Do Penalties Apply to Late Payment of VRMA?

Saturday, October 8, 2005 | 0

Do penalties apply to late payments of vocational rehabilitation maintenance allowance (VRMA)? This question was recently raised in the WorkCompCentral Professional Forums, and the following were the responses...

A1: My answer has always been NO, however, someone brought to my attention an en banc decision, Juan Rivera vs. Tower Staffing , SCIF and Calvin Crump vs. LA USD.

These two cases discuss 4650 (d) penalties in dealing with C&R's and death penalties, not VRMA, however in the Appeals Board Reporter issued 11/22/02, it states:

"The appeals board added by way of dicta: While the application of section 4650 (d) to VRMA is not being raised in these cases, we wish to observe that statutory and case law support the conclusion that VRMA is the functional equivalent of TD and therefore the section 4650 (d) penalty applies to periodic payments of VRMA."

A2: Briefly, L.C. 4650(d) is due when VRMA is delayed per SCIF vs. WCAB (Monroy) 64 CCC 1324, Sup. Ct. denied review 28 CWCR 15. As you note, there was dicta in Crump & Rivera, 30 CWCR 297, but Rivera was reversed on other grounds, 31 CWCR 261, 68 CCC 1460.

The Monroy case was cited with approval and L.C. 5814 was allowed when 4650(d) was not paid in Baker vs. WCAB, 29 CWCR 286.

An exception to 4650(d) is where TD is paid within 14 days of a final award where TD had been contested. Case is Leinon vs WCAB, 32 CWCR 219, 69 CCC 995, 1449, producing the inference retro VRMA would not have 4650(d) applied if payment is made within 14 days of a final award.

Last of all, a determination VRMA is due at the TD rate is not a penalty. VRMA is ONLY due once a defendant has done certain things after other things have happened. There is no "right" of a defendant to VRMA and the $16k cap. The RU can find a delay has occurred and that the "delay rate" is due, but they can't order 4650(d) or 5814.

A3: [The above] answer is substantially correct for the pre AB 227 (repeal of VR) and post SB 899 re-instatement of LC 132.5.

Since the changes wrought with those bills, there are several other possibilities to the questions.

One is that LC 4650 does not apply to VR based on the following rational. The WCAB in Rivera (which was pointed out above was reversed on other grounds and is therefore not citable) awarded 4650 in VR using the rational that VRMA was a "TD like " benefit and intended to serve the same purpose as TTD. Therefore even thought VRMA is not mentioned in LC 4650 as a benefit that is enhanced as a result of delay, since it a similar benefit, we will apply the same consequences to VRMA that we do to TTD. Part of the key analysis is the similarity of the benefit.

With SB 899, LC 3207 was changed. This section defines "compensation" and previously included all Divisions 4 benefits and specifically included VR by name. With AB 899, the definition of "compensation' changed and it now refers to all benefits in Division 4 of the LC. However VR is not in division 4, nor is it specifically mentioned in the definition of compensation as it previously was. VR is only mentioned in division 1. VR is therefore no longer "compensation". This makes the WCAB argument that VR and TTD are the same "character" of benefit much weaker, perhaps completely untenable. I think a very strong argument exists that the statutory change renders the arguments for 4650 applying to VR invalid.

Additionally, AB 227 repealed all of the sections on VR (139.5 plus LC 4635 to 4646). SB 899 reenacted LC 139.5 but not the other sections. 139.5 did however specifically adopt a portion of the former LC 4642 (and also 4644) that had to do with the provision of benefits outside the VR cap. In referencing a portion of LC 4642, the legislature did not indicate an intent to resurrect the additional provisions of that section that dealt with payment of VR at the TTD rate in cases of delay. While the WCAB has given us the Godinez case that allows use of many of the provisions of LC 4635 to 4646 to manage VR benefits, there is also a very strong argument that the provisions of LC 4642, to the extent that section required payment of VR at the TTD rate, does not survive the re-enactment of LC 139.5 since that section has a very specific provision about VR is paid where there is a delay. LC 139.5 specifically provides that where the applicant prevails on an issue of entitlement to VR, the benefit is paid from the date of demand at the VRMA rate (up to $246/week).

Given the very specific instructions in LC 139.5, it is difficult to use a now repealed "ghost" statute to impose liability different from the applicable statute.. Since SB 899 is applicable to all claims regardless of the date of injury (unless a different effective date is give, which is not in this section), effective 4/19/05 the use of the now repealed LC 4642 to impose VR benefits at the TTD rate is legally unsupportable.

As a final matter, remember that LC 5814 imposes a penalty on the delay in payment of "compensation" which is defined as all benefits in Division 4, of which VR is not included.

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