ADJ9313967 · May 14, 2024

Defendant failed to prove entitlement to credit for LTD payments because it did not produce the actual LTD policy, did not prove intent that LTD payments were an advance on workers' compensation benefits, and relied on an employee handbook which was insufficient evidence.

From the decision · page 2Based on our review of the record and applicable law, we conclude that defendant has not met its burden of proving that it is entitled to credit for LTD benefits against its liability for temporary disability indemnity. We will grant reconsideration, rescind the WCJ's decision, and replace it with a decision denying credit. We also include a finding that applicant must be paid temporary disability indemnity at the weekly rate required by Labor Code section 4661.5. To provide applicant with notice, we will defer the issue of attorney's fees.

From the decision · page 6We also find merit in applicant's contention that because defendant never paid temporary disability indemnity and the benefit will be paid well past two years from the date of injury, she is entitled to have the indemnity paid at the rate required by Labor Code section 4661.5. (See

Defendant did not produce the actual LTD insurance policy as ordered by the Board.

Favours Applicant prevailed

Without the actual policy, defendant failed to meet its burden to prove entitlement to credit for LTD payments.

From the decision · page 3In his Report on applicant's petition for reconsideration herein, the WCJ does not ignore the fact that in our March 13, 2023 decision, we remanded the case to the WCJ with a directive to obtain the actual LTD insurance policy from defendant. However, the WCJ acknowledges that this was not done. Instead, the WCJ states in his Report that defendant "did provide the [WCJ] with clarification per the benefit handbook provided to all employees inclusive of the applicant."

Applicant testified she paid for the LTD policy and was unaware that LTD payments would offset temporary disability benefits.

Favours Applicant prevailed

This testimony undermined defendant's claim for credit and supported the conclusion that payments were not intended as an advance on workers' compensation benefits.

From the decision · page 5Here, defendant presented no evidence regarding either the employer or employee's intent with regard to the long-term disability payments applicant received. Indeed, the only evidence concerning that issue was applicant's testimony at trial that the way he remembered it, he paid for the policy. Although the force of that testimony was diminished by applicant's further statement that he did not remember "exactly how it worked," the resulting ambiguity does not support defendant's claim for credit. This is because defendant was asserting the claim of credit for LTD payments and it had the affirmative burden of proof on that issue. (Lab. Code, § 5705; Appleby, supra.) Presenting ambiguous and uncertain testimony did not carry that burden.

Labor Code section 4903.1(a)(3)(A)

Labor Code section 4903.1(a)(3)(A) allows a lien for benefits paid by a group disability policy for the same days as temporary disability indemnity, but only if the policy provides for coordination of benefits.

The Board found defendant did not meet its burden to prove entitlement to credit under this statute because the actual LTD policy was not produced and the handbook was insufficient.

From the decision · page 4(3)(A) If the appeals board issues an award finding that an injury or illness arises out of and in the course of employment and makes an award for temporary disability indemnity, the appeals board shall allow a lien as living expense under Section 4903, for benefits paid by a group disability policy providing loss-of-time benefits and for loss-of-time benefits paid by a self-insured employee welfare benefit plan. The lien shall be allowed to the extent that benefits have been paid for the same day or days for which temporary disability indemnity is awarded and shall not exceed the award for temporary disability indemnity. A lien shall not be allowed hereunder unless the group disability policy or self-insured employee welfare benefit plan provides for reduction, exclusion, or coordination of loss-of-time benefits on account of workers' compensation benefits.

Labor Code section 4909

Labor Code section 4909 requires that payments credited must be intended as an advance on compensation to become due.

Defendant failed to prove intent that LTD payments were an advance on workers' compensation benefits, so credit was denied.

From the decision · page 4[...] Labor Code section 4909 authorizes the Appeals Board to award a defendant credit for payments made during a time period that there was not a legal obligation to do so. [] (Maples v. Workers' Comp. Appeals Bd. (1980) 111 Cal.App.3d 827

Appleby v. Workers' Comp. Appeals Bd. (1994)

Appleby v. Workers' Comp. Appeals Bd. (1994) and Ott v. Workers' Comp. Appeals Bd. (1981) require clear intent by employer and employee for credit to LTD payments.

The Board applied these cases to require clear intent for credit, which defendant did not prove.

From the decision · page 5[168 Cal. Rptr. 884, 45 Cal.Comp.Cases 1106].) An employer may be entitled to credit for payments made under an employer-provided private disability plan. (Appleby v. Workers' Comp. Appeals Bd. (1994) 27 Cal.App.4th 184 [32 Cal. Rptr. 2d 375, 59 Cal.Comp.Cases 520] (Appleby).) However, in order to obtain credit, the payments must have been, "clearly intended by both employer and employee as an advance on compensation to become due." (Ott v. Workers' Comp. Appeals Bd. (1981) 118 Cal.App.3d 912 [173 Cal. Rptr. 648, 46 Cal.Comp.Cases 545] (Ott); Sea-Land Serv. v. Workers' Comp. Appeals Bd. (Lopez) (1996) 14 Cal.4th 76 [58 Cal. Rptr. 2d 190, 925 P.2d 1309, 61 Cal.Comp.Cases 1360].)

Labor Code section 4661.5

Labor Code section 4661.5 requires payment of temporary disability indemnity at an increased rate if not paid within two years of injury.

Applicant is entitled to increased temporary disability indemnity rate because defendant never paid TTD and the benefit will be paid well past two years from injury.

From the decision · page 6We also find merit in applicant's contention that because defendant never paid temporary disability indemnity and the benefit will be paid well past two years from the date of injury, she is entitled to have the indemnity paid at the rate required by Labor Code section 4661.5. (See

Applicant's testimony that she paid for the LTD policy and was unaware that LTD would offset TTD benefits

From the decision · page 5Here, defendant presented no evidence regarding either the employer or employee's intent with regard to the long-term disability payments applicant received. Indeed, the only evidence concerning that issue was applicant's testimony at trial that the way he remembered it, he paid for the policy. Although the force of that testimony was diminished by applicant's further statement that he did not remember "exactly how it worked," the resulting ambiguity does not support defendant's claim for credit. This is because defendant was asserting the claim of credit for LTD payments and it had the affirmative burden of proof on that issue. (Lab. Code, § 5705; Appleby, supra.) Presenting ambiguous and uncertain testimony did not carry that burden.