California Highway Patrol v. Workers' Compensation Appeals Board

Opinion

HALLER, J. An employer delayed in paying workers’ compensation benefits. When the employer made a retroactive payment, it failed to include accrued interest. The Workers Compensation Appeals Board (WCAB) imposed two consecutive 10 percent penalties: one for the late benefit payment and one for the failure to pay interest. (Lab. Code, § 5814.) We hold that when an employer or carrier makes a late workers’ compensation benefit payment and fails to include interest in that payment, only a single penalty may be imposed under Labor Code section 5814 (section 5814).

California Highway Patrol (CHP) petitions after the WCAB awarded Jaime Erebia three separate penalties for unreasonable delays in paying (1) permanent disability benefits; (2) interest on the late permanent disability payment; and (3) medical treatment benefits. CHP contends the penalty for the unreasonable delay in paying interest constitutes an improper multiple penalty under Christian v. Workers’ Comp. Appeals Bd. (1997) 15 Cal.4th 505 [63 Cal.Rptr.2d 336, 936 P.2d 115]. We agree, and annul the portion of the WCAB’s order awarding a penalty for the failure to include accrued interest with the retroactive benefit payment.

Facts

In 1988, Jaime Erebia, a CHP traffic officer, sustained serious injuries. Erebia filed a workers’ compensation claim, and the WCAB found Erebia’s injuries resulted in permanent disability of 100 percent. The WCAB awarded Erebia $224 per week for life, future medical treatment, and reimbursement for out-of-pocket medical expenses. The award provided a $107,000 credit for funds to be received from a third party. CHP was not required to begin making the disability or medical payments until the third party credit was exhausted.

[1204]On June 14, 1997, Erebia mailed information to State Compensation Insurance Fund (State Fund), CHP’s adjusting agency, showing that the third party payments had been exhausted. Two days later, on June 16, State Fund received the notice. Six weeks later, on July 25, 1997, State Fund resumed permanent disability benefits, and made a retroactive payment of $1,216, reflecting $224 per week for the period June 18, 1997, through July 25, 1997. This retroactive payment did not include interest.

In August 1999, Erebia filed notice that he was seeking penalties under section 5814 for CHP’s (1) delay in paying permanent disability benefits; (2) failure to include accrued interest when making the retroactive disability payment; and (3) delay in paying for medical treatment. At the hearing, the evidence established Erebia gave notice to State Fund on June 16 through a certified letter of the fact that the third party credit had been exhausted. This notice immediately triggered CHP’s obligation to pay the $224 weekly installment payments.