McCarthy

On April 19, 2004, Governor Arnold Schwarzenegger signed into law Senate Bill No. 899 (2003-2004 Reg. Sess.), a package of reforms to the workers’ compensation laws. (Stats. 2004, ch. 34.) (Bill No. 899.) The legislation took effect immediately as an urgency measure. (Stats. 2004, ch. 34, § 49.) Bill No. 899 amended and repealed former Labor Code section 5814, and added new section 5814. Both the former and the new statute authorize imposition of penalties for the unreasonable delay or refusal to pay compensation. (Stats. 2004, ch. 34, §§ 42 & 43.) Former section 5814 authorizes penalties equal to 10 percent of “the full amount of the order, decision, or award . . . ,” As pertinent here, new section 5814, subdivision (a) provides “the amount of the payment unreasonably delayed or refused” is increased up to 25 percent or $10,000, whichever is less. In other words, if former section 5814 applies, the applicant’s entire award of temporary disability benefits—past, present and future—is increased by the 10 percent penalty. Under new section 5814, subdivision (a), the penalty is assessed only against the amount of payment delayed or refused.

On December 8, 2004, the Workers…