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DIVISION 1. DEPARTMENT OF INDUSTRIAL RELATIONS
CHAPTER 4.5. DIVISION OF WORKERS' COMPENSATION
SUBCHAPTER 1.5. INJURIES ON OR AFTER JANUARY 1, 1990
ARTICLE 5.5. ADMINISTRATIVE PENALTIES PURSUANT TO LABOR CODE SECTION 5814.6
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§ 10112.2. Schedule of Administrative Penalties Pursuant to Labor Code §5814.6.


(a) Administrative penalties shall only be imposed under this section based on violations of Labor Code section 5814, after more than one penalty award has been issued by the Workers' Compensation Appeals Board on or after June 1, 2004 based on conduct occurring on or after April 19, 2004 for unreasonable delay or refusal to pay compensation within a five year time period. The five year period of time shall begin on the date of issuance of any penalty award not previously subject to an administrative penalty assessment pursuant to Labor Code section 5814.6.

(b) The Division of Workers' Compensation shall at least monthly submit copies of WCAB decisions, findings, and/or awards issued pursuant to Labor Code section 5814 to the Audit Unit.

(c) The Audit Unit shall obtain monthly Labor Code section 5814 activity reports and shall determine if the decisions, findings, and/or awards are final. If more than one final penalty award has been issued on or after June 1, 2004 against a claims administrator at a single adjusting location, the Audit Unit may proceed with an investigation.

(d) To determine whether a violation described in Labor Code section 5814.6 has occurred, and notwithstanding Labor Code section 129(a) through (d) and section 129.5 subdivisions (a) through (c) and sections 10106, 10106.1, 10107 and 10107.1 of Title 8 of the California Code of Regulations, the Administrative Director, or his or her designee, may conduct an investigation, which may include but is not limited to an audit of claims and/or utilization review files. The investigation may be independent of, or may be conducted concurrently with, an audit conducted pursuant to Labor Code section 129 and 129.5.

(e) The Administrative Director, or his or her designee, may also utilize the provisions of Government Code sections 11180 through 11191 to carry out the responsibilities mandated by Labor Code section 5814.6.

(f) The Administrative Director may issue a Notice of Assessment under this article in conjunction with an order to show cause pursuant to section 10113 of Title 8 of the California Code of Regulations, charging both an administrative penalty under this section and a civil penalty under subdivision (e) of Labor Code section 129.5 in the same pleading, however only one penalty may be imposed by the Administrative Director following the hearing on such charges.

(g) Pursuant to Labor Code section 5814.6, the Administrative Director, or his or her designee, shall issue a Notice of Assessment for administrative penalties against an employer and/or insurer as follows:

  (1) $ 100,000 for when the Administrative Director, or his or her designee, has evidence to support a finding that an employer or insurer knowingly violated Labor Code section 5814 with a frequency that indicates a general business practice, and additionally for each applicable penalty award, the following;  


  (2) $ 30,000 for each penalty award by the Workers' Compensation Appeals Board for a violation of Labor Code section 5814 for an unreasonable delay or refusal to comply with an existing compensation order;  


  (3) For each penalty award by the Workers' Compensation Appeals Board for a violation of Labor Code section 5814 for an unreasonable delay or refusal to make a payment of temporary disability benefits or salary continuation payments in lieu of temporary disability; vocational rehabilitation maintenance allowance, life pension, or death benefits:  


  (A) $ 5,000 for 14 days or less of indemnity benefits;  


  (B) $ 10,000 for 15 days through 42 days of indemnity benefits;  


  (C) $ 15,000 for more than 42 days of indemnity benefits.  


  (4) For each penalty award by the Workers' Compensation Appeals Board for a violation of Labor Code section 5814 for an unreasonable delay or refusal to provide authorization for medical treatment:  


  (A) $ 1,000 for retrospective medical treatment authorization;  


  (B) $ 5,000 for prospective or concurrent medical treatment authorization;  


  (C) $15,000 for prospective or concurrent medical treatment authorization when the employee's condition is such that the employee faces an imminent and serious threat to his or her health.  


  (5) For each penalty award by the Workers' Compensation Appeals Board for a violation of Labor Code section 5814 for an unreasonable delay or refusal to reimburse an employee for self-procured medical treatment costs:  


  (A) $ 1,000 for medical treatment costs of $100 or less, excluding interest and penalty;  


  (B) $ 2,000 for medical treatment costs of more than $100 to $300, excluding interest and penalty;  


  (C) $ 3,000 for medical treatment costs of more than $300 to $500, excluding interest and penalty;  


  (D) $ 5,000 for medical treatment costs of more than $500, excluding interest and penalty.  


  (6) $ 2,500 for each penalty award by the Workers' Compensation Appeals Board for a violation of Labor Code section 5814 for an unreasonable delay or refusal to provide the the supplemental job displacement benefit, as required by section 10133.51(b) and section 10133.56(c), respectively, of Title 8 of the California Code of Regulations.  


  (7) $ 2,500 for each penalty award by the Workers' Compensation Appeals Board for a violation of Labor Code section 5814 for an unreasonable delay or refusal to make payment to an injured worker as reimbursement for payment for services provided for a supplemental job displacement benefit voucher, or where the unreasonable delay or refusal to pay the training provider causes an interruption in the employee's retraining.  


  (8) For each penalty award by the Workers' Compensation Appeals Board for a violation of Labor Code section 5814 for an unreasonable delay or refusal to make a payment of permanent disability indemnity benefits:  


  (A) $ 1,000 for 15 weeks or less of indemnity benefits;  


  (B) $ 5,000 for more than 15 but not more than 50 weeks of indemnity benefits;  


  (C) $ 7,500 for more than 50 but not more than 95 weeks of indemnity benefits;  


  (D) $ 15,000 for more than 95 weeks of indemnity benefits.  


  (9) $ 2,500 for any other penalty award by the Workers' Compensation Appeals Board pursuant to Labor Code section 5814 not otherwise specified in this section.  


(h) In cases that the Administrative Director deems appropriate, the Administrative Director, or his or her designee, may mitigate a penalty imposed under this section after considering each of these factors:

  (1) The consequences and gravity of the violation(s).  


  (2) The good faith of the claims administrator.  


  (3) The history of previous penalty awards under Labor Code section 5814.  

  (4) The number and type of the violations.  


  (5) The time period in which the violations occurred.  


  (6) The size of the claims adjusting location.  


(i) Each administrative penalty assessed under this section shall be doubled upon a second Order (which may be a Stipulated Order or a final Determination and Order) by the Administrative Director under Labor Code § 5814.6 against the same employer or insurer within a five (5) year period. Each administrative penalty under this section shall be tripled upon a third Order (which may be a Stipulated Order or a final Determination and Order) by the Administrative Director under Labor Code § 5814.6 against the same employer or insurer within the same five (5) year period.

(j) In no event shall the administrative penalties assessed against a single employer or insurer in a single Stipulated Order or final Determination and Order after doubling or tripling exceed $400,000.


     Note: Authority cited: Sections 133, 5307.3 and 5814.6, Labor Code. Reference: Sections 129.5, 139.48, 5814 and 5814.6, Labor Code; and Sections 11180-11191, Government Code.  

 HISTORY 
   
1. Change without regulatory effect former section 10225.1 to section 10112.2 filed 4-7-2008 pursuant to  section 100, title 1, California Code ofRegulations (Register 2008, No. 15).

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