In California, the legislature created a penalty for temporary disability indemnity outside the cap of two years from the commencement of benefits.  In the en banc decision of Hawkins v. Amberwood Products, et al., the question arose as whether the two year cap began when the benefits were first paid or owed.  In this decision, the Workers’ Compensation Appeals Board (“WCAB”) held that the date of commencement of a “temporary disability payment” as used in Labor Code section 4656(c)(1), means the date on which temporary disability indemnity was first paid, and not the date when temporary disability indemnity was first owed.  Therefore, when a defendant chooses not to pay temporary disability and later it is determined that the applicant was temporarily disabled; a defendant is responsible for payments outside the cap for any period of retroactive temporary disability.

In Hawkins, the applicant sustained an industrial injury to her spine.  E.D.D. paid benefits from July 26, 2004 through March 31, 2004 and State Compensation Insurance Fund (“SCIF”) reimbursed them.  The applicant also received temporary disability benefits from July 17, 2004 through July 14, 2006.  That being said, SCIF did not commence temporary disability until May 3, 2005.  At that time, the defendant paid retroactive temporary disability from July 14, 2004 through May 3, 2005.  SCIF did so with the hope that it would only be responsible for additional payments potentially through July 16, 2006 (two years from the first date the applicant was temporarily disabled), pursuant to Labor Code section 4656(c)(1).  The applicant disagreed and the parties proceeded to trial on the issue.