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Chapter 4.5. Division of Workers' Compensation
Subchapter 1.5. Injuries on or After January 1, 1990
Article 5. Administrative Penalties

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§10111.1. Schedule of Administrative Penalties for Injuries on or After January 1, 1994.

The administrative penalties set forth in subdivisions (a) through (d) of this section will be imposed for injuries occurring on or after January 1, 1994, subject to any applicable mitigation or exacerbation under subdivision (e) of this section. Penalties will not be assessed for violations occurring during the period January 1, 1994 through March 31, 1994 for acts or omissions for which there previously existed no audit penalties.

(a) The following Group A violations carry penalties of up to $100:

  (1) The penalty for each failure to pay the 10% self-imposed increase with a late indemnity payment in accordance with Labor Code section 4650(d) is:  


  $25 if the self-imposed increase was paid after the late indemnity payment;  


  If the self-imposed increase was not paid or was only partially paid, the audit penalty is based on the amount of the underlying indemnity and is as follows:  


  $25 if the late-paid indemnity totals not more than 3 days;  


  $50 if the late-paid indemnity totals more than 3 but not more than 7 days;  


  $75 if the late-paid indemnity totals more than 7 but not more than 14 days;  


  $100 if the late paid indemnity totals more than 14 days.  


  (2) The penalty for each failure to make the first payment of permanent disability indemnity within 14 days after the last payment of temporary disability indemnity, or within 14 days of knowledge of the existence of permanent disability when there is no temporary disability, is:  


  $25 if the first payment was made 1 to 2 days late;  


  $50 if the first payment was made 3 to 7 days late;  


  $75 if the first payment was made 8 to 14 days late;  


  $100 if the first payment was made more than 14 days late;  


  (3) The penalty for each failure to object or pay to the injured worker, within 60 days of receiving a request, reimbursement for the reasonable expense incurred for self-procured medical treatment in accordance with Labor Code section 4600, is:  


  $25 for $100 or less in expense;  


  $50 for more than $100, to $200, in expense;  


  $75 for more than $200, to $400, in expense;  


  $100 for more than $400 in expense.  


  (4) The penalty for each failure to pay mileage fees and bridge tolls when notifying the employee of a medical evaluation scheduled by the claims administrator, in accordance with Labor Code sections 4600 through 4621; or to pay mileage fees and bridge tolls within 14 days of receiving notice of a medical evaluation scheduled by the administrative director or the appeals board; or to object or pay the injured worker for any other transportation, temporary disability, meal or lodging expense incurred to obtain medical treatment or evaluation, within 60 days of receiving a request, is:  


  $25 for $10 or less in expense;  


  $50 for more than $10, to $50, in expense;  


  $75 for more than $50, to $100, in expense;  


  $100 for more than $100 in expense.  


  (5) The penalty for each failure to document a factual basis for paying less than the maximum indemnity rate is $100.  


  (6) The penalty for each failure to make temporary disability, permanent disability, death benefits or VRMA payments according to the payment schedule defined by California Code of Regulations, title 8, section 10100.1(x) of these regulations is:  


  $25 for each payment made 1 to 2 days late;  


  $50 for each payment made 3 to 7 days late;  


  $75 for each payment made 8 to 14 days late;  


  $100 for each payment made more than 14 days late.  


  (7) The penalty for each failure to comply with any regulation of the Administrative Director specified in this subdivision is:  


  [i] For each failure to include in a claim file a copy of the Employee's Claim for Worker's Compensation Benefits, DWC Form 1, showing the date the form was provided to and received from the employee, or documentation of the date the claim form was provided to the employee if the employee did not return the form, the penalty is:  


  $100 if there was any late indemnity payments, or if notice of acceptance of the claim was not issued within 90 days after the employer's date of knowledge of injury and disability, or if the claim was denied.  


  [ii] For each failure to issue a notice of benefits as required by California Code of Regulations, title 8, beginning with section 9810, or by California Code of Regulations, title 8, beginning with section 10122, unless penalties apply and are assessed under section 10111.1 subdivisions (b)(2), (b)(3), (b)(4), (b)(5), (b)(6), (b)(7) or (b)(8), the penalty is $100.  


  [iii] For each Notice of Benefits which was not issued timely as provided in California Code of Regulations, title 8, beginning with section 9810, or as provided in California Code of Regulations, title 8, beginning with section 10122, unless penalties apply and are assessed under section 10111.1 subdivisions (b)(2), (b)(3), (b)(4), (b)(5), (b)(6), (b)(7) or (b)(8), the penalty is:  


  $25 for each notice of first, resumed, changed or final payment of temporary disability indemnity, wage continuation, death benefits, permanent disability indemnity, or VRMA which was issued from 1 to 7 days late;  


  $50 for each notice of first, resumed, changed or final payment of temporary disability indemnity, wage continuation, death benefits, permanent disability indemnity, or VRMA which was issued more than 7 days late, and for each delay in decision notice which was issued from 1 to 7 days late;  


  $75 for each delay in decision notice which was issued more than 7 days late.  


