ADJ16384093 · January 20, 2026

The defendant had a reasonable legal basis to deny surgery due to ongoing litigation and a genuine dispute over medical necessity, so no bad faith or unreasonable delay was found to justify penalties or sanctions.

From the decision · page 31. Applicant's Petition for Penalties, Costs, and Attorney fees based on the untimely issuance of authorization for right hip replacement surgery. 2. The statutory limit for temporary total disability benefits according to Labor Code section 4656(c). 3. The transition, at the time of termination of temporary disability benefits, to permanent disability benefits. (MOH, July 16, 2025, 2:23-3:2.) The WCJ issued an F&O on October 7, 2025 finding, in relevant part, that defendant had not violated sections 5814 and 5813 by delaying or denying medical treatment or temporary disability benefits. (F&), 10/7/2025, p. 3.) The WCJ noted:

The defendant had a reasonable legal basis to deny surgery authorization due to ongoing litigation and a genuine dispute over medical necessity.

Favours Defendant prevailed

This justified the denial of penalties, sanctions, and attorney fees as no bad faith or unreasonable delay was found.

From the decision · page 3"...the Defendant had some reasonable legal basis to not authorize the surgery pursuant to Dr. Penenberg's RFA as UR denied the surgery. In the interim, between the date of the RFA, 11/16/2023, and the date of final surgery, 9/12/2024, the parties were litigating the issue of UR denial. This does not constitute an unreasonable delay under Labor Code Section 5814 or 5814.5 as the parties were actively litigating the issue of surgery. The Applicant's request for sanctions must be denied." (Id. at p. 3.) The WCJ further noted that defendant did not exhaust temporary disability by unreasonably delaying the surgery noting that a prior trial on the issue of temporary disability had raised a genuine legal basis for terminating temporary disability at that time. The benefit printout notes that temporary disability was paid for a continuous period of 104 weeks through September 10, 2024. (Defendant's H.) Last, the WCJ concluded there was no evidence of bad faith conduct solely intended to cause delay to support sanctions under section 5813.

The parties actively litigated the issue of surgery authorization between the date of the RFA and the surgery date, which does not constitute unreasonable delay.

Favours Defendant prevailed

This supported the conclusion that the delay was not unreasonable under Labor Code section 5814.

From the decision · page 3"...the Defendant had some reasonable legal basis to not authorize the surgery pursuant to Dr. Penenberg's RFA as UR denied the surgery. In the interim, between the date of the RFA, 11/16/2023, and the date of final surgery, 9/12/2024, the parties were litigating the issue of UR denial. This does not constitute an unreasonable delay under Labor Code Section 5814 or 5814.5 as the parties were actively litigating the issue of surgery. The Applicant's request for sanctions must be denied." (Id. at p. 3.) The WCJ further noted that defendant did not exhaust temporary disability by unreasonably delaying the surgery noting that a prior trial on the issue of temporary disability had raised a genuine legal basis for terminating temporary disability at that time. The benefit printout notes that temporary disability was paid for a continuous period of 104 weeks through September 10, 2024. (Defendant's H.) Last, the WCJ concluded there was no evidence of bad faith conduct solely intended to cause delay to support sanctions under section 5813.

No evidence of bad faith conduct solely intended to cause delay was found to support sanctions under Labor Code section 5813.

Favours Defendant prevailed

This negated the basis for sanctions and attorney fees under section 5813.

From the decision · page 3"...the Defendant had some reasonable legal basis to not authorize the surgery pursuant to Dr. Penenberg's RFA as UR denied the surgery. In the interim, between the date of the RFA, 11/16/2023, and the date of final surgery, 9/12/2024, the parties were litigating the issue of UR denial. This does not constitute an unreasonable delay under Labor Code Section 5814 or 5814.5 as the parties were actively litigating the issue of surgery. The Applicant's request for sanctions must be denied." (Id. at p. 3.) The WCJ further noted that defendant did not exhaust temporary disability by unreasonably delaying the surgery noting that a prior trial on the issue of temporary disability had raised a genuine legal basis for terminating temporary disability at that time. The benefit printout notes that temporary disability was paid for a continuous period of 104 weeks through September 10, 2024. (Defendant's H.) Last, the WCJ concluded there was no evidence of bad faith conduct solely intended to cause delay to support sanctions under section 5813.

Requested authorization for right total hip arthroplasty; his request was initially denied by UR but later found to be reasonably necessary by the WCJ.

His medical reporting was substantial evidence supporting the necessity of surgery, but the denial was litigated and not found to be in bad faith.

From the decision · page 2On November 16, 2023, Dr. Brad Penenberg, surgical consultant, issued a request for authorization for a right total hip arthroplasty as well as pre-operative and post-operative testing and durable medical equipment. Defendant issued a UR denial on November 27, 2023. Applicant filed a declaration of readiness to proceed to expedited hearing (DOR) on January 5, 2024 alleging that the UR determination was untimely. The matter was continued three times and finally heard on June 12, 2024.

