A settlement by compromise and release is approved; payment is delayed because the order was filed in the wrong file by the insurer. The employee is entitled to which remedy?

• A. Entitled to a 10% penalty because the unreasonable delay
• B. Not entitled to the penalty because the delay was not significant
• C. Entitled to interest and a 10% penalty because of the delay
• D. Not entitled to a penalty but is entitled to interest from date of the award

Answer: (C)

When a compromise and release is approved, the insurer must pay the agreed amount promptly. If payment is delayed, California workers’ compensation law provides two remedies to the employee: interest on the overdue sum and a 10% penalty for an unreasonable delay. In this case, the payment was delayed because the order was filed in the wrong file by the insurer, which is an administrative error. Even though the fault lies with the insurer’s handling, the law treats the delay as unreasonable and thus triggers both remedies. The employee is entitled to interest from the date the payment was due and a 10% penalty on the amount due.