  [iv] For each notice of benefits required by California Code of Regulations, title 8, beginning with section 9810, (except a materially misleading denial notice assessed under section 10111.1(b)(9)), or by California Code of Regulations, title 8, beginning with section 10122, which is materially inaccurate or incomplete, the penalty is $25.  


  [v] For each failure to include in a claim file, or document attempts to obtain, any of the required contents specified in section 10101.1 subdivisions (b), (c), (d), (e), (f), (g), (h), (i), (j), the penalty is $100.  


  [vi] For each failure to comply with any regulation of the Administrative Director, not otherwise assessed in this subchapter, the penalty is $100.  


  (8) The penalty for each failure to pay or object to a billing for a medical-legal expense, in the manner required by section 9794, within 60 days of receiving the bill and all reports and documents required by the Administrative Director incident to the services, is:  


  $25 for each bill which was paid more than 60 days from receipt with interest and a 10% increase;  


  $50 for each bill which was paid more than 60 days from receipt where either interest or a 10% increase was not included;  


  $75 for each bill which was paid more than 60 days from receipt where neither interest nor a 10% increase was paid.  


  $100 for each bill which was not paid at the time the audit subject was notified the claim was selected for audit where no timely objection was sent.  


  (9) The penalty for each failure to pay or object to, in the manner required by Labor Code section 4603.2, a bill for medical treatment provided or authorized by the treating physician, is as follows when the bill remains unpaid at the time the audit subject is notified that the claim was selected for audit. For the purpose of this penalty the treating physician will be presumed chosen by the employee unless the claims administrator demonstrates otherwise:  


  $25 for each bill of $100 or less, excluding interest and penalty;  


  $50 for each bill of more than $100, but no more than $200 excluding interest and penalty;  


  $75 for each bill of more than $200, but no more than $300, excluding interest and penalty;  


  $100 for each bill of more than $300, excluding interest and penalty.  


  (10) The penalty for each failure to pay or object to, in the manner required by Labor Code section 4603.2, a bill for medical treatment provided or authorized by the treating physician, is as follows when the bill was paid before the audit subject was notified that the claim was selected for audit:  


  $25 for each bill which included an increase and interest with the late payment of any uncontested amount of the bill, in accordance with Labor Code Section 4603.2;  


  $50 for each bill which included either the increase or interest with the late payment of any uncontested amount of the bill, in accordance with Labor Code Section 4603.2;  


  $75 for any bill which included neither the increase nor interest with the late payment of any uncontested amount of the bill, in accordance with Labor Code Section 4603.2.  


  (11) The penalty for each failure to pay or object to a vocational rehabilitation bill within 60 days of receipt, as required by California Code of Regulations, title 8, sections 10132 and 10132.1, is:  


  $25 for each bill of $100 or less;  


  $50 for each bill of more than $100, but no more than $200;  


  $75 for each bill of more than $200, but no more than $300;  


  $100 for each bill of more than $300.  


  (12) The penalty for each failure to make a required first payment of temporary disability indemnity within 14 days after the employer's date of knowledge of injury and disability is:  


  $25 if the first payment was made 1 to 7 days late;  


  $50 if the first payment was made 8 to 14 days late;  


  $75 if the first payment was made 15 to 21 days late;  


  $100 if the first payment was made more than 21 days late.  


  (13) The penalty for each underpayment of an indemnity payment (including death benefits and VRMA), when the balance of the indemnity was paid late, is:  


  $25 for late payment of the equivalent of 3 days of indemnity or less;  


  $50 for late payment of the equivalent of more than 3 but no more than 7 days of indemnity;  


  $75 for late payment of the equivalent of more than 7 but no more than 14 days of indemnity;  


  $100 for the late payment of the equivalent of more than 14 days of indemnity.  


  (14) The penalty for each failure to make a first payment of VRMA or death benefit when due is:  


  $25 if the first payment was made 1 to 7 days late;  


  $50 if the first payment was made 8 to 14 days late;  


  $75 if the first payment was made 15 to 21 days late;  


  $100 if the first payment was made more than 21 days late.  