Provided a report supporting the need for right hip surgery, which was found more persuasive than the PTP's opinion regarding MMI and surgery necessity.

His report was substantial evidence supporting surgery necessity, influencing the award of surgery and temporary disability benefits.

From the decision · page 10Next, Petitioner filed for an Expedited Hearing on the issue of the Petitioner's entitlement to continuing TD benefits. The trial proceeded on 10/2/2023, and a Findings and Award issued on 12/28/2023. PQME Dr. Berkowitz's report of 3/17/2023, indicated Petitioner was not MMI, and that she needed right hip surgery, (Ex 1). On the contrary, PTP Dr. Dini indicated that there was a need for the surgery but simultaneously found that the Petitioner was MMI, (Ex. A). Based on Dr. Dini's report, Defendant terminated TD benefits, (Ex. C). The WCJ found the report of PQME Dr. Berkowitz to be more persuasive and awarded the Petitioner TD benefits from 4/17/2023 and continuing.

Found the applicant to be at MMI and recommended surgery, but his opinion was less persuasive than the QME's regarding ongoing disability and surgery necessity.

His opinion supported surgery but was outweighed by the QME's contrary opinion on MMI and disability.

From the decision · page 10Next, Petitioner filed for an Expedited Hearing on the issue of the Petitioner's entitlement to continuing TD benefits. The trial proceeded on 10/2/2023, and a Findings and Award issued on 12/28/2023. PQME Dr. Berkowitz's report of 3/17/2023, indicated Petitioner was not MMI, and that she needed right hip surgery, (Ex 1). On the contrary, PTP Dr. Dini indicated that there was a need for the surgery but simultaneously found that the Petitioner was MMI, (Ex. A). Based on Dr. Dini's report, Defendant terminated TD benefits, (Ex. C). The WCJ found the report of PQME Dr. Berkowitz to be more persuasive and awarded the Petitioner TD benefits from 4/17/2023 and continuing.

Labor Code section 5813

Labor Code section 5813 provides for sanctions against parties engaging in bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.

Applied to assess whether defendant's delay in authorizing surgery was sanctionable bad faith.

From the decision · page 5II In addition to the analysis outlined in the Report incorporated hereto, we add the following analysis. Section 5813 provides that "[t]he workers' compensation referee or appeals board may order a party, the party's attorney, or both, to pay any reasonable expenses, including attorney's fees and costs, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay" (Lab. Code, § 5813(a).) WCAB Rule 10421, promulgated under section 5813, discusses the nature and scope of conduct that is subject to sanctions. Subdivision (b) provides that "[b]ad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay include actions or tactics that result from a willful failure to comply with a statutory or regulatory obligation, that result from a willful intent to disrupt or delay the proceedings of the Workers' Compensation Appeals Board, or that are done for an improper motive or are indisputably without merit." (Cal. Code Regs., tit. 8, § 10421(b).) Subdivision(b)(6)-(b)(8) outline considerations for determining whether a position or defense is indisputably without merit.

WCAB Rule 10421

WCAB Rule 10421 defines bad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay, including willful failure to comply with obligations or improper motives.

Used to evaluate the nature and scope of conduct subject to sanctions under Labor Code section 5813.

From the decision · page 5II In addition to the analysis outlined in the Report incorporated hereto, we add the following analysis. Section 5813 provides that "[t]he workers' compensation referee or appeals board may order a party, the party's attorney, or both, to pay any reasonable expenses, including attorney's fees and costs, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay" (Lab. Code, § 5813(a).) WCAB Rule 10421, promulgated under section 5813, discusses the nature and scope of conduct that is subject to sanctions. Subdivision (b) provides that "[b]ad faith actions or tactics that are frivolous or solely intended to cause unnecessary delay include actions or tactics that result from a willful failure to comply with a statutory or regulatory obligation, that result from a willful intent to disrupt or delay the proceedings of the Workers' Compensation Appeals Board, or that are done for an improper motive or are indisputably without merit." (Cal. Code Regs., tit. 8, § 10421(b).) Subdivision(b)(6)-(b)(8) outline considerations for determining whether a position or defense is indisputably without merit.

Dubon v. World Restoration, Inc. (2014) 79 Cal.Comp.Cases 1298 (Appeals Board en banc)

Dubon v. World Restoration, Inc. (2014) 79 Cal.Comp.Cases 1298 (Appeals Board en banc) establishes that the Appeals Board has jurisdiction to determine whether a UR decision is timely and medical necessity if UR is untimely.

Cited to explain the jurisdiction and medical necessity determination in the context of UR denial litigation.

