Work-related injuries can create serious financial problems for an individual or family. Your medical bills are piling up while you have no assurance of returning to work, depending on the severity of your injuries. Workers’ comp benefits become the only saving grace to ease your financial troubles. But what if workers comp payments in California don’t come through or are late? What happens then? How do you move forward to claim your benefits or compensate for the loss?
Timeframe for Payments
Before we delve further into the ‘what ifs,’ we need first to assess the timeframe within which the payments are made and the ‘why’ behind the delay. As per California, once the workers’ comp claim is filed and accepted, temporary disability payments begin within 14 days of the employers receiving the notification of injury. The payments replace the wages lost due to the absence because of the injury. Initial medical treatment benefits, such as coverage for doctor visits, hospital visits, medications, diagnostics, etc., should also be provided so the worker receives care without any delays.
Failure to do so will result in hefty fines and workers’ compensation penalty payments.
Why do Delays in Workers’ Compensation Benefits Happen?
Although payments are always expected to be on time, there might be delays in dispensing workers comp benefits. It can be due to the following reasons:
- Employer delays: Employers may fail to report the injury promptly or make errors in the paperwork during submission, which can slow down the process.
- Disputes over claim validity: Employers or insurance companies may dispute the claim’s extent of injury, etc., resulting in a delay in payment as the claim needs to be investigated. Insurance companies might ask for additional documents for investigation or intentionally delay payments to minimize payouts.
- Missing documentation: Errors in filing claims, such as missing or incomplete information, can delay payment.
- Delay in medical reports: Doctors and hospitals can take time to submit their evaluations. Insurance companies can also ask for a second evaluation from an independent reviewer, further delaying the process.
- Errors in processing: Administrative mistakes or errors in claim processing can lead to payment delays.
These can lead to delays and penalties for late workers’ comp payments. But how much will that penalty cost?
Well, according to California state laws, the insurance company must pay late payment penalties between 10% and 25%, depending on the type of benefit and the reason for the delay. This is defined by Labor Code Section 4650 and California Labor Code 5814.
What Happens if Payments are Late?
When workers’ compensation payments are delayed, it can create significant financial and emotional strain for injured workers. Timely payments are essential for covering medical expenses, daily living costs, and other financial responsibilities during recovery. Usually, for workers’ comp payments in California that are late, penalties are imposed that the insurance company has to pay. These are divided into two types.
1. Late Payments:
As per California law, if the payment is late without a reasonable excuse, an automatic penalty of 10% of the unpaid amount is added for temporary or permanent disability benefits. As per Labor Code Section 4650, the worker doesn’t have to prove the delay is unreasonable. Initially, every injured worker is assigned temporary disability benefits, irrespective of the severity of the case. If the payments are not made within 14 days of the start of payments or every two weeks, then the insurance company/employer must pay an additional 10% on top of the delayed benefit amount.
Section 4650 can apply anytime a disability payment is due or when an injured worker wins at trial. It is important to note that both temporary and permanent disability are paid every two weeks; the disability rates differ.
For example, the temporary disability rate is two-thirds of the weekly earnings, while the permanent disability rate is $290 weekly for most workers, depending on the severity of the injury/disability. So, a worker who is injured and earns $300 per week will get a compensation of $200 per week, i.e., two-thirds of their salary.
2. Discretionary Penalties:
When payments are delayed due to unreasonable reasons, an injured worker may be entitled to a penalty of up to 25% or $10,000, whichever is less, as per California Labor Code 5814. The injured worker needs to prove that the delay was unreasonable to claim the higher penalty. This applies to various types of payments, including medical treatment, settlement funds, and mileage reimbursement. This penalty is meant to further incentivize prompt payments by punishing negligent behavior.
If the insurance company discovers that the payments are late before the worker claims the penalty, then they have 90 days to pay the amount plus a 10% automatic penalty. The penalty claim needs to be made within two years from the due date of the original payment. Under California Labor Code 5814, the claim can be made for:
- Temporary disability
- Permanent disability
- Medical treatment
- Settlement payments
- Mileage reimbursement
- Death benefits
Which Reasons are Justified as Unreasonable Delays?
To delve deeper into California Labor Code 5814 and claim penalties, it is essential to understand what is justified as “unreasonable delays.” While there is no set definition for unreasonable delays, the outcome heavily depends on it and differs from case to case. For example, a clerical error, such as a discrepancy in name, cannot be regarded as an unreasonable reason. However, the case might differ if the claim amount or the receiver’s address is wrong. The factors that determine unreasonable delays are:
- The amount of the payment delayed and the length of the delay
- Was the delay accidental, and was it promptly corrected?
- Is there a history of delayed payment? Was it a single instance of human error, or has it been repeated?
- Were there any statutory, regulatory, or other requirements stating that payment was to be made within a specified number of days?
- Was the delay due to the realities of processing benefits claims or the legitimate needs of administering workers’ compensation insurance?
- Was there institutional neglect by the insurer, such as whether the insurer provided a sufficient number of adjusters to handle the workload, provided sufficient training to its staff, or otherwise configured its office or business practices to make errors improbable?
- Did the employee contribute to the delay by promptly failing to notify the employer/insurer of it?
- What is the effect of the delay on the injured worker?
Difference Between Labor Code Sections 4650 and 5814
While Labor Code Section 4650 penalizes any delay in disability payments with an automatic 10% penalty, Section 5814 focuses on unreasonable delays or refusals of payment for up to 25%. Section 4650 is a strict liability provision for late payments, while Section 5814 addresses unreasonable delays and requires proof of misconduct.
Additionally, both can be applied to a case. Suppose an injured worker claims a penalty under California Labor Code 5814, and it also happens to be a temporary/permanent disability that is late. In that case, 10% can be added per the automatic payment penalty. However, the penalty will not exceed 25% as a whole.
How do you Claim the Penalty for Late Workers’ Comp Payment?
If you think your workers’ compensation payments in California are delayed, you need to notify the insurance company in writing. Reach out to your claims adjuster or the insurance company handling your case and tell them about the delay. They may be able to resolve the issue quickly.
If you face significant delays or cannot resolve the issue with the insurance company, you can contact a workers’ compensation attorney. Legal representation will help protect your rights and guide you through the complicated process of requesting penalties.
How do you File a Claim for a Penalty under California Labor Code 5814?
An injured worker can file a petition if they believes the delay is unjustified. They need to do so in writing to the insurance company as soon as they suspect a delay in payment. The notification should highlight the delay and explicitly claim the penalty under 5814. If they fail to claim the penalty, the insurance company can get away with paying the automatic penalty of 10% to correct their mistake, and the worker loses the ability to collect the 25% penalty.
Claim your Rights by Filing a Penalty Claim with Joe Pluta
The process of waiting and delays can be pretty frustrating. A free workers’ compensation consultation can help resolve this. While direct communication is advised with insurance companies, the delays and redirections can be hassling. Our attorneys at Joe Pluta can easily assist and navigate the complexities of the workers’ comp in California, guide you on your rights, and assist in building your case under California Labor Code 5814 with the California Workers Compensation Appeals Board.
Conclusion
Delays in workers’ compensation payments are not just mere inconveniences. Penalties outlined in Sections 4650 and 5814 serve as critical safeguards, ensuring that injured workers are not left stranded when they need support the most. These laws demand accountability, creating a fairer, more transparent system for all.
Understanding these penalties is empowering for workers. It’s not just about financial recovery—it’s about standing up for your rights and ensuring justice is served. The workers’ compensation system isn’t perfect, but penalties like these are steps toward creating a system that truly supports the injured when they need it most.
FAQs
1. What should I do if my workers’ compensation payment is late?
If your payment is delayed, contact your employer or the insurance company to inquire about the delay. Document all communications and consult with a workers’ compensation attorney if necessary.
2. What is the penalty for late workers comp payment?
Different penalties vary from case to case. Section 4650 imposes an automatic 10% penalty for late disability payments – temporary or permanent- while Section 5814 imposes up to a 25% penalty for unjustified payment delay.
3. How do we prove that a worker’s comp payment delay was unreasonable?
To prove a delay was unreasonable, you must provide evidence such as communication records, missed deadlines, or similar behavior patterns. An attorney can help strengthen your case and file a claim under California Labor Code 5814.
4. Does the automatic penalty under Section 4650 apply to all delayed payments?
No, Labor Code Section 4650 applies only to late payments of temporary or permanent disability benefits.
5. Can penalties under Sections 4650 and 5814 be combined?
Yes, Sections 4650 and 5814 penalties can sometimes apply to the same delayed payment, depending on the circumstances.