(b) The following Group B violations carry penalties of up to $500:

  (1) The penalty for each failure to maintain or provide to the Audit Unit a claim log which complies with these Regulations is:  


  $25 for each failure to list on a claim log one or more of the following: employee's name; claim number; date of injury;  


  $25 for each misdesignation of an indemnity file as a medical-only file on the claim log;  


  $100 for each failure to identify self-insured employers on the log as required by California Code of Regulations, title 8, section 10103.1(b)(6);  


  $100 for each failure to identify the underwriting insurance company of an insurance group;  


  $100 for each failure to designate a denied claim on the log;  


  $100 for each claim not listed on the log;  


  $250 for each failure to provide the claim log to the Audit Unit within 14 days of receipt of a written request if the claim log was provided more than 14 but no more than 30 days from receipt of the request;  


  $500 for each failure for more than 30 days from receipt of a written request, to provide the claim log to the Audit Unit.  


  (2) The penalty for each failure to provide information regarding the Americans with Disabilities Act, the Fair Employment and Housing Act, and workers' compensation vocational rehabilitation as required by Labor Code section 4636(a) immediately after 90 days of aggregate temporary disability indemnity is $100 if the information was provided or the employee returned to his or her usual and customary occupation more than 10 but not more than 20 days after 90 days of aggregate total disability, and an additional $100 for each additional delay of not more than 10 days, to a maximum penalty of $400 if the notice was issued more than 30 days late, and $500 if the notice was overdue more than 40 days and was not issued at the time the audit subject was notified that the claim was selected for audit.  


  (3) The penalty for each failure to issue notice of medical eligibility for vocational rehabilitation services (if not previously issued) within 10 days after knowledge of a physician's opinion that the employee is medically eligible, or for failure to issue notice within 10 days after 366 days of aggregate total temporary disability, is $100 if the notice was issued not more than 10 days late, and an additional $100 for each additional delay of not more than 10 days, to a maximum penalty of $400 if the notice was issued more than 30 days late, and $500 if the notice was overdue more than 40 days and was not issued at the time the audit subject was notified that the claim was selected for audit. Where the injured worker is represented by an attorney and documentation in the claim file indicates that the injured worker's attorney has received a copy of the physician's report indicating the employee is medically eligible for vocational rehabilitation, and if the knowledge is of a physician's opinion other than the injured worker's treating physician, a physician selected from a panel provided by the DWC Medical Unit, or an agreed medical examiner, the penalty shall be assessed at 20% of the amount otherwise assessed under this subdivision and shall not exceed $100.  


  (4) The penalty for each failure to provide the employee with a copy of the treating physician's final report together with notice of the procedure to contest the treating physician's determination, in accordance with Labor Code section 4636(d), immediately upon receipt of that report, is $100 for compliance more than 10 but not more than 20 days after receipt of the treating physician's final report, and an additional $100 for each additional delay of not more than 10 days, to a maximum penalty of $400 if the notice was issued more than 30 days late, and $500 if the notice was overdue more than 40 days and was not issued at the time the audit subject was notified that the claim was selected for audit.  


  (5) The penalty for each failure to notify an injured employee of the reasons he or she is not entitled to any, or to any further, vocational rehabilitation services, and the procedure for contesting the determination of non-eligibility, as required by California Code of Regulations, title 8, sections 9813(a)(3) and 10131, is $100 if notification was issued more than 10 but not more than 20 days after the determination, and an additional $100 for each additional delay of not more than 10 days, to a maximum penalty of $400 if the notice was issued more than 30 days late, and $500 if the notice was overdue more than 40 days and was not issued at the time the audit subject was notified that the claim was selected for audit.  


  (6) The penalty for each failure to notify an injured employee that his or her injury may have caused permanent disability and the procedures for evaluating the permanent disability, or of the employer's position that the injury has caused no permanent disability and the employee's remedies, in the manner provided by California Code of Regulations, title 8, beginning with section 9810; is $100 if the notice was issued up to 10 days late, and an additional $100 for each additional delay of not more than 10 days, to a maximum penalty of $400 if the notice was issued more than 30 days late, and $500 if the notice was overdue more than 40 days and was not issued at the time the audit subject was notified that the claim was selected for audit.  


  (7) The penalty for each failure to notify a claimant of the denial of all death benefits claimed by that person (except a denial limited to all or any of: burial expense, benefits which were due to the injured worker before his or her death, or medical-legal expense), in the manner provided by California Code of Regulations, title 8, beginning with section 9810, is $100 if the notice was issued up to 10 days late, and an additional $100 for each additional delay of not more than 10 days, to a maximum penalty of $400 if the notice was issued more than 30 days late, and $500 if the notice was overdue more than 40 days and was not issued at the time the audit subject was notified that the claim was selected for audit.  


  (8) The penalty for each failure to send a notice denying liability for all workers' compensation benefits, in accordance with California Code of Regulations, title 8, beginning with section 9810, is $100 if the notice was issued up to 10 days late, and an additional $100 for each additional delay of not more than 10 days, to a maximum penalty of $400 if the notice was issued more than 30 days late, and $500 if the notice was overdue more than 40 days and was not issued at the time the audit subject was notified that the claim was selected for audit.  


  (9) The penalty for each notice denying liability for all workers' compensation benefits, which was materially misleading, is $500. The penalty for each materially incomplete denial notice is $100.  


  (10) The penalty for each failure to pay any uncontested penalty assessment in a Notice of Penalty Assessments within 15 days of receipt of the Notice of Penalty Assessments is:  


  $100 for each assessment paid more than 15 but not more than 30 days after receipt;  


  $300 for each assessment paid more than 30 but not more than 45 days after receipt;  


  $500 for each assessment not paid within 45 days after receipt.  


  (11) The penalty for each failure to comply with California Code of Regulations, title 8, section 10104 is:  


  $100 for each period of 1 to 14 days' delay in filing the Annual Report of Inventory, to a maximum penalty of $500 for each Annual Report of Inventory;  


  $500 for each Annual Report of Inventory that overstates or understates the number of claims by 10% or more.  


(c) The following Group C violations carry penalties of up to $1,000:

  (1) The penalty for each failure to pay compensation as ordered in a Notice of Compensation Due within 15 days of receipt, if no timely Request for Review of Notice of Compensation Due was filed, is:  


  $250 if the compensation was paid more than 15 but not more than 30 days from receipt of notice;  


  $500 if the compensation was paid more than 30 but not more than 45 days from receipt of notice;  


  $1,000 for failure to pay the compensation within 45 days of receipt of notice.  


  (2) The penalty for each termination, interruption or deferral of vocational rehabilitation services other than as provided by Labor Code sections 4637(b), 4644(b) is $1,000.  


  (3) The penalty for each failure to pay or denial of rehabilitation maintenance allowance, temporary disability indemnity, or salary continuation in lieu of temporary disability indemnity, without a factual, medical or legal basis for the failure or denial, is:  


  $100 for the equivalent of 3 days or less of unpaid indemnity;  


  $200 for the equivalent of more than 3 but not more than 7 days of unpaid indemnity;  


  $300 for the equivalent of more than 7 but not more than 14 days of unpaid indemnity;  


  $500 for the equivalent of more than 14 but not more than 21 days of unpaid indemnity;  


  $750 for the equivalent of more than 21 but not more than 28 days of unpaid indemnity;  


  $1,000 for the equivalent of more than 28 days of unpaid indemnity.  


  (4) The penalty for each failure to pay permanent disability indemnity based on a reasonable estimate of permanent disability, or denial of permanent disability indemnity, without a factual, medical or legal basis, is:  


  $200 for up to 6 weeks of unpaid indemnity;  


  $400 for more than 6 but not more than 15 weeks of unpaid indemnity;  


  $750 for more than 15 but not more than 30 weeks of unpaid indemnity;  


  $1,000 for more than 30 weeks of unpaid indemnity.  


  (5) The penalty for each failure to pay or denial of death benefits to any claimant without a factual, medical or legal basis for the failure or denial, is:  


  $100 for the equivalent of 3 days or less of unpaid indemnity under Labor Code section 4701(b), or for up to $300 of unpaid burial expenses;  


  $200 for the equivalent of more than 3 but not more than 7 days of unpaid indemnity under Labor Code section 4701(b), or for more than $300, up to $600, of unpaid burial expenses;  


  $300 for the equivalent of more than 7 but not more than 14 days of unpaid indemnity under Labor Code section 4701(b), or for more than $600, up to $900, of unpaid burial expenses;  


  $500 for the equivalent of more than 14 but not more than 21 days of unpaid indemnity under Labor Code section 4701(b), or for more than $900, up to $1,500, of unpaid burial expenses;  


  $750 for the equivalent of more than 21 but not more than 28 days of unpaid indemnity under Labor Code section 4701(b), or for more than $1,500, up to $2,250, of unpaid burial expenses;  


  $1,000 for the equivalent of more than 28 days of unpaid indemnity under Labor Code section 4701(b), or for more than $2,250 of unpaid burial expenses.  


  The penalty for each failure to pay or denial of payment to any claimant of compensation which was accrued and unpaid to the injured worker at the time of the worker's death is the same penalty which would apply for failure to pay or denial of payment of that compensation to the injured worker.  


  The penalty under this subdivision does not supersede the penalty under subdivision 10111.1(d)(1).  


  (6) The penalty for each failure to investigate a claim as provided by California Code of Regulations, title 8, section 10109 of these regulations is:  


  $250 if the failure to investigate involved a claim for medical treatment only, with no reasonable expectation of liability for indemnity payments;  


  $500 if the failure to investigate involved a claim or reasonable expectation of liability for temporary or permanent disability indemnity or vocational rehabilitation benefits;  


  $1,000 if the failure to investigate involved a claim or reasonable expectation of liability for death benefits, or a combination of two or more of the following classes of benefits temporary or permanent disability indemnity or vocational rehabilitation.  


  This penalty does not supersede a penalty for denial of claim without an investigation and documentation supporting a factual, medical, or legal basis for denial as set forth in section 10111.1(d)(1).  


(d) The following Group D violations carry penalties of up to $5,000:

  (1) The penalty for each denial of all liability for a claim without documentation supporting a factual, medical, or legal basis for the denial is specified in this subdivision.  


  In order to avoid a penalty, the denial must state a legal, factual or medical basis recognized by applicable law and documented by information in the claim file. An employee's purported waiver of benefits in a compensable case is not a ground to deny liability.  


  The gravity portion of the penalty is based on the class or classes of benefits potentially payable if benefits were provided. The total penalty shall be determined by the applying the penalty assessment amount listed in [i] for gravity, subtracting the amount listed in [ii] for good faith if applicable, and increasing or decreasing the penalty as applicable for history and frequency as set forth in [iii] and [iv]:  


  [i] For a claim involving potential for medical treatment only the penalty is $3,500;  


  For a claim involving potential for medical treatment and either temporary or permanent disability the penalty is $4,000;  


  For a claim involving potential for medical treatment and both temporary and permanent disability the penalty is $4,500;  


  For a claim involving potential for medical treatment, temporary disability, permanent disability and vocational rehabilitation the penalty is $5,000;  


  For a claim involving potential for death benefits the penalty is $5,000.  


  [ii] The penalty will be reduced by $1,000 for good faith if there was a reasonable attempt to investigate the claim.  


  [iii] Reduction or increase of the penalty for history shall be based on the following:  


  An audit subject having no prior Audit Unit history will receive a $500 reduction;  


  An audit subject having a prior Audit Unit history of no more than one audited unsupported denial will receive a $500 reduction;  


  An audit subject having a prior Audit Unit history of more than one audited unsupported denial but no more than 5% of audited denials as unsupported will receive no reduction or increase for history;  


  An audit subject having a prior Audit Unit history of more than one audited unsupported denial and more than 5% of audited denials as unsupported will receive a $500 increase.  


  [iv] Reduction of the penalty for frequency shall be based on the following:  


  An audit subject having no more than one audited unsupported denial will receive a $500 reduction;  


  An audit subject having more than one audited unsupported denial but no more than 5% of audited denials which are unsupported will receive no reduction or increase for frequency;  


  An audit subject having more than one audited denial and more than 5% of audited denials which are unsupported will receive an increase of $500.  


  [v] The total amount assessed for a denial shall be reduced by 50% if the claim was accepted after the denial without evidence that the acceptance was the result of litigation or of the claim's selection for audit.  


  (2) The penalty for each failure to comply with, show good cause for non-compliance with, or contest, within 30 days of receipt, any written request or order of the Administrative Director or Audit Unit which is not specified in subdivisions (b)(1), (c)(1), or (d)(5) of this section is:  


  $500 if there was compliance in more than 30 but not more than 40 days from receipt of the request or order;  


  $1,000 if there was compliance in more than 40 but not more than 60 days from receipt of the request or order;  


  $2,500 if there was compliance in more than 60 but not more than 90 days of receipt of the request or order;  


  $5,000 for failure to comply within 90 days of receipt of the request or order.  


  (3) The penalty for each failure by a claims administrator to provide a claim form within one working day of receipt of a request from an injured worker or the worker's agent is:  


  $500 if the claim form was provided in more than 1 but not more than 5 working days from receipt of the request, if benefits were being provided to the employee at the time of the request;  


  $1,000 if the claim form was not provided within 5 working days of receipt of the request, if benefits were being provided to the employee at the time of the request;  


  $3,000 if the claim form was provided in more than 1 but not more than 5 working days from receipt of the request, if benefits were not being provided to the employee at the time of the request;  


  $5,000 if the claim form was not provided within 5 working days of receipt of the request, if benefits were not being provided to the employee at the time of the request.  


  (4) The penalty for each failure to comply in full with any final award or order of the Workers' Compensation Appeals Board or the Rehabilitation Unit within 20 days of service, allowing an additional five days for service by mail, is:  


  For any failure to pay all amounts payable as awarded or ordered, including interest, when partial nonpayment is due to a miscalculation or oversight and all other amounts have been paid, the penalty amount shall be determined based on the equivalent amount of unpaid indemnity as assessed under subdivision (c)(3) of this section.  


  For late payment of an award or order, the penalty is:  


  $500 for compliance in more than 20 but not more than 35 days from the date of service;  


  $1,000 for compliance (other than a late interest payment) in more than 35 but not more than 60 days from the date of service;  


  $2,500 for compliance (other than a late interest payment) in more than 60 but not more than 90 days from the date of service;  


  $5,000 if there was not compliance (other than failure to pay interest) within 90 days of the date of service.  


  Penalties will be assessed separately for both late payment and the failure to pay a portion of an award or order.  


  (5) The penalty for each failure to produce a legible paper copy of a claim file as required by California Code of Regulations, title 8, section 10107 or at the time specified by the Administrative Director is:  


  $100 if the file was produced not more than 3 days late;  


  $250 if the file was produced more than 3 but not more than 14 days late;  


  $500 if the file was produced more than 14 but not more than 29 days late;  


  $1,000 if the file was produced more than 29 days late but not more than 40 days late;  


  $2,500 if the file was produced more than 40 days late but not more than 90 days late;  


  $5000 if the was produced more than 90 days late or was not produced.  


  (6) The penalty for providing a backdated or otherwise altered or fraudulent document to the Audit Unit, or intentionally withholding a document from the Audit Unit, which would have the effect of avoiding liability for the payment of compensation or an audit penalty is:  


  $5,000 for each backdated, altered, or withheld document. The amount of the penalty is not subject to reduction based on frequency, history, or good faith as set forth in subdivision (e) of this section.  


  The claims administrator shall not be subjected to penalty under this subdivision if it demonstrates by clear and convincing evidence that the backdating, alteration, or withholding of the document was due solely to unintentional clerical error.  


(e) The penalties otherwise applicable under subdivisions (a) through (d) of this section shall be modified by any applicable provision of this subdivision (e). However, the method of modifying penalties for unsupported denials is set forth in section 10111(d)(2) and section 10111.1(d)(1) and is not governed by this subdivision (e).

  (1) Modification for the gravity of each violation is included within the penalty assessment amounts listed in subdivisions (a) through (d);  


  (2) Modification for the good faith of the audit subject shall be determined based on documentation of attempts to comply with requirements of the Labor Code and the Administrative Director's regulations, and may result in a reduction of 20% for each applicable violation.  


  (3) Modification for frequency shall be considered for each type of violation. Frequency shall be determined by comparing the number of audited files which were randomly selected pursuant to section 10107(c) and (d) of these regulations in which there is an assessment for a specific type of violation to the total number of those randomly selected audited files in which the possibility of that type of violation exists. The frequency of violations in the complaint files selected for audit pursuant to section 10107(e) shall not be used to determine penalty amounts for these categories, except the mitigation or exacerbation of penalty amounts based on frequency of violations in the randomly selected files shall be applied to the audited complaint files.  


  [i] If there are assessments for late first payments of temporary disability indemnity in 10% or less of the audited files in which payments of temporary disability indemnity are made, the penalty amounts of these assessments will be reduced by 20%. If there are assessments for late first payments of temporary disability indemnity in more than 30% of the audited files in which payments of temporary disability indemnity are made, the penalty amounts of these assessments will be increased by 20%,  


  [ii] If there are assessments for late first payments of permanent disability indemnity in 10% or less of the audited files in which payments of permanent disability indemnity are made, the penalty amounts of these assessments will be reduced by 20%. If there are assessments for late first payments of permanent disability indemnity in more than 30% of the audited files in which payments of permanent disability indemnity are made, the penalty amounts of these assessments will be increased by 20%.  


  [iii] If there are assessments for late first payments of vocational rehabilitation maintenance allowance in 10% or less of the audited files in which payments of maintenance allowance in 10% or less of the audited files in which payments of maintenance allowance are made, the penalty amounts of these assessments will be reduced by 20%. If there are assessments for late first payments of vocational rehabilitation maintenance allowance in more than 30% of the audited files in which payments of maintenance allowance are made, the penalty amounts of these assessments will be increased by 20%.  


  [iv] If there are assessments involving late subsequent payments, including any payment in which all indemnity then due is not paid with that payment but is paid with a subsequent payment as assessed under subdivision (a)(13) of this section, of temporary disability indemnity, permanent disability indemnity, or vocational rehabilitation maintenance allowance in 10% or less of the audited files in which these subsequent payments were made, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for late subsequent payments of temporary disability indemnity, permanent disability indemnity, or vocational rehabilitation maintenance allowance exceeds 30% of the total number of audited files with subsequent payments of these benefits, the penalty amounts of these assessments will be increased by 20%.  


  [v] If there are assessments involving late payments of death benefits in 10% or less of the audited files in which these payments were made, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for late payments of death benefits exceeds 30% of the total number of audited files with payments of death benefits, the penalty amounts of these assessments will be increased by 20%.  


  [vi] If there are assessments involving failure to issue benefit notices (other than notices specifically mentioned elsewhere in this subdivision (3)) in 10% or less of the audited files in which these benefit notices are required, no penalties will be assessed for those violations. If the number of audited files with assessments for failure to issue these notices exceeds 10%, but does not exceed 20%, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for failure to issue these notices exceeds 30% of the total number of audited files in which these notices are required, the penalty amounts of these assessments will be increased by 20%.  


  [vii] If there are assessments involving late provision of benefit notices (other than notices specifically mentioned elsewhere in this subdivision (3)) in 10% or less of the audited files in which these benefit notices are required, no penalties will be assessed for those violations. If the number of audited files with assessments for late issuance of these notices exceeds 10%, but does not exceed 20%, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for late issuance of these notices exceeds 30% of the total number of audited files in which these notices were required and issued, the penalty amounts of these assessments will be increased by 20%.  


  [viii] If there are assessments involving the failure to pay or object to medical expenses within 60 days of receipt of the billing in 10% or less of the audited files with a requirement to pay or object to medical bills within 60 days of receipt of billing, the penalty amounts of these assessments will be reduced by 20%. if the number of audited files with assessments for failure to pay or object to medical expenses within 60 days of receipt of the billing exceeds 30% of the total number of audited files in which there was a requirement to pay or object to medical bills within 60 days of receipt of billing, the penalty amounts of these assessments will be increased by 20%.  


  [ix] If there are assessments involving the failure to pay or object to medical-legal expenses within 60 days of receipt of the billing in 10% or less of the audited files containing medical-legal expenses, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for failure to pay or object to medical-legal expenses within 60 days of receipt of the billing exceeds 30% of the total number of audited files in which there was a requirement to pay or object to medical-legal expenses within 60 days of receipt of billing, the penalty amounts of these assessments will be increased by 20%.  


  [x] If there are assessments involving the failure to pay or object to vocational rehabilitation expenses within 60 days of receipt of the billing in 10% or less of the audited files containing vocational rehabilitation expenses, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for failure to pay or object to vocational rehabilitation expenses within 60 days of receipt of the billing exceeds 30% of the total number of audited files in which there was a requirement to pay or object to vocational rehabilitation expenses within 60 days of receipt of billing, the penalty amounts of these assessments will be increased by 20%.  


  [xi] For injuries before January 1, 1994, if there are assessments involving the failure to assign a qualified rehabilitation representative within 10 days after 90 days of aggregate total disability in 10% or less of the audited files with 90 or more days of aggregate total disability, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments involving the failure to assign a qualified rehabilitation representative within 10 days after 90 days of aggregate total disability exceeds 30% of the total number of audited files in which there was a requirement to assign a qualified rehabilitation representative within 10 days after 90 days of aggregate total disability, the penalty amounts of these assessments will be increased by 20%.  


  [xii] For injuries on or after January 1, 1994, if there are assessments involving the failure to provide information to the employee required by Labor Code section 4636(a) within 10 days after 90 days of aggregate total disability in 10% or less of the audited files with 90 or more days of aggregate total disability, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments involving the failure to provide the information specified in section 4636(a) within 10 days after 90 days of aggregate total disability exceeds 30% of the total number of audited files in which there was a requirement to provide the information specified in section 4636(a) within 10 days after 90 days of aggregate total disability, the penalty amounts of these assessments will be increased by 20%.  


  [xiii] If there are assessments involving the failure to notify an employee in a timely manner of potential eligibility for vocational rehabilitation in 10% or less of the audited files in which these notices are required, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments involving the failure to notify an employee in a timely manner of potential eligibility for vocational rehabilitation exceeds 30% of the total number of audited files in which these notices are required, the penalty amounts of these assessments will be increased by 20%.  


  [xiv] If there are assessments involving the failure to notify an employee in a timely manner of non-eligibility for vocational rehabilitation in 10% or less of the audited files in which these notices are required, the penalty amounts of these assessments will be reduced 20%. If the number of audited files with assessments involving the failure to notify an employee in a timely manner of non-eligibility for vocational rehabilitation exceeds 30% of the total number of audited files in which these notices are required, the penalty amounts of these assessments will be increased by 20%.  


  [xv] If there are assessments involving the failure to notify an employee in a timely manner of the procedure for evaluating the employee's permanent disability, as required by California Code of Regulations, title 8, section 9812(f)(2), (f)(4), (g)(2), and (g)(3), in 10% or less of the audited files in which these notices are required, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for failure to issue these notices exceeds 30% of the total number of audited files in which these notices are required, the penalty amounts of these assessments will be increased by 20%.  


  [xvi] If there are assessments involving the failure to notify an employee or claimant in a timely manner of the denial of all liability for a claim, or of all liability for death benefits, in 10% or less of the audited files in which these notices are required, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for failure to issue these notices exceeds 30% of the total number of audited files in which these notices are required, the penalty amounts of these assessments will be increased by 20%.  


  [xvii] If there is an assessment for the failure to timely respond to a request to provide or authorize medical treatment in no more than one audited file, the penalty amount of that assessment will be reduced by 20%. If the number of audited files with assessments for the failure to timely respond to a request to provide or authorize medical treatment, the penalty amounts for these assessments will be increased by 20%.  


  [xviii] If there are assessments involving the failure to pay temporary disability indemnity, permanent disability indemnity, death benefits, vocational rehabilitation maintenance allowance, self-imposed increase for late indemnity payment, interest, or penalty in 5% or less of the audited files in which any of these forms of compensation are accrued and payable, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments for the failure to pay any of these forms of compensation is more than 20% of the audited files in which any of these forms of compensation is accrued and payable, the penalty amounts of these assessments will be increased by 20%.  


  [xix] If there are assessments for failure to include items or properly designate entries on a claim log, and if no more than ten, or no more than 1%, of the entries on the log are affected, whichever is smaller, the penalty amounts of these assessments will be reduced by 20%. If more than fifty, or more than 5% of the entries on the log are affected, whichever is smaller, the penalty amounts of these assessments will be increased by 20%.  


  [xx] If there are other violations assessed which are not specified in [i] through [xix] above in 5% or less of the audited files, the penalty amounts of these assessments will be reduced by 20%. If the number of audited files with assessments exceeds 20% of the audited files, the penalty amounts of these assessments will be increased by 20%.  


  (4) Modification of the history of previous violations, if any, shall be based on prior audits of the audit subject at the current adjusting location. However, no modification for history shall apply if a valid comparison cannot be made between the current and prior audit(s). The penalty shall be modified for history as follows:  


  [i] There will be a reduction of 20% of any penalty for which there was no increase in the penalty amount based on frequency as described in subdivisions (e)(3)[i] through (3)[xx] above in the previous audit, and for which there was a reduction in the penalty amount based on frequency in the present audit at the audited adjusting location.  


  [ii] There will be an increase of 20% of any penalty for which there was an increase in the penalty amount based on frequency as described in subdivisions (3)[i] through (3)[xx] above in the previous audit, and for which there was no decrease in the penalty amount based on frequency of violations in the present audit at the audited adjusting location, provided that any increased penalty is limited to the maximum provided by statute and regulation for the violation.  


  (5) No administrative penalties shall be assessed if the only violations found in an audit are violations which do not involve the denial of a claim without supporting documentation, or failure to pay or late payment of compensation, and the violations are found in 20% or less of the indemnity files audited.  


  (6) Penalties may be mitigated outside the above mitigation guidelines in extraordinary circumstances, when strict application of the mitigation guidelines would be clearly inequitable.  



     Note: Authority cited: Sections 59, 129.5, 133, 138.3, 138.4, 139.5, 4603.5, 4627 and 5307.3, Labor Code. Reference: Sections 124, 129, 129.5, 4061, 4453, 4454, 4550, 4600, 4603.2, 4621, 4622, 4625, 4636 through 4638, 4639, 4641, 4642, 4650, 4651, 4701 through 4703.5, 4706, 4706.5, 5401, 5401.6, 5402, 5800 and 5814, Labor Code; and Section 2629.1(e), (f), Unemployment Insurance Code.  


 HISTORY 
   
1. New section filed 1-28-94; operative 1-28-94. Submitted to OAL for printing only pursuant to Government Code section 11351 (Register 94, No. 4).

2. Editorial correction inserting omitted text in subsection (e)(3)[xviii]  (Register 95, No. 32).

3. Amendment of subsections (a)(7)[ii]-(a)(7)[iv], (b)(1), (b)(9), (d)(1) and  (e)(3)[xv] filed 2-14-96; operative 2-14-96. Submitted to OAL for printing only pursuant to Government Code section 11351 (Register 96, No. 7).

4. Amendment filed 10-26-98; operative 11-25-98 (Register 98, No. 44).

5. Amendment filed 4-20-2009; operative 5-20-2009 (Register 2009, No. 17).

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