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WORKERS’ COMPENSATION CASES
Summary: Exclusion for claims arising directly or indirectly out of a breach of contract or warranty applies to tort claims based on the same facts as the excluded contract claims. Discussion: This was a contribution action between two insurance companies that had issued general liability policies to a construction company. A former client sued the construction company for defective construction, asserting claims for (1) breach of the construction contract, (2) negligence, (3) unjust enrichment, (4) breach of an implied warranty that the property would be constructed free from defects and be fit for ordinary purposes, and (5) breach of an implied covenant to perform its work in a competent manner. Mt. Hawley refused to defend the action, relying in part on a Breach of Contract Exclusion in its policies that excluded “any claim or ‘suit’ … arising directly or indirectly out of” a “[b]reach of express or implied contract” or a “[b]reach of express or implied warranty.” Plaintiff insurer argued the exclusion did not apply to noncontractual claims, while defendant argued that all claims were based on the same facts as the contract claims and therefore all were subject to the exclusion. Because California courts construe the phrase “arising out of” broadly even when used in an exclusion, and look to the conduct alleged rather than the legal theories relied upon, the court agreed with the defendant that the exclusion applied to the various claims that were all based on the same facts. Otherwise, it observed, claimants might recharacterize their breach of contract claims as noncontractual ones to manufacture coverage where it would not otherwise exist. Finally, the court rejected the plaintiff’s argument that defendant waived the contract exclusion by failing to mention it in its initial denial letter. California law requires proof of waiver by clear and convincing evidence of an intent to waive a known right. Mere omission does not establish such intent. Accordingly, the exclusion is not waived.
WORKERS’ COMPENSATION CASES Summaries provided by Randal C. McClendon of Cuneo, Black, Ward & Missler
Rosenbrook v. Knight-Swift Transportation Holdings, Inc. 2021 Cal. Wrk. Comp. P.D. LEXIS 16
Summary: A telehealth medical-legal evaluation that satisfies the provisions of Emergency Regulation Section 46.2 is an appropriate alternative to an in-person evaluation during the current Covid-19 pandemic. Discussion: Applicant claimed injury to the low back, urology system, and internal system in the form of diabetes and hypertension on 6/27/2013 while employed as a driver by Knight-Swift Transportation. Defendant accepted the low back but disputed other alleged body parts. The parties obtained a QME panel in internal medicine, and Dr. Bahman Omrani was selected. On 8/21/2020, applicant sent a letter to Dr. Omrani asking if a physical exam was required or if he would agree to proceed with a telehealth appointment. Dr. Omrani agreed to proceed with the evaluation via telehealth. Defendant refused to agree to move forward with the telehealth evaluation, so applicant filed a DOR for an expedited hearing on the issue. At trial, the applicant testified that he lives in Washington State, so for him to attend the QME evaluation in person, he would have to travel to California. He further testified that he has medical conditions that make him high risk, so he was concerned about traveling to an in-person examination. Applicant testified he agreed to proceed with a telehealth examination, and if testing were required, he would go to a local place to complete it. The WCJ issued the Findings & Order stating that defendant’s denial of the QME evaluation via telehealth was unreasonable pursuant to Emergency Regulation 46.2(a)(3)(C), and the parties were ordered to proceed with a telehealth examination with Dr. Omrani. Defendant filed a Petition for Reconsideration asserting that the elements of Section 46.2(a)(3) were not met, and therefore the applicant was required to attend an in-person QME evaluation. The WCAB agreed with the WCJ that defendant unreasonably denied agreeing to a telehealth evaluation per the emergency regulation, that the
applicant had met all the elements in Emergency Regulation 46.2(a)(3), and that the defendant has not shown significant prejudice or irreparable harm by the order for a telehealth evaluation with the QME. In so finding, the WCAB stated, “We decline to order him to risk his health and the health of his household, in addition to potentially other members of the public, to attend an in-person evaluation with Dr. Omrani.”
Summary: In person med-legal examinations are allowed during the pandemic if the applicant is willing to travel and the physicians conducting the examinations are able to safely conduct in-person examinations. Discussion: Applicant, while living outside California, obtained panels in Internal Medicine, Otolaryngology, and Neurology. