California: Delay in Payment of Disability Retirement Advances: Is it Subject to an LC 5814 Penalty?

In Gage v. County of Sacramento, 2016 Cal. Wrk. Comp. P.D. LEXIS --, the WCAB, reversing the WCJ in a split panel opinion, held that the defendant’s delay in the payment of disability retirement advances to the applicant deputy sheriff who suffered an industrial injury to her lumbar spine on 9/14/2011 was not subject to a Labor Code § 5814 penalty.

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The WCAB panel majority concluded that:

(1) Advances of disability retirement pursuant to Labor Code § 4850.4 [LC 4850.4] are not equivalent to regular workers’ compensation benefits, but rather are obligations of the employer and the employer’s retirement system that are administered through a separate statutory process and governed by an independent retirement board,

(2) Payment of disability retirement benefits differs from industrial disability leave under Government Code § 19870(a) [GC 19870], on which a Labor Code § 5814 [LC 5814] penalty can be imposed, because industrial disability leave is paid to state workers as a form of “temporary disability” akin to workers’ compensation benefits, whereas the payment of disability retirement advances is not equivalent to the payment of workers’ compensation benefits,

(3) There are no provisions extending WCAB jurisdiction to Labor Code § 4850.4 benefits such as there are for special payments provided to public safety employees under Labor Code § 4850 [LC 4850], albeit without authority to impose the Labor Code § 5814 penalty, and

(4) Jurisdiction should not be inferred to cover payments that are administered under a separate system and are not equivalent or paid in lieu of a regular workers’ compensation benefit.

Commissioner Sweeney, dissenting, would uphold the WCJ’s finding that disability retirement advances under Labor Code § 4850.4 constitute “compensation” under Labor Code § 3207 [LC 3207] and are subject to the penalty provisions in Labor Code § 5814 if delayed or denied. Commissioner Sweeney reasoned that Labor Code § 3207 plainly defines “compensation” as including every benefit or payment conferred by Division 4, which encompasses Labor Code § 4850.4, and that the WCAB has jurisdiction to enforce the defendant’s obligation to pay “compensation” due under Labor Code § 4850.4.

Commentary:

The majority in Gage points out that Labor Code Section 4850.4(d) mandates that a public entity make advanced disability pension payments to the injured public safety employee provided that certain conditions are met. Though there can be no dispute that Labor Code Section 4850.4(d) confers a very specific benefit to the injured public safety worker, the majority’s conclusion that the payment of these benefits cannot be the subject of a Labor Code Section 5814 penalty lacks much in the way of legal analysis. The majority argues that there is no “regular worker’s compensation benefit equivalent to the disability retirement benefit advances”. Additionally, the majority emphasizes that there is no Labor Code provision expressly conferring jurisdiction on the WCAB concerning the timely payment of these benefits.

However, the majority appears to have glossed over the primary point being made by both the underlying WCJ’s decision as well as the dissent’s opinion. When enacting Labor Code Section 4850.4(d), the legislature clearly mandated the payment of a benefit under Division 4 of the Labor Code payable to the public safety employee. As this benefit falls under the definition of “compensation” under Labor Code Section 3207, there is really no legal authority to suggest that the unreasonable delay in the payment of this benefit could not be the subject of a Labor Code Section 5814 penalty.

In conclusion, there are obviously strong public policy concerns with imposing a workers’ compensation penalty on a public entity that does not comply with Labor Code Section 4850.4. Many public entities continue to face difficult economic circumstances and imposing an additional burden on them may seem to be unduly harsh. However, it appears to strain the plain meaning of the statutes in question to argue that these payments do not constitute “compensation” and cannot be the subject of penalties in the WCAB arena when they are unreasonably delayed. Warning: Ms. Gage is still within the period of time in which she could appeal the WCAB’s decision. It will be very interesting to see whether she does appeal the decision and ultimately what the Third District Court of Appeal does with this particular issue.

Read the Gage noteworthy panel decision.

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