Ramirez Lara: Routine Payment Delays Do Not Constitute Bad-Faith Sanctions Under Labor Code Section 5813

In Cristofer Ramirez Lara v. The Ding Doctor, Inc., the Workers’ Compensation Appeals Board denied reconsideration of a trial judge’s decision denying bad-faith sanctions against Travelers Property Casualty Company of America that repeatedly delayed paying a medical-legal evaluation invoice. The Appeals Board held that the evidence of two possible response delays did not establish sanctionable bad faith on this record.

Medical-Legal Billing Delays and Subsequent Compromise

The applicant designated Physical Rehabilitation Services, Inc., and Arbi Mirzaians, D.C., as his primary treating provider, and the provider performed an initial evaluation and issued a medical-legal report on May 30, 2024. On July 5, 2024, the cost petitioner served an itemized invoice for $923.74. The carrier issued an Explanation of Review on August 28, 2024, listing a zero-dollar payment on the ground that the services had already been considered. Following an Order Approving Compromise and Release in the case-in-chief on September 25, 2024, the cost petitioner submitted a repeat payment request and later filed a formal request for second bill review on November 18, 2024.

On January 29, 2025, the provider filed its petition dated January 15 for penalties, interest, expenses, costs, sanctions and fees. On May 27, 2025, the parties agreed to settle the underlying invoice for $626.00, including statutory penalties and interest under Labor Code section 4622. The $626 agreement applied if payment issued within 30 days. The cost petitioner pursued an amended petition for monetary sanctions under Labor Code section 5813 and WCAB Rule 10786, proceeding to trial on October 2, 2025, solely on the sanctions issue.

Why These Possible Delays Did Not Establish Bad Faith

The Workers’ Compensation Administrative Law Judge found no good cause to order sanctions, and the Appeals Board affirmed on reconsideration. Under WCAB Rule 10786(i)(1) and Rule 10421(b), monetary sanctions under section 5813 require a showing of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay. The Board explained that section 5813 sanctions are designed to punish litigation abuses and control tribunal calendars, rather than serve as an automatic remedy for delayed bill payments.

Citing Duncan v. Workers’ Comp. Appeals Bd. (2008) 166 Cal.App.4th 294, 302, the Board highlighted that bad faith requires conduct resulting from a willful failure to comply with statutory obligations or an improper motive indisputably without merit. The panel said the defendant appeared possibly to have responded late to two requests. It treated those possible delays as mistakes that could be construed as routine errors; the billing-review questions themselves had not been submitted for decision at trial. Because the record contained no evidence of willful intent or a demonstrated pattern of abusive litigation tactics, the provider failed to meet the evidentiary standard for section 5813 sanctions.

Practical Guidance for Workers’ Compensation Fee Litigation

The panel decision in Ramirez Lara emphasizes the clear boundary between statutory late-payment remedies and discretionary monetary sanctions:

• Separate statutory additions under section 4622 from bad-faith sanctions under section 5813. Negotiating a settlement for billed fees, penalties, and interest does not automatically establish entitlement to litigation sanctions.
• Build an evidentiary record showing willful noncompliance or repeated institutional delay if seeking section 5813 sanctions. Identify evidence explaining why the conduct meets the bad-faith standard, rather than relying only on two late responses.

Rule 10421(b)(4), as quoted by the panel, excepts failures resulting from mistake, inadvertence, surprise or excusable neglect. That language helped explain why the possible routine errors did not establish bad faith on the submitted record. The billing-review merits had not been submitted at the sanctions-only trial. Ramirez Lara, decision, pages 5–7.