Is an Applicant Entitled to a Labor Code §5814 Penalty for Late Supplemental Return to Work Payments Made by the Administrative Director Due to Delay Caused by the Defendants?
Unfortunately, delay in issuance of the Supplemental Job Displacement Benefit/Voucher is a common claim seen in the Workers’ Compensation Court. (The penalty is often alleged as a result of a misunderstanding as to when the voucher is to be issued.) I have seen more than one applicant attorney allege Labor Code §5814 penalties as a result of failure to offer the voucher timely. I have also seen more than one applicant attorney, and even a Workers’ Compensation Judge, allege Labor Code §5814 penalties on benefits related to Labor Code §139.48, which are supplemental payments issued by the Administrative Director.
We often see a claim for a Labor Code §5814 penalty on the voucher of up to $6,000.00 as well as a Labor Code §5814 penalty on the delay in the applicant’s ability to obtain the $5,000.00 supplemental benefit under Labor Code §139.48 from the Administrative Director. Often the threat of a penalty on the supplemental benefit under Labor Code §139.48 is used as leverage to settle the penalties at a higher amount than potentially would be owed. The recent case of Teresa McFarland v. Redlands Unified School District, (2017) 45 C.W.C.R. 288 (hereinafter McFarland) in which the applicant’s Petition for Reconsideration was denied, is an example of a case in which a Labor Code §5814 penalty was claimed to be owed as a result of a delay in the applicant’s ability to obtain the $5,000.00 supplemental benefit under Labor Code §139.48.
In McFarland, the defendants stipulated that the penalty claim for the defendant’s delay in providing a Labor Code §4658.7 voucher was previously resolved by agreement of the parties. Thereafter, a second penalty under Labor Code §5814 was alleged claiming the defendants original delay in issuing the voucher under Labor Code §4658.7 resulted in a delay of the applicant being able to collect the $5,000.00 supplemental payment.)
The matter proceeded to Trial with the Judge ruling the defendant was not liable for a second Labor Code §5814 penalty. The applicant thereafter file for reconsideration. In incorporating the Workers’ Compensation Judge’s decision, the Court denied the applicant’s Petition for Reconsideration and agreed that Labor Code §139.48 benefits are not a part of Division 4 of the Labor Code, but instead are supplemental payments to workers whose permanent disability benefits are disproportionately low in comparison to their earnings loss. The supplemental benefits under Labor Code §139.48 are not the liability of the injured worker’s employer, but are made from a fund administered by the Administrative Director. Thus, the supplemental benefits are not compensation under Division 4 of the Labor Code and are not compensation as contemplated in Labor Code §5814. The Court noted it would be fundamentally unfair to impose two delay penalties for one act of delay. Issuing two penalties for the same act would not accomplish Labor Code §5814’s mandate that the Appeals Board shall use it’s discretion to accomplish a fair balance and substantial justice between the parties (45 C.W.C.R. 288). Ultimately, the Court found that all consequences of the original delay in providing the Labor Code §4658.7 voucher were encompassed within the parties’ original resolution of the penalty claim.
The McFarland case provides an argument that a delay in issuing the voucher under Labor Code §4658.7 is limited in terms of exposure of up to $6,000.00. (Please also remember that a Labor Code §5814 penalty is not automatically calculated based upon the potential full value of the voucher of $6,000.00. The voucher has no monetary value until such time it is converted when the injured worker receives the training.) Furthermore, allegations of a penalty owed against Labor Code §139.48 supplemental payments by the Administrative Director should be disputed as benefits paid by the Administrative Director are not subject to a second penalty for delay.