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This case presents a narrow issue of construction under Kerley v. Workmen’s Comp. App. Bd. (1971) 4 Cal.3d 223 [ 93 Cal.Rptr. 192 , 481 P.2d 200 ], which set the standard for determining when employers are liable for a 10 percent increase in a worker’s compensation award because of unreasonable delay in making payments, under Labor Code section 5814. 1 We are asked to decide how broad a meaning the Supreme Court intended for the term “liability” in holding “that the only satisfactory excuse for delay in payment of disability benefits ... is genuine doubt from *898 a medical or legal standpoint as to liability for benefits . . . .” (Kerley v. Workmen’s Comp. App. Bd., supra, 4 Cal.3d 223, 230.)

Employer M&J Logging and its insurance carrier Employee Benefits Insurance Company (collectively EBIC) contend that Kerley insulates them from the statutory penalty because of their doubt of liability to make further payment of compensation until they had fully offset overpayments and before the final order was issued. The Worker’s Compensation Appeals Board (board) accepted this rationale. We hold, for a number of reasons, that EBIC’s position is incorrect.

I.

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