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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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§10112.3. Notice of Administrative Penalty Assessment, Appeal Hearing Procedures and Review.

(a) Pursuant to Labor Code section 5814.6, the Administrative Director shall issue a Notice of Assessment when the Administrative Director, or his or her designee (the investigating unit of the Division of Workers Compensation), has evidence to support a finding that an employer or insurer has knowingly violated section 5814 with a frequency that indicates a general business practice.

(b) Successor liability may be imposed on a corporation or other business entity that has merged with, consolidated with, or otherwise continued the business of an employer or insurer that is subject to penalties under Labor Code section 5814.6. The surviving entity shall assume and be liable for all the liabilities, obligations and penalties of the prior employer or insurer. Successor liability will be imposed if there has been a substantial continuity of business operations and/or the new business uses the same or substantially the same work force.

(c) The Notice of Assessment shall be in writing and shall contain all of the following:

  (1) The basis for the penalty assessment, including a statement of the alleged violations and the amount of each proposed penalty;  


  (2) A description of the methods for paying or appealing the penalty assessment.  


(d) The Notice of Assessment shall be served personally or by registered or certified mail.

(e) Within thirty (30) calendar days after the date of service of the Notice of Assessment, the employer or insurer may pay the penalties as assessed or file an appeal with the Administrative Director.

(f) If the employer or insurer pays the penalties within thirty (30) calendar days, the Notice of Assessment shall be deemed a Stipulated Order.

(g) If the employer or insurer files an appeal of the Notice of Assessment with the Administrative Director, the appeal shall:

  (1) Admit or deny, in whole or in part any of the allegations set forth in the Notice;  


  (2) Appeal the existence of any or all of the alleged violations;  


  (3) Appeal the amount of any or all the penalties assessed;  


  (4) Set forth any affirmative and other defenses;  


  (5) Set forth the legal and factual bases for each defense and each ground for appeal. Any item listed in the Notice of Assessment but not appealed shall be paid within thirty (30) calendar days after the date of service of the Notice of Assessment.  


(h) Failure to timely file an appeal shall constitute a waiver of the appellant's right to an evidentiary hearing. Unless set forth in the appeal, all defenses to the Notice of Assessment shall be deemed waived. The appellant may also file a written request for leave to assert additional defenses which the Administrative Director may grant upon a showing of good cause.

(i) The appeal shall be in writing signed by, or on behalf of, the employer or insurer, and shall state the appellant's mailing address. The appeal shall be verified, under penalty of perjury, by the employer or insurer. If the appellant is a corporation, the verification may be signed by an officer of the corporation. In the event the appellant is not the employer, the employer's address shall be provided and the employer shall be included on the proof of service.

  (1) The appellant shall file the original and one copy of the appeal on the Administrative Director and concurrently serve one copy of the appeal on the investigating unit of the Division of Workers Compensation designated by the Administrative Director. The original and all copies of any filings required by this section shall have a proof of service attached.  


(j) At any time before the hearing, the Administrative Director may file or permit the filing of an amended Notice of Assessment. All parties shall be notified thereof. If the amended Notice of Assessment presents new allegations or new penalties, the Administrative Director shall afford the Appellant a reasonable opportunity to prepare its defense, and the Appellant shall be entitled to file an amended appeal.

(k) At the Administrative Director's discretion, the Administrative Director may proceed with an informal pre-hearing conference with the appellant in an effort to resolve the contested matters. If any or all of the proposed penalties in Notice of Assessment or the amended Notice of Assessment remain contested, those contested matters shall proceed to an evidentiary hearing.

(l) Whenever the Administrative Director's Notice of Assessment has been contested, the Administrative Director may designate a hearing officer to preside over the hearing. The authority of the Administrative Director or any designated hearing officer includes, but is not limited to: conducting a prehearing settlement conference; setting the date for an evidentiary hearing and any continuances; issuing subpoenas for the attendance of any person residing anywhere within the state as a witness or party at any pre-hearing conference and hearing; issuing subpoenas duces tecum for the production of documents and things at the hearing; presiding at hearings; administering oaths or affirmations and certifying official acts; ruling on objections and motions; issuing prehearing orders; and preparing a Recommended Determination and Order based on the hearing.

(m) The Administrative Director, or the designated hearing officer, shall set the time and place for any prehearing conference on the contested matters in a Notice of Hearing and shall give sixty (60) calendar days written notice to all parties.

(n) The prehearing conference may address one or more of the following matters:

  (1) Exploration of settlement possibilities.  


  (2) Preparation of stipulations.  


  (3) Clarification of issues.  


  (4) Rulings on identity and limitation of the number of witnesses.  


  (5) Objections to proffers of evidence.  


  (6) Order of presentation of evidence and cross-examination.  


  (7) Rulings regarding issuance of subpoenas and protective orders.  


  (8) Schedules for the submission of written briefs and schedules for the commencement and conduct of the hearing.  


  (9) Any other matters as shall promote the orderly and prompt conduct of the hearing.  


(o) The Administrative Director, or the designated hearing officer, shall issue a prehearing conference order incorporating the matters determined at the prehearing conference. The Administrative Director, or the designated hearing officer, may direct one or more of the parties to prepare the prehearing conference order.

(p) Not less than 30 calendar days prior to the date of the pre-hearing conference, or if no pre-hearing conference is set, not less than 30 calendar days prior to the date of the evidentiary hearing, the Appellant shall file and serve the original and one copy of a written statement with the Administrative Director, or the designated hearing officer, specifying the legal and factual bases for its appeal and each defense, listing all witnesses the Appellant intends to call to testify at the hearing, and appending copies of all documents and other evidence the Appellant intends to introduce into evidence at the hearing. A copy of the written statement and its attachments shall also concurrently be served on the investigating unit of the Division of Workers' Compensation. If the Appellant's written statement and supporting evidence are not timely filed and served, the Administrative Director, or the designated hearing officer , shall dismiss the appeal and the violations and penalties as stated in the Notice of Assessment shall be final, due and payable. Within ten (10) calendar days of the date for filing the written statement and supporting evidence, the Appellant may file a written request for leave to file a written statement and supporting evidence. The Administrative Director, or the designated hearing officer, may grant the request, upon a showing of good cause. If leave is granted, the written statement and supporting evidence must be filed and served no later than ten (10) calendar days prior to the date of the hearing.

(q) Oral testimony shall be taken only on oath or affirmation.

(r)(1) Each party shall have these rights: to call and examine witnesses, to introduce exhibits; to cross-examine opposing witnesses on any matter relevant to the issues even though that matter was not covered in the direct examination; to impeach any witness regardless of which party first called him or her to testify; and to rebut the evidence.

  (2) In the absence of a contrary order by the Administrative Director, or the designated hearing officer, the investigating unit of the Division of Worker's Compensation shall present evidence first.  


  (3) The hearing need not be conducted according to the technical rules relating to evidence and witnesses, except as hereinafter provided. Any relevant evidence shall be admitted if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs, regardless of the existence of any common law or statutory rule which might make improper the admission of the evidence over objection in civil actions.  


  (4) Hearsay evidence may be used for the purpose of supplementing or explaining other evidence but over timely objection shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions. An objection is timely if made before submission of the case to the Administrative Director, or to the designated hearing officer.  


(s) The written affidavit or declaration of any witness may be offered and shall be received into evidence provided that (i) the witness was listed in the written statement pursuant to section 10112.3(p), (ii) the statement is made by affidavit or by declaration under penalty of perjury, (iii) copies of the statement have been delivered to all opposing parties at least 20 calendar days prior to the hearing, and (iv) no opposing party has, at least 10 calendar days before the hearing, delivered to the proponent of the evidence a written demand that the witness be produced in person to testify at the hearing. The Administrative Director, or the designated hearing officer, shall disregard any portion of the statement received pursuant to this regulation that would be inadmissible if the witness were testifying in person, but the inclusion of inadmissible matter does not render the entire statement inadmissible. Upon timely demand for production of a witness in lieu of admission of an affidavit or declaration, the proponent of that witness shall ensure the witness appears at the scheduled hearing and the proffered declaration or affidavit from that witness shall not be admitted. If the Administrative Director, or the designated hearing officer, determines that good cause exists that prevents the witness from appearing at the hearing, the declaration may be introduced in evidence, but it shall be given only the same effect as other hearsay evidence.

(t) The Administrative Director, or the designated hearing officer, shall issue a written Recommended Determination and Order, granting or denying the appeal, in whole or part, and affirming or amending the penalty assessment(s). The Recommended Determination and Order shall include a statement of the basis for the decision and each penalty assessed. It shall be served on all parties within sixty (60) calendar days of the date the case was submitted for determination. This requirement is directory and not jurisdictional.

(u) The Administrative Director shall have up to sixty (60) calendar days to adopt or modify the Recommended Determination and Order issued by the Administrative Director or the designated hearing officer. In the event the Recommended Determination and Order is modified, the Administrative Director shall include a statement of the basis for the Determination and Order. If the Administrative Director does not act within sixty (60) calendar days, then the Recommended Determination and Order shall become the Determination and Order on the sixty-first calendar day.

(v) The Determination and Order shall be served on all parties personally or by registered or certified mail by the Administrative Director.

(w) The Determination and Order, if any, shall become final on the date it was served, unless the aggrieved party files a timely Petition Appealing Determination and Order within twenty (20) days. A timely filed Petition Appealing the Determination and Order tolls the period for paying any disputed penalty. All findings and assessments in the Determination and Order that are not contested in the Petition Appealing Determination and Order shall become final as though no such petition was filed.

(x) At any time prior to the date the Determination and Order becomes final, the Administrative Director may correct the Determination and Order for clerical, mathematical or procedural error.

(y) Penalties assessed in a Determination and Order shall be paid within thirty (30) calendar days of the date the Determination and Order has been served, if no Petition Appealing Determination and Order has been filed. The penalties shall be deposited into the Return-to-Work-Fund.

(z) All appeals from any part or the entire Determination and Order shall be made in the form of a Petition Appealing the Determination and Order, in conformance with the requirements of chapter 7, part 4 of Division 4 of the Labor Code. Any such Petition Appealing the Determination and Order shall be filed at the Workers' Compensation Appeals Board in San Francisco (and not with any district office of the Workers' Compensation Appeals Board), in the same manner specified for petitions for reconsideration.


     Note: Authority cited: Sections 133, 5307.3 and 5814.6, Labor Code. Reference: Sections 129.5, 139.48, 5300, 5814, 5814.6 and 5900 et seq., Labor Code.  

 HISTORY 
   
1. Change without regulatory effect former section 10225.2 to section 10112.3, including amendment of subsection (s), filed 4-7-2008 pursuant to section100, title 1, California Code of Regulations (Register 2008, No. 15).

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