Q: Does "sick pay" medical benefit payments qualify as a salary continuation plan as justification to avoid a WC penalty ?

A: IF what you are trying to say is that the INSURER did not pay Temporary Disability indemnity AT ALL, then no, a penalty is due. But if you are trying to say the Insurer paid 2/3 of your average earnings PLUS the employer used accrued benefits to add to that to make a full paycheck with co-payments for dental and health insurance, then no, there is no penalty for that.

The LABOR CODE requires just that the Insurer pay 2/3 of the average weekly earnings at the time of injury. The insurer must pay that back to the first date the MPN Treating pHysician wrote this worker is totally temporarily disabled up to the present date and continuing then every two weeks until 104 weeks passes or until the QME or the treating MPN doc writes the TTD has ended. If the payments are not made, there is a penalty due.

A: I do not know that you can get a penalty without an award in place, but LC 5814 does provide for an increase in benefits for late payment. In a February 2018 decision (W.C.A.B. No. ADJ10459624 Yelena Zakaryan, Applicant v. Glendale Community College,) the Appeals board found that applicant who suffered industrial injury to her lungs, respiratory system and pulmonary system while working as lab technician on 2/29/2016 was entitled to receive temporary disability indemnity benefits pursuant to parties' 10/20/2016 stipulated award, under which parties agreed that applicant was temporarily disabled from 3/1/2016 and continuing, and that defendant was liable for sanctions for failure to pay temporary disability after date of stipulated award, when WCAB found that, contrary to defendant's assertion, applicant's use of accrued sick leave and vacation pay to cover her paychecks was not payment by defendant in lieu of paying temporary disability, as applicant was entitled to have accrued leave time she used to pay herself while temporarily disabled reimbursed by defendant.

So unfortunately, the answer to your question is "yes" and "no." It's a panel decision and not binding on other judges, but they may be persuaded by it. Sick pay is not TTD.