LC 4650(d) Penalties

LABOR CODE § 4650(d) increase will not be imposed when injury or indemnity benefits are disputed until the dispute is finally resolved.

Robertson v. Veterinary Centers of America; Zurich (BPD) ADJ 7275781

The case stands for the proposition that defendants are not liable for a LC § 4650 (d) automatic penalty if they have a legitimate dispute as to injury or indemnity benefits and once the dispute is resolved defendant pays the benefits within 14 days.

Failure to pay the LC § 4650 (d) penalty can be the basis for a LC § 5814 penalty.

Defendant contended they did not unreasonably fail to pay a LC § 4650 (d) penalty, because none was due. Defendant argues they disputed the period of disability until the time of the decision of the WCJ and paid the award within 14 days of its issuance.

LC § 4650 (d) states that when an indemnity payment is not timely paid, “the amount of the late payment shall be increased 10% and shall be paid, without application to the employee….” Unlike a penalty under LC § 5814, which applies when benefits are unreasonably delayed or denied, LC § 4650(d) is an “automatic, strict liability penalty.” (Rhiner 58 CCC 172)

However, a LC § 4650(d) increase will not be imposed when injury or indemnity benefits are disputed until the dispute is finally resolved.” (Lenion, Appeals Board en banc, 69 CCC 995)

The WCAB indicated that in this case defendant was disputing the period of temporary disability and claimed an overpayment of temporary disability. It appeared to the WCAB from the record that the parties had a genuine dispute about the days when applicant was working, and thus about the dates on which temporary disability was due. If so, defendant was not liable for the 10% increase.

Although the WCJ suggested in his report that the Lenion case only concerns disputed injuries, not accepted claims such as the one in this case. The Lenion case states that LC § 4650(d) is not applicable when “injury or indemnity benefits are disputed”, defendant is not necessarily liable for a 10% increase even though it accepted applicants claim. In the case or Mike v. WCAB (68 CCC 266, W/D) it was found that when defendant excepted the claim but disputed the temporary disability rate, and, after a finding of a higher rate, paid the difference within 14 days no automatic penalty was required.

If defendant failed to pay undisputed indemnity, however, then a LC § 4650(d) increase is appropriate. Furthermore, when a defendant automatically fails to add a required LC § 4650 (d) penalty, they may be subject to a separate penalty under LC section 5814. A portion of a payment that has been unreasonably delayed or refuse must be increased up to 25% or $10,000, whichever is less, and defendant may be liable for a reasonable attorney’s fees incurred in enforcing payment. (LC §§ 5814, 5814.5) LC § 5814 (d) (a) states that the payment shall be reduced by any amount paid under LC § 4650(d) on the same benefit payment.

The record in this matter according to the WCAB was not entirely clear. They could not determine whether defendant, by making a claim of overpayment for particular dates, was contesting applicant’s eligibility for temporary disability on those days or were arguing that an overpayment occurred for some other reason. The question is whether defendant failed to make indemnity payments that were undisputed at the time they were delayed beyond the usual 14 day deadline. The fact that defendant requested a credit for overpayment is not dispositive. A credit for overpayment of temporary disability is discretionary and must be approved by the WCJ. (Herrera 34 CCC 382)
The WCAB therefore remanded the matter for supplemental Findings and award. Upon return to the trial level, the WCJ should determine whether there was actually a dispute about indemnity benefits and issue a new decision accordingly.

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