ADJ7932563 · August 17, 2022

The penalties and sanctions issues were not litigated or adjudicated at trial, thus not denied by operation of law under section 5815; the 5-year limitation of section 5804 does not bar these claims; removal was denied as no irreparable harm or severe prejudice would result.

From the decision · page 1Defendant seeks removal of an order setting this matter for trial (Order) issued on the November 2, 2020 by a workers' compensation administrative law judge (WCJ). The Order was issued following applicant's Declaration of Readiness to Proceed on applicant's issues of penalties for failure to pay permanent disability (Lab. Code, § 4650(d)), and petition for sanctions and penalties for failure to pay temporary disability (penalties and sanctions issues).

Penalties and sanctions issues were raised at trial but not litigated or adjudicated; no findings or awards were made on these issues by the WCJ.

Favours Applicant prevailed

This meant the issues were not denied by operation of law under section 5815, allowing them to be litigated later.

From the decision · page 2FACTS Trial commenced in this matter on September 3, 2019, and was thereafter continued to November 14, 2019 and January 29, 2020. (See Minutes of Hearing and Summary of Evidence (MOH) dated September 3, 2019, November 14, 2019, and January 29, 2020.) The penalties and sanctions issues were raised on the first day of trial: "a) Applicant claims 4650(d) penalties for failure to pay PD and petition for sanctions and penalties per temporary disability." (MOH, September 3, 2019, p. 3, § 8.) The WCJ issued a Findings and Award on April 21, 2020 (F&A). (F&A, April 21, 2020.) The WCJ did not issue any findings of fact related to the penalties and sanctions issues, nor did the WCJ issue any orders or awards related to those issues. (Ibid.) There is no discussion of these issues in the Opinion on Decision. (Id., Opinion on Decision, April 21, 2020.) On April 24, 2020, applicant requested amendment of the F&A related to the penalties and sanctions issues.

Applicant did not testify about late indemnity payments and defendant did not present rebuttal evidence or cross-examine on this issue.

Favours Applicant prevailed

This supported the conclusion that the penalties and sanctions issues were not actually litigated, preventing issue preclusion.

From the decision · page 4Next, defendant contends that the penalties and sanctions issues were litigated and adjudicated at trial, and contends that applicant is therefore precluded from re-litigating the issues under the doctrine of issue preclusion.5 We disagree. The record of this case indicates that although the penalties and sanctions issues were identified in the initial MOH, neither the parties nor the WCJ intended to adjudicate these issues at trial. For example, in addition to the WCJ not including the issues in the F&A or Opinion on Decision, applicant did not testify regarding any late indemnity checks. Also, and more telling, there is no rebuttal evidence in the record from defendant, i.e., defendant neither called its own witnesses nor cross-examined applicant regarding late indemnity payments.6 We therefore disagree that applicant can be precluded from litigating issues that were never litigated, and which were never subject to a final decision on the merits. (See DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824 [2015 Cal. LEXIS 4652] ["issue preclusion applies...after final adjudication...of an identical issue...actually litigated and necessarily decided in the first suit..."].)

The 5-year limitation of Labor Code section 5804 does not apply to penalties and sanctions claims under sections 4650 and 5814.

Favours Applicant prevailed

This allowed the Appeals Board to retain jurisdiction to enforce penalties and sanctions beyond the 5-year period.

From the decision · page 5Finally, the adjudication and/or award of penalties and/or sanctions under section 4650 or 5814, are not barred by the 5-year time limit of section 5804. (Lab. Code, § 5804 ["No award of compensation shall be rescinded, altered, or amended after five years from the date of the injury except upon a petition by a party in interest filed within such five years..."], emphasis added.)8 The "authority [of the WCJ and the Appeals Board] under section 5803 to enforce its awards, including

Labor Code section 4650(d)

Penalties under Labor Code section 4650(d) are self-executing and must be paid without application unless exceptions apply.

The burden to establish an exception is on the employer or carrier; the WCJ and Appeals Board cannot deny penalties if liability exists.

Labor Code section 5815

Issues not determined by the Appeals Board are deemed decided adversely to the party who raised them (Labor Code section 5815).

The penalties and sanctions issues were not adjudicated or litigated, so section 5815 does not apply to deny them by operation of law.

From the decision · page 34 "Every order, decision or award, other than an order merely appointing a trustee or guardian, shall contain a determination of all issues presented for determination by the appeals board prior thereto and not theretofore determined. Any issue not so determined will be deemed decided adversely as to the party in whose interest such issue was raised." (Lab. Code, § 5815.)

Labor Code section 5804

No award of compensation shall be rescinded, altered, or amended after five years from the date of injury except upon a timely petition (Labor Code section 5804).

The 5-year limitation does not bar penalties and sanctions claims which are not subject to this limitation.

From the decision · page 5Finally, the adjudication and/or award of penalties and/or sanctions under section 4650 or 5814, are not barred by the 5-year time limit of section 5804. (Lab. Code, § 5804 ["No award of compensation shall be rescinded, altered, or amended after five years from the date of the injury except upon a petition by a party in interest filed within such five years..."], emphasis added.)8 The "authority [of the WCJ and the Appeals Board] under section 5803 to enforce its awards, including

Applicant did not testify regarding any late indemnity checks; no rebuttal evidence from defendant; no cross-examination on late indemnity payments.

From the decision · page 4Next, defendant contends that the penalties and sanctions issues were litigated and adjudicated at trial, and contends that applicant is therefore precluded from re-litigating the issues under the doctrine of issue preclusion.5 We disagree. The record of this case indicates that although the penalties and sanctions issues were identified in the initial MOH, neither the parties nor the WCJ intended to adjudicate these issues at trial. For example, in addition to the WCJ not including the issues in the F&A or Opinion on Decision, applicant did not testify regarding any late indemnity checks. Also, and more telling, there is no rebuttal evidence in the record from defendant, i.e., defendant neither called its own witnesses nor cross-examined applicant regarding late indemnity payments.6 We therefore disagree that applicant can be precluded from litigating issues that were never litigated, and which were never subject to a final decision on the merits. (See DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824 [2015 Cal. LEXIS 4652] ["issue preclusion applies...after final adjudication...of an identical issue...actually litigated and necessarily decided in the first suit..."].)