Opinion
Wе consider the proper computation of penalties in workers’ compensation cases and, particularly, construe section 5814 of the Labor Code which provides for the assessment of a 10 percent penalty when payment of benefits has been unreasonably delayed or refused. In this case, petitioner (applicant) sought three separate penalties in the amount of $1,370 each, assessed against an award of permanent disability benefits in the total amount of $13,702.50. The Workers’ Compensation Appeals Board (board) allowed a single $1,370 penalty.'As we will explain, we have concluded that the penalty was properly imposed, that additional penalties may have been appropriate, and that the board should have the opportunity to reconsider the matter of the additional penalties in the light of the principles which we express herein.
Applicant was injured in an industrial accident on August 22, 1975. On August 27, 1975, respondent, employer’s insurance carrier (carrier), advised applicant that temporary disability benefits would commence as of August 23, and soon thereafter such benefits, at the rate of $117 per week, were paid to applicant. Carrier did not inform applicant of his right to reimbursement for any transportation expenses related to necessary medical examinatiоns.
Thereafter, during 1975 and early 1976, applicant incurred travel expenses in submitting to medical examinations by two physicians, and on Januaiy 30, 1976, applicant’s attorney requested reimbursement to applicant of these expenses in the sum of $62.72. Carrier acknowledged the letter and requested itemization of the dates of the examinations. Applicant responded by filing a petition with the board on April 27, 1976, requesting assessment of the statutory 10 percent рenalty against carrier for its failure to reimburse travel expenses “within a reasonable time after demand.” The petition requested imposition of the penalty in addition to other benefits for temporary disability and further medical treatment incurred subsequent to February 19, 1976.
In June 1976, applicant submitted an itemized statement of claimed travel expenses, and carrier voluntarily paid the $62.72 claim approxi *820 mately six weeks later prior to the heаring on applicant’s petition for a penalty.
In August 1976, carrier notified applicant that it was terminating further temporary disability payments because applicant’s condition had become permanent and stationary as of August 10. The notice further advised applicant that, by carrier’s calculations subsequently proven incorrect, the previous payments included a four-day overpayment, related to the fact that applicant had attempted to work on four different occasions.
Despite the termination of temporary disability benefits, carrier did not immediately commence permanent disability payments. Applicant’s attorney advised carrier in late August 1976 that such payments should be made “to avoid the possibility of a penalty.” On September 13, 1976, applicant filed his second formal petition with the board, seeking “separate and distinct 10% penalties” for the separate delays (1) in failing to advance permanent disability benefits, and (2) in claiming the four-day overpayment credit without prior board authorization. Thus, as of September 1976, applicant had sought three separate 10 percent penalties pursuant to the two petitions then pending before the board.
Carrier answered the second petition on September 22 and made its first advance permanent disability payment to applicant on September 29, no formal petition for an award of such benefits having yet been filed. The payment reflected the claimed four-day credit for overpayment of temporary disability benefits. Later, carrier paid to applicant the approximately $66 deducted for the credit, because it learned that applicant was never paid for the four days on which he attempted to work.
Applicant’s two petitions werе consolidated and heard in March 1977. The parties stipulated to a permanent disability award rated at 42Vi percent. The compensation judge, observing that applicant was entitled to temporary disability benefits which were already “fully compensated,” awarded applicant permanent disability benefits in the amount of $13,702.50, and assessed a single 10 percent penalty on that sum, on the general ground that carrier “did unreasonably refuse to provide compensation benefits.” The penalty was based solely upon carrier’s six-week delay in advancing permanent disability payments.
Applicant sought reconsideration from the board, contending that two additional penalty assessments were appropriate. The board, in affirming *821 the judge’s award of a single penalty, stated that although the assessment of “multiple penalties for successive delays in the factual context оf this case” was “discretionary” no abuse thereof occurred by reason of the award of a single 10 percent penalty.
The board and the parties have requested us to clarify the effect of section 5814 in situations involving asserted successive, preaward delays in different types of benefit payments. The specific issues presented are: (1) Whether in the assessment of the 10 percent penalty preaward and postaward delinquencies are to be treated similarly; (2) whether penalties may be assessed for an unreasonable delay in paying allegedly “de minimis” amounts of benefits; (3) whether multiple 10 percent penalties may be assessed for successive preaward delays in the payment of compensation benefits; and (4) whether the penalty for a preaward delinquency affecting only a particular class of benefits owing the applicant must be assessеd against the entire amount of the ultimate aggregate award, including benefits of types which have been promptly paid.
As will appear, we have concluded that if a particular delinquency is found unreasonable by the board, the assessment of a 10 percent penalty is mandatoiy under section 5814, whether or not the delinquency occurs prior to the issuance of a formal award or involves amounts seemingly “de minimis.” We have further concludеd that multiple penalties are mandatory for each separate delinquency, but that each penally must be assessed only against the class of benefits which was actually delayed or refused.
We preface our discussion of the foregoing issues by noting that section 5814 provides: “When payment of compensation has been unreasonably delayed or refused, either prior to or subsequent to the issuance of an award, the full amount оf the order, decision or award shall be increased by 10 percent. The question of delay and the reasonableness of the cause therefor shall be determined by the appeals board in accordance with the facts. Such delay or refusal shall constitute good cause under Section 5803 to rescind, alter or amend the order, decision or award for the purpose of making the increase provided for herein.”
1. Preaward Penalties
It is argued that thе amount of the statutory penalty varies depending on whether the delinquency occurred before or after the
*822
award. Section 5814, however, expressly mandates the imposition of a penalty for delinquencies occurring “either prior to or subsequent to the issuance of an award . . . .” Accordingly, it is now well established that if the carrier unreasonably delays in advancing compensation benefits prior to and in anticipation of an awаrd, then the statutory penalty should be assessed.
(Kerley
v.
Workmen’s Comp. App. Bd.
(1971)
Similarly, we see no reason why the
amount
of the penalty should vary depending on whether the delinquency occurred prior or subsequent to the award. It is true that until an award is entered or decision issued the precise amount of the penalty may be difficult to determine. (See, e.g.,
Daniels
v.
Workmen’s Comp. Appeals Bd.
(1972)
2. Penalties for “de minimis” Delinquencies
(2) Carrier urges that the board should have discretion to ignore minor, de minimis delinquencies in determining whether to assess a penalty. The lаnguage of section 5814, however, does not recognize any such exception and requires assessment of the penalty for
any
“unreasonable” delay (see
Kampner
v.
Workers’ Comp. Appeals Bd.
(1978)
The seeming severity of the foregoing rule, requiring a 10 percent penalty for unreasonable delay in payments regardless of the amount involved, is mitigated by application of the further rule, discussed in section 4 hereof, that the penalty is to relate only to that class of benefits which were delayed or refused.
3. Multiple Penalties for Successive Delays
Carrier contends that the board lacks authority to impose multiple penalties for successive delinquencies in paying compensation benefits. We are unable to accept the argument, concluding that the specific language of section 5814, properly construed, requires the imposition of a separate penalty whenever compensation benefits have been unreasonably delayed or refused. This principle is not new. Thus in
Davison
v.
Industrial Acc. Com.
(1966)
Similarly, we agree with the condition of Davison that the additional penalties must be preceded by the imposition of “a first penalty” and follow a further unreasonable delay. Such a limitation upon the assessment of multiple penalties is appropriate to assure that the employеr or carrier is not doubly penalized for what may be essentially a *824 single act of misconduct, and, further, to provide reasonable notice of the risk of imposition of multiple penalties. Where, however, the circumstances disclose separate and distinct acts of delay or nonpayment, and prior notice was given of the applicant’s intent to seek separate or additional penalties for such acts, then multiple рenalties are appropriate in a single penalty proceeding.
4. Computation of Penalty
Applicant has argued that each 10 percent penalty imposed under section 5814 must be assessed against the full amount of the award of all forms of compensation, including those portions which may contain other types of compensation benefits, payment of which was neither delayed nor refused. Our analysis of both the statutory language and the apрlicable authorities convinces us, however, that if, as in the usual case, an award is readily severable into the different classes or categories of compensation as defined in the Workers’ Compensation Act (Lab. Code, § 3200 et seq.), then the penalty is to be assessed against only the amount awarded for the particular benefit of the kind delayed or refused.
It is settled that if the employer delays in furnishing
permanent
disability benefits awarded to the employee, the 10 percent penalty should be computed with reference to the
permanent
disability award only, but should not include any amounts of
temporary
disability previously awarded.
(Manning
v.
Workmen’s Comp. App. Bd.
(1970)
We were presented with a converse situation in
Garcia
v.
Workmen’s Comp. Appeals Bd.
(1972)
The
Garcia-Manning
rationale was recently extended in
Daniels
v.
Workmen’s Comp. Appeals Bd., supra,
Thereafter, in
State Comp. Ins. Fund
v.
Workmen’s Comp. Appeals Bd.
(1973)
The foregoing principle must be distinguished from that recently expressed by us in
Adams
v.
Workers’ Comp. Appeals Bd.
(1976)
We stress that in Adams we did not suggest that the penalty should be applied to any benefits, such as the permanent disability award, which had not been delayed, despite the fact that such benefits arguably were part of the “full” award to which the penalty could apply. In Adams we were careful not to disapprove the Manning, Garcia, Daniels and State Comp. Ins. Fund line of cases which, as discussed above, developed the rule that the penalty should not be applied to those types of benefits which were neither delayed nor refused.
Any alternative construction of
section
5814 would, in our view, lead to harsh and unfair results. To hold otherwise would mean that the size of the penalty would vary substantially depending on whether or not the delayed benefits (1) were contained in a separate award (see
Manning
and
Garcia),
in which case the timely paid benefits would not be included for purposes of penalty computation; or (2) were, as here, included in a single, aggregate award of all types of benefits payable, in which case the timely paid benefits would be included. Furthermore, where there are severable classes of benefits included in a single decision or award it is more fair and reasonable to assess penalties only upon the type of benefits, the payment of any part of which has been delayed, rather than to impose them as well upon benefits which have been promptly and entirely paid. . Consistent with
Garcia, Daniels,
and
State Comp. Ins. Fund,
we adopt the more moderate construction of the statutory language, holding that the phrase “full amount of the . . . award” in section 5814 refers to the full amount of the award for the particular class of benefit delayed or withheld. The penalty should not be assessed against other types of benefits despite their inclusion in a single decision or award containing multiple benefits. To the extent that
Sierra Pac.
*827
Industries
v.
Workers’ Comp. Appeals Bd.
(1977)
Carrier argues that the penalty should be applied to the
net
amount of benefits remaining unpaid, thereby permitting credit to the emplоyer or carrier for amounts previously paid without delay on the specific benefit awarded. (See
Adams
v.
Workers’ Comp. Appeals Bd., supra,
5. Summary
As we have explained, (1) both preaward аnd postaward delinquencies are equally subject to the 10 percent penalty, (2) the penalty is mandatory despite the arguably de minimis nature of the amounts involved, (3) multiple penalties must be assessed for successive delays so long as separate and distinct acts of misconduct are involved, and (4) the penalty is to be computed by assessing 10 percent of the entire amount ultimately awarded for the particular class of benefit which hаs been unreasonably delayed or withheld.
Applying the foregoing principles to the present case, we note that the board awarded only a single penalty for carrier’s unreasonable delay in commencing permanent disability payments, measured by the total amount awarded for those benefits. Applicant alleged, however, that carrier committed an additional act of misconduct in obtaining an unauthorized credit for assertеd overpayments in temporary disability payments, which credit resulted in a reduction of the permanent disability benefits which were ultimately paid. The board should consider the question whether this credit constituted a separate act of misconduct resulting in additional unreasonable delay in furnishing compensation benefits. If so, a second penalty would be appropriate as indicated above. Additionally, applicant asserted that carrier unreasonably delayed in reimbursing his travel expenses, a further act of misconduct which, if proved, would justify another 10 percent penalty, applied to the total amount of travel expenses for which reimbursement was proper. We *828 express no opinion on the question whether carrier’s alleged acts were unreasonable within the meaning of section 5814.
In penalty cases the board should proceed with a view toward achiеving a fair balance between the right of the employee to prompt payment of compensation benefits, and the avoidance of imposition upon the employer or carrier of harsh and unreasonable penalties.
The decision of the Workers’ Compensation Appeals Board is annulled and the cause is remanded to the board for further proceedings consistent with the views expressed herein. The parties shall bear their own costs.
Bird, C. J., Tobriner, J., Mosk, J., Clark, J., Manuel, J., and Newman, J., concurred.