From the decision · page 6Cal.Comp.Cases 1298, the Appeals Board held that it has jurisdiction to determine whether a UR decision is timely. If a UR decision is untimely, the determination of medical necessity for the treatment requested may be made by the Appeals Board. (Dubon II, supra, at pages 1299, 1300.) As noted by the WCJ in her original opinion, she found that the medical reporting was substantial evidence to rebut the Medical Treatment Utilization Schedule (MTUS) despite applicant not having completed the recommended course of injections prior to surgical intervention. Defendant had a genuine basis to argue that the record did not support the treatment based on MTUS. Until that determination was made by the WCJ, there was a legitimate dispute and defense. Defendant's position was not without merit pursuant to Dubon II and therefore cannot be the basis for sanctions, costs, or attorney's fees pursuant to section 5813.

Ramirez v. Drive Financial Services (2008) 73 Cal.Comp.Cases 1324 (Appeals Board en banc)

Ramirez v. Drive Financial Services (2008) 73 Cal.Comp.Cases 1324 (Appeals Board en banc) states that a penalty is payable only when payment has been unreasonably delayed or refused, and a genuine doubt about liability negates unreasonableness.

Applied to determine that defendant's delay was not unreasonable due to genuine legal and medical doubt.

From the decision · page 6Further, we agree with the WCJ that there was not an unreasonable delay pursuant to section 5814. In Ramirez v. Drive Financial Services (2008) 73 Cal.Comp.Cases 1324, 1331 (Appeals Board en banc), we stated that "section 5814(a)... provides that a penalty is payable only `[w]hen payment of compensation has been unreasonably delayed or refused.' (Emphasis added.) Relevant here, we note that a delay or a refusal to pay is generally not `unreasonable' if the defendant had `genuine doubt from a medical or legal standpoint as to [its] liability.' (Kerley v. Workers' Comp. Appeals Bd. (1971) 4 Cal.3d 223, 230 [36 Cal.Comp.Cases 152].)"

Kerley v. Workers' Comp. Appeals Bd. (1971) 4 Cal.3d 223

Kerley v. Workers' Comp. Appeals Bd. (1971) 4 Cal.3d 223 establishes that a delay or refusal to pay is not unreasonable if there is genuine doubt from a medical or legal standpoint.

Cited to support that genuine doubt negates unreasonable delay under Labor Code section 5814.

From the decision · page 6Further, we agree with the WCJ that there was not an unreasonable delay pursuant to section 5814. In Ramirez v. Drive Financial Services (2008) 73 Cal.Comp.Cases 1324, 1331 (Appeals Board en banc), we stated that "section 5814(a)... provides that a penalty is payable only `[w]hen payment of compensation has been unreasonably delayed or refused.' (Emphasis added.) Relevant here, we note that a delay or a refusal to pay is generally not `unreasonable' if the defendant had `genuine doubt from a medical or legal standpoint as to [its] liability.' (Kerley v. Workers' Comp. Appeals Bd. (1971) 4 Cal.3d 223, 230 [36 Cal.Comp.Cases 152].)"

The parties were actively litigating the issue of surgery authorization between the date of the RFA and the surgery date, which does not constitute unreasonable delay.

From the decision · page 3"...the Defendant had some reasonable legal basis to not authorize the surgery pursuant to Dr. Penenberg's RFA as UR denied the surgery. In the interim, between the date of the RFA, 11/16/2023, and the date of final surgery, 9/12/2024, the parties were litigating the issue of UR denial. This does not constitute an unreasonable delay under Labor Code Section 5814 or 5814.5 as the parties were actively litigating the issue of surgery. The Applicant's request for sanctions must be denied." (Id. at p. 3.) The WCJ further noted that defendant did not exhaust temporary disability by unreasonably delaying the surgery noting that a prior trial on the issue of temporary disability had raised a genuine legal basis for terminating temporary disability at that time. The benefit printout notes that temporary disability was paid for a continuous period of 104 weeks through September 10, 2024. (Defendant's H.) Last, the WCJ concluded there was no evidence of bad faith conduct solely intended to cause delay to support sanctions under section 5813.

No evidence of bad faith conduct solely intended to cause delay was found to support sanctions under Labor Code section 5813.

From the decision · page 3"...the Defendant had some reasonable legal basis to not authorize the surgery pursuant to Dr. Penenberg's RFA as UR denied the surgery. In the interim, between the date of the RFA, 11/16/2023, and the date of final surgery, 9/12/2024, the parties were litigating the issue of UR denial. This does not constitute an unreasonable delay under Labor Code Section 5814 or 5814.5 as the parties were actively litigating the issue of surgery. The Applicant's request for sanctions must be denied." (Id. at p. 3.) The WCJ further noted that defendant did not exhaust temporary disability by unreasonably delaying the surgery noting that a prior trial on the issue of temporary disability had raised a genuine legal basis for terminating temporary disability at that time. The benefit printout notes that temporary disability was paid for a continuous period of 104 weeks through September 10, 2024. (Defendant's H.) Last, the WCJ concluded there was no evidence of bad faith conduct solely intended to cause delay to support sanctions under section 5813.