In Dunehew v. Don Keith Transportation, ADJ4045682, ADJ2806318, and ADJ6769921, 2010 Cal. Wrk. Comp. P.D. LEXIS 407, petition for writ of review filed 1-13-2011 sub nom. State Compensation Insurance Fund v. W.C.A.B. (Civ. No. F061625), applicant sought reconsideration of a Findings and Award wherein the workers' compensation administrative law judge (WCJ) found that the applicant sustained industrial injuries cumulatively through August 16, 2000 (ADJ4045682) and June 30, 2007 (ADJ6769921) and on March 31, 2003 (ADJ2806318). The WCJ awarded permanent disability indemnity in all three cases and allowed a credit for permanent disability advances paid in ADJ2806318 against the permanent disability owed in ADJ6769921.

On reconsideration, applicant argued that the WCJ erred in allowing defendant a credit for permanent disability advances paid in ADJ2806318 against the permanent disability owed in ADJ6769921.

In addressing applicant's contention on reconsideration, the majority on the panel noted:

"Under Labor Code section 4909, the WCJ may allow a credit for any payment, allowance or benefit paid by the defendant to the injured employee when it was not then due and payable or when there is a dispute or question concerning the right to compensation. The California Supreme Court has stated that the allowance of a credit is within the Workers' Compensation Appeals Board's discretion. (City and County of San Francisco v. Workmen's Comp. Appeals Bd. (Quinn)(1970) 2 Cal. 3d 1001, 1016 [35 Cal.Comp.Cases 390, 395]; Herrera v. Workers' Comp. Appeals Bd. (1969) 71 Cal.2d 254, 258 [34 Cal.Comp.Cases 382. 384].)... In Maples v. Workers' Comp. Appeals Bd. (1980) 111 Cal.App.3d 827 [45 Cal.Comp.Cases 1106] the Court of Appeal stated that equitable principles are frequently applied to workers' compensation matters, that equity favors allowance of a credit if the credit is small and does not cause a significant interruption of benefits, that the allowance of a credit of overpayment of one benefit against a second benefit can be disruptive and in some cases totally destructive of the purpose of the second benefit, and that the injured employee should not be prejudiced by defendant's actions when the employee received benefits in good faith with no wrong-doing on his part. These equitable principles are particularly important where a defendant seeks a credit in one case for benefits paid in a different case and such claims for credit should be scrutinized closely. (City of Santa Clara v. Workers' Comp. Appeals Bd. (Henry) (2004) 69 Cal. Comp. Cases 386 [writ den.].)"

The majority continued:

"In analyzing whether the WCJ abused his discretion in allowing defendant a credit for a benefit paid in a different workers' compensation case, we will follow the equitable principles discussed in Maples, supra. In this case, as a result of the passage of Senate Bill 899 in 2004 and the decision in Benson v. Workers' Comp. Appeals Bd. (2009) 170 Cal.App.4th 1535 [74 Cal.Comp.Cases 113] applicant's permanent disability was apportioned between three dates of injury, resulting in a smaller monetary award than if the permanent disability from all three injuries was combined. Defendant received a benefit from this change in the law, and it would be inequitable for defendant to obtain the benefit of the separation of the three injuries for purposes of calculating permanent disability, while allowing defendant to essentially merge the cases for purposes of permanent disability advances...Furthermore, allowing defendant a credit would be destructive of the purpose of the permanent disability award for applicant's 2007 injury. Defendant advanced $11,477.40 in ADJ2806318. All advances were made prior to applicant's 2007 cumulative trauma injury in ADJ6769921. Pursuant to the Finding and Award, the applicant is entitled to $6,336.25 in ADJ2806318 and $4,830.00 in ADJ6769921. Allowing defendant a credit for permanent disability advances made in ADJ2806318 against permanent disability indemnity due in ADJ6769921, would result in the applicant not receiving any "new money" for his 2007 injury."

There was a dissenting opinion which argued that the credit against the separate and distinct injury should have been allowed.

The case highlights a couple of very important points. First, when dealing with overpayments and credits created by those overpayments, the Workers' Compensation Appeals Board is supposed to apply "equitable principles" in determining whether the credit should be allowed. This can often lead to the credit being allowed, denied or modified. Additionally, when defendant asks that the overpayment credit be applied to a separate and distinct case, such a request is likely going to be examined carefully.

In conclusion, many in the workers' compensation community assume that where there has been any type of overpayment, defendant will always be allowed to recoup the loss. The point of this article is to highlight the fact that when the Workers' Compensation Appeals Board is dealing with overpayments, especially when the reimbursement is being sought from a different case, there is nothing "automatic" about the defendant's entitlement to recover the overpayment.

[Editor's Note: Defendant State Compensation Insurance Fund filed a petition for writ of review on Jan. 13, 2011. See Civ. No. F061625. According to the case docket, the Court of Appeal has not acted yet on the petition. Practitioners should check the subsequent history of the case before citing to it.]

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