by § 23-1065 to the person entitled thereto after a finding and award for benefits has been issued and becomes final.
(Emphasis added.) Section 23-901(4) defines “compensation” as “the compensation and benefits provided by this chapter.” The Special Fund contends the phrase “compensation and benefits” must be interpreted strictly because “[n]one of the statutory sections ... establishes] [an employee’s] right to payment of the assessed penalty from Special Fund monies.” Consistent with the authorities above, however, we believe the legislature intended a broad interpretation of the phrase because, had it not, it would have speeified various possible components of compensation, such as wage compensation, death benefits, medical or surgical benefits, vocational rehabilitation, and physical therapy. These are all available under the Act and are generally considered compensation or benefits.
The fundamental question we must decide then is whether the penalty ordered here pursuant to § 23-930(B) is compensation or benefits under the Act. Section 23-930(B) provides:
If the commission finds that unfair claim processing or bad faith has occurred in the handling of a particular claim, it shall award the claimant, in addition to any benefits it finds are due and owing, a benefit penalty of twenty-five per cent of the benefit amount ordered to be paid or five hundred dollars, whichever is more.
(Emphasis added.) In interpreting this statute, we find it significant that the legislature used the word “benefit” in conjunction with the word “penalty.” It need not have done so. Because it did, we presume that the legislature intended the word “benefit” to have meaning, Adams v. Bolin, 74 Ariz. 269, 247 P.2d 617 (1952), and that it intended the penalty to be part of the employee’s benefits; otherwise, it would not have provided that the benefit penalty be “in addition to any benefits” awarded by the Commission. We thus conclude that the benefit penalty provided for in § 23-930(B) falls within the statutory definition of compensation found in § 23-901(4) and must be paid by the Special Fund along with other compensation awarded by the Commission pursuant to § 23-907(B).1
The Special Fund contends, however, that the Commission cannot order it to pay a bad faith penalty, citing Spear v. Industrial Comm’n, 114 Ariz. 601, 562 P.2d 1099 (App.1977). We find Spear inapposite. There, because her employer was uninsured, the injured employee first filed a complaint for her injuries in superior court and then filed an application for compensation with the Commission. After this court held that the *133filing of the superior court complaint constituted an election of remedies under § 23-1024, we addressed the employee’s contention that § 23-1061(M) estopped the Commission and Special Fund from raising the election issue. Section 23-1061(M) imposes the sanction of immediate payment on an insurance carrier that fails to deny a claim within twenty-one days after it receives a notice of claim or petition to reopen. We rejected the employee’s estoppel argument summarily, stating: “The short answer to this contention is that here we do not have a carrier against whom to assess the statutory penalty for delay, nor do we find any undue delay on the Commission’s part under the total circumstances of this case.” Spear, 114 Ariz. at 606, 562 P.2d at 1104. In this case, however, we are faced not only with a different penalty statute, but with an entirely different issue. In a case more on point, the California Supreme Court reasoned:
No one, of course, contends that the state or the Fund is guilty of any wrongdoing; the obligation arising under [West’s Ann. Labor Code] section 3716 is not imposed as a penally for any misconduct by the state. Rather, the new statutory provisions merely establish the Fund as an immediate source of money to which an injured employee can resort when his employer is uninsured and fails to pay a compensation award; the statutory scheme contemplates that the Fund, having paid the employee’s award as an initial matter, will then proceed against the employer and will recover the entire award from him____ Consequently, it is the employer, rather than the Fund, who must ultimately pay the additional penalties awarded because of the employer’s failure to insure.
Flores v. Workmen’s Compensation Appeals Board 11 Cal.3d 171, 113 Cal.Rptr. 217, 222, 520 P.2d 1033, 1038 (1974) (superseded by statute, 1976; see Du Bois v. Workers’ Compensation Appeals Board, 5 Cal.4th 382, 20 Cal.Rptr.2d 523, 528, 853 P.2d 978, 983 (1993)).
We find the court’s reasoning in Flores persuasive and equally applicable here because Arizona has a similar statutory scheme, as this case demonstrates. Pursuant to § 23-907(B), Leanza applied for compensation to the Commission, instead of filing a civil action against her uninsured employer, and the Commission awarded her disability compensation, medical benefits, and a $500 benefit penalty. As we interpret § 23-907(B), the Special Fund must now pay the Commission’s award for the uninsured employer. Pursuant to § 23-907(C), the Special Fund may then recover from the employer the “amount expended” plus interest and a penalty of ten percent or $500, whichever is greater. Because the phrase “amount expended” is undefined, we conclude that its meaning is necessarily coextensive with that given “compensation”; otherwise, the Special Fund might be prevented from recovering all amounts awarded by the Commission.
Moreover, this statutory scheme places the burden of recovery where it should be, on the Special Fund. As a practical matter, the Special Fund is in a better position than the employee to recover the bad faith penalty because it can simply include the penalty amount in recovering any other amounts it has expended. The employee, on the other hand, may well forego collection because attendant costs such as hiring an attorney could, as here, substantially exceed the penalty. This would, as to uninsured employers, effectively eviscerate the deterrent effect of the bad faith statute.
Finally, the Special Fund argues that compelling it to pay a bad faith penalty “severely punishes those employers that obey the law by contributing to the Special Fund.” We fail to see how the Special Fund’s payment of this penalty “punishes” insured employers any more than does the Special Funds’s payment of other compensation and benefits owed by uninsured employers. As Professor Larson points out, the scope of an uninsured employers’ fund “is identical to that of the uninsured employer-no more and no less.” 2A Arthur Larson & Lex K. Larson, The Law of Workmen’s Compensation § 67.40, at 12-196 (1995). Because nothing in the Act suggests the legislature intended otherwise, we affirm the Commission’s award ordering the Special Fund to pay the benefit penalty.
ESPINOSA, P.J., concurs.

. We reach this conclusion despite the dissent’s contention that § 23-1065(A) limits the Special Fund to "the promotion of vocational rehabilitation” of disabled persons. This limitation is inapplicable to § 23-907(B), for if it were applicable, employees of uninsured employers would be precluded from recovering fully for their injuries under § 23-907(B). The two statutes simply establish different but complementary purposes for the Special Fund.