Trial Court: Workers' Compensation Appeals Board Workers' Compensation Judge: (WCAB Case No. ADJ3326487)
The opinion of the court was delivered by: Jenkins, J.
CERTIFIED FOR PUBLICATION
Petitioners Coca-Cola Enterprises Inc. and Sedgwick CMS (Coca-Cola and Sedgwick; collectively, defendants) petitioned for review of an order by the Workers' Compensation Appeals Board (Board), in which the Board denied reconsideration of an award issued by a Workers' Compensation Judge (WCJ). The WCJ awarded respondent Isaac Espinoza permanent disability (PD) benefits and imposed a penalty under Labor Code section 5814*fn1 for defendants' underpayment of temporary total disability (TTD) benefits.
Defendants claim the WCJ and the Board erred by: (1) relying on an incorrect occupational group number in determining Espinoza's PD rating; (2) imposing a penalty under section 5814; (3) imposing "multiple" penalties on the same type of benefit (TTD); and (4) calculating the amount of the penalty.
We granted the petition, only as to one issue relating to the calculation of the penalty.*fn2 We now hold that the WCJ erred in calculating the penalty. Accordingly, we will annul the Board's decision on that point and direct modification of the award.
I. TTD RATES AND PENALTIES FOR LATE PAYMENTS
Section 4653 provides that, when a worker is temporarily totally disabled, TTD benefits are payable in the amount of "two-thirds of the average weekly earnings [(AWEs)] during the period of such disability, consideration being given to the ability of the injured employee to compete in an open labor market." Section 4453, subdivision (a) specifies minimum and maximum limits on the amount of AWEs that may be considered for purposes of this calculation. The limits are different for different time periods (see § 4453, subd. (a)), and the limits in effect on a worker's date of injury generally apply (§ 4453, subd. (d)). However, under section 4661.5, when any TTD payment is made two years or more after the date of injury, the amount of the payment is to be computed in accordance with the limits in effect on the date of payment, not the date of injury. (§ 4661.5; see Hofmeister v. Workers' Comp. Appeals Bd. (1984) 156 Cal.App.3d 848, 852 (Hofmeister).)
Section 4650, subdivision (d) provides for an automatic 10 percent penalty on a late TTD payment. In addition, section 5814 provides for a penalty for an unreasonable delay or refusal of benefits, including an unreasonable failure to pay at the correct rate. (§ 5814, subd. (a); see Mote v. Workers' Comp. Appeals Bd. (1997) 56 Cal.App.4th 902, 910-912 [penalty for "failure to pay at the correct adjusted statutory rate of TTD"]; Jardine v. Workers' Comp. Appeals Bd. (1984) 163 Cal.App.3d 1, 4-5, 7-8 [penalty for payment at permanent partial disability rate rather than permanent total disability rate]; Smith v. Workers' Comp. Appeals Bd. (2009) 74 Cal.Comp.Cases 984, 985.) Specifically, section 5814, subdivision (a) authorizes a penalty of up to 25 percent of the amount of the payment unreasonably delayed or refused, or up to $10,000, whichever is less;*fn3 this penalty is reduced by the amount of any penalty under section 4650, subdivision (d) on the same unreasonably delayed or refused benefit payment. (See § 5814, subd. (d).)
II. FACTUAL AND PROCEDURAL BACKGROUND
On July 16, 2004, Espinoza, while employed by Coca-Cola, sustained an industrial injury to his shoulders. Coca-Cola was permissibly self-insured; its claims were adjusted by Sedgwick. At the time of his injury, Espinoza's AWEs were approximately $1,195.92 per week.
Espinoza received TTD benefits during two periods of temporary total disability: (1) from February 7, 2005 through October 10, 2005; and (2) from October 9, 2006, through February 15, 2007. During both periods, he received benefits at the rate of $599.20 per week. On or after November 2, 2006 (i.e., during Espinoza's second period of TTD), Coca-Cola provided Sedgwick with a wage statement summarizing Espinoza's earnings. On March 21, 2007 (after both of Espinoza's periods of TTD had ended), Espinoza was paid a lump sum retroactively adjusting his benefit level for both TTD periods to $728 per week.
At a hearing before the WCJ, the parties submitted for decision the issues of Espinoza's level of PD and whether a penalty should be imposed for underpayment of TTD. The parties submitted these issues on the basis of stipulations and documentary evidence; no testimony was presented. Among other issues, the parties stipulated that the TTD rate Espinoza initially should have received was $728 per week; the rate later should have increased to $797.32 per week.
The WCJ issued a ruling determining Espinoza's level of PD and imposing a penalty for the underpayment of TTD. In calculating the penalty, the WCJ divided defendants' payments into three time periods--the payments made during Espinoza's two periods of TTD and the retroactive adjustment payment made in March 2007. First, for Espinoza's first period of TTD (February 7, 2005 through October 10, 2005), the WCJ found Espinoza was entitled to $728 per week; the WCJ thus imposed a penalty of 25 percent of the difference between that amount and the lower amount paid ($599.20 per week). Second, for the later period of TTD (October 9, 2006 through February 15, 2007), the WCJ found Espinoza was entitled to increased TTD benefits; the WCJ imposed a penalty of 25 percent of the difference between $840 per week and $599.20 per week for the period from October 9, 2006 until the provision of the wage statement,*fn4 and 25 percent of the difference between $797.32 per week and $599.20 per week from the provision of the wage statement through February 15, 2007. Third, as to the March 2007 retroactive adjustment payment, the WCJ found that ...