Gastelum: A Returned Fee Check Did Not Establish Unreasonable Delay, but Interest Remained Open

The WCAB found no unreasonable delay in replacing a returned attorney-fee check, but it still required a separate decision about interest. Gastelum v. Pacific Clinics, No. ADJ9098027 (WCAB Oct. 9, 2026), illustrates why a failed penalty claim does not answer every payment question.

The October 9, 2026 decision was issued by Commissioner Joseph V. Capurro, Chair Katherine A. Zalewski and Commissioner Paul F. Kelly. This WCAB panel decision applies the en banc penalty framework to a specific returned-check record. The official opinion contains the payment history, the trial judge’s explanation and the panel’s separate treatment of interest.

A settlement payment reached an undeliverable-mail problem

The compensation case settled through a Compromise and Release approved on October 23, 2024. The settlement was $195,000, less a $19,500 attorney fee. Its provisions waived penalties and interest conditionally if payment was made within 30 days of the defendant’s receipt of the approval order. The fee was to be paid directly to counsel. Pages 2–3 and 9.

The administrator issued the fee check on October 31. It was sent to counsel’s confirmed address but returned undelivered. Counsel then exchanged emails about nonreceipt and replacement. Defense counsel asked on November 15 whether payment had arrived. Applicant’s counsel reported nonreceipt on November 18. On November 20, defense counsel asked repeatedly whether to reissue the check; applicant’s counsel replied without answering that question. On November 26, counsel demanded penalties, fees and interest. Only on November 27 did he confirm reissue and the address. The panel identified those exchanges in applicant’s exhibits 8–12 and 23. Page 8. The replacement check was issued on December 3. Pages 3 and 6–9.

The panel’s facts section describes an October 31 return and November 12 notice; the report separately recites a November 15 postal stamp and testimony placing receipt of the returned item around November 22. These are differently attributed entries in the payment record. The panel’s analysis turns on the correct address, follow-up and replacement exchange rather than selecting one reconciled return date. Pages 3, 6–9.

The penalty question depended on what each side did

Labor Code section 5814 addresses compensation unreasonably delayed or refused. Its maximum increase is the lesser of 25 percent of the delayed amount and $10,000; the maximum is not an automatic consequence of late receipt. The panel applied the factors discussed in the en banc decision Ramirez v. Drive Financial Services (2008) 73 Cal.Comp.Cases 1324, including the length and cause of delay, whether an error was promptly corrected, applicable payment requirements, business practices and any contribution by the recipient. Pages 5–6 (factors) and 8–9 (application).

The panel found the original payment timely and correctly addressed. It also considered the defense’s attempts to confirm receipt and arrange replacement. Applicant’s counsel did not answer the replacement question promptly, even when responding to an email that asked it. That exchange raised the possibility that the check could have been reissued sooner with a clearer response. Pages 8–9.

The administrator’s witness described a November 26 stop-payment request and the responsible adjuster’s absence on Mondays, with reissue entered December 3 after the Thanksgiving period. The trial evidence thus addressed stop-payment processing and the office schedule. The panel weighed that schedule together with timely initial issuance, the confirmed address, defense follow-up and counsel’s delayed answer about reissue. Its conclusion was that this record did not support an unreasonable delay warranting a section 5814 penalty or corresponding section 5814.5 attorney fees.

Interest required its own finding

Labor Code section 5800 addresses interest on compensation awards. For amounts payable immediately, the statute runs interest from the making and filing of the award; later amounts bear interest when they become due. The panel explained that interest is mandatory. Where awarded attorney fees are payable directly to counsel, the panel cited Koszdin v. State Compensation Insurance Fund (2010) 186 Cal.App.4th 480, 490, for paying that interest directly to counsel. Page 9.

The trial judge had treated the interest as waived because the original fee check was issued within the settlement’s 30-day period and sent to the correct address. The panel found that conclusion insufficient. At some point the money remained owed and interest began to accrue, yet the record did not establish payment of interest or a finding identifying the accrual date.

The panel therefore deferred the interest issue. The accrual date and amount remained for determination. It encouraged the parties to resolve what it expected to be a small interest dispute without further proceedings. Pages 9–11.

The final order separated three possible remedies

This distinction matters when reviewing a payment dispute. A recipient may lack proof of unreasonable conduct while still identifying unpaid interest. Conversely, an interest balance does not by itself establish entitlement to a penalty.

What to preserve when a check is returned

For the practical replacement steps and the records to request, see our returned-settlement-check guide. The case analysis separates the reasonable-delay finding from the still-open interest calculation.

For advice about a returned settlement or fee check, bring those records and identify the relief requested: Replacement of principal, interest, a penalty, or enforcement fees. That lets the review address the disputed obligation instead of treating all four as the same claim.