And You Thought Interest Was Waived…
Antonie Tur sustained an injury in 1991 while employed as a general manager at a certain facility that processes avian creatures of the insane variety. The matter proceeded to trial and applicant was awarded an 83% permanent disability rating with future medical treatment.
The remaining issues of additional temporary disability and penalties were settled on September 8, 2008, and, as part of the agreement, all penalties and interest claims were expressly waived. Defendant made payments to applicant and his attorney in accordance with the agreement on September 24, 2008.
After defendant made payment, applicant sought interest and penalties, presumably on interest accrued during the 16 days between the award and payment made. The matter proceeded to trial, and the Workers’ Compensation Judge found no penalties or late feed were owed and that all payments were timely.
Applicant filed a petition for reconsideration, arguing that the stipulation waiver of interest only applied to those payments already accrued, not future payments.
Incorporating the WCJ’s report and recommendation, which now agreed with the payment of interest, but not to applicant’s attorney and not penalties, the Workers’ Compensation Appeal Board granted reconsideration as to interest owed on the post-award amount, finding interest owed both to the applicant and the applicant’s attorney. The WCAB denied the petition for penalties.
In reaching its conclusion, the WCAB found that Labor Code section 5800 is mandatory and the WCAB does not have jurisdiction to enforce any award that negates the section.
Interestingly enough, § 5800, while stating that “[a]ll awards of the appeals board … shall carry interest … from the date of the making and filing of said award,” also states “[a]s to amounts which by the terms of the award subsequently become due in installments or otherwise, such interest shall run from the date when each such amount becomes due and payable.”
In theory, had the settlement agreement included language of when the payment is to become due, such as in 30 days, no interest would have then been payable under section 5800.
The Court of Appeal denied applicant’s petition for a writ of review.
Perhaps we should all consider amending our standard settlement language?
Greg – Good point. I always put language that the penalty and interest is “included” if paid by the defendant within 25 or 30 days of the date of the award. Do you think that language would satisfy LC 5800?
On the one hand I would agree – this seems like solid language. On the other hand, if you are stipulating that to X% of permanent disability, and the PD schedule says X% is $Y, it’s hard to say interest is included.
I don’t have a rock-solid answer, other than bringing a check book to the walk-through hearing, but here is an idea for purposes of brainstorming. What about including language that says:
“the parties agree this award is to be considered “filed,” as contemplated by Labor Code section 5800, thirty (30) days from the filing of an order approving these stipulations with request for award. In the event that this provision is found invalid or unenforceable, the entirety of the agreement is to be stricken and the parties shall resume settlement negotiations.”
Or perhaps languages such as:
“by the terms of this agreement, payment of the award is to be made in one installment, due, as agreed by the parties, thirty (30) days from the filing of the award. The parties recognize the general applicability of Labor Code section 5800, and the delay in the due date of the installment is a mutually agreed-upon term to avoid the imposition of interest which would otherwise become due on the date the award is filed.”
What are your thoughts, Jeff?