In this published case, the Third District reversed the WCAB, finding that the Uninsured Employers Fund (UEF, also known as the UEBTF) could NOT be penalized with sanctions under Labor Code Section 5813, despite its knowing refusal to timely pay applicant's attorney fees.
The facts involved a truck driver who was killed while working for an illegally uninsured employer. The parties agreed that death benefits would be paid by the UEF, including $17,400 in attorney fees.
After months of not being paid despite repeated requests, the applicant's law firm petitioned for a "25% penalty over [the] attorney fees that remain unpaid," plus interest "pursuant to [sections] 5800 and . . . 5814.5."
Months after the Award (and repeated requests), the UEF finally paid the fees but without the penalties or interest, advising the firm that such additional payment was prohibited by Section 3716.2. The law firm then filed an amended petition against the UEF for "sanctions pursuant to [section] 5813 and attorney fees pursuant to [section] 5814.5" for the fund's delay in payment of applicant's attorney fees."
Finding that the law firm had contacted the UEF on "no less than [five] separate" occasions, the Workers' Compensation Judge found the UEF's failure to make the attorney fee payment after repeated contacts constituted "bad faith action under Labor Code Section 5813."
Concluding that a sanction against the UEF for bad faith action was NOT prohibited by section 3716.2, the WCJ ordered the UEF to pay a sanction of $100 to the Workers' Compensation Appeals Board (WCAB). The WCJ deferred, to another date, "the issue of attorney fees."
The UEF sought reconsideration, asserting the California Supreme Court's interpretation of section 3716.2 in the DuBois case (5 Cal.4th 382) -- which precludes an award of penalties pursuant to section 5814 - also applies equally to an award of sanctions pursuant to section 5813.
Granting the petition for reconsideration, the WCAB concluded (1) a "sanction" imposed as authorized by section 5813 is different than a "penalty" imposed pursuant to section 5814, and (2) because section 3716.2 states only that the UEBTF is not liable for "any penalties," it does not preclude an award of "sanctions" pursuant to section 5813.
Accordingly, the WCAB held that "[w]hen a sanction is warranted under section 5813 and [CCR, Title 8] Rule 10561, [the UEBTF] may be sanctioned, like any other party."
However, since the WCAB found that there was a "complete lack of evidence on why the payment of attorney's fees was delayed," it ruled that the WCJ erred in holding that the UEBTF acted in bad faith in delaying the payment.
The WCAB returned the matter to the WCJ "for further proceedings, including testimony by [the UEBTF's] claims adjuster, to determine the reason for the delayed payment of attorney's fees," and ordered that "[b]efore imposing a sanction, the WCJ should consider the requirements of section 5813 and Rule 10561 and decide, based on the evidence, whether [the UEBTF's] failure to comply with the award of attorney's fees resulted from willful or bad faith actions, or from mistake, inadvertence, surprise, or excusable neglect."
The Court of Appeal's published opinion short-circuited all that by annulling the WCAB's order remanding the case, ruling simply that the UED could NOT be sanctioned under Section 5813.
The Court noted that the Legislature has specified that the "UEBTF shall not be liable for any penalties or for the payment of interest on any awards." (§ 3716.2.) Thus, "sections 3716 and 3716.2, defining the obligations and limiting the liability of the [UEBTF], do not permit imposition of any penalty mandated by section 5814 against the [UEBTF], even for its own unreasonable delay in paying valid claims for workers' compensation." (DuBois, supra, 5 Cal.4th at p. 385.)
It ruled that the same limitation of liability specified by section 3716.2 also precludes the imposition of a sanction against the UEBTF that otherwise could be imposed against "a party, the party's attorney, or both" under Section 5813.
The case is Duncan v. WCAB (Silva).
To read the full opinion,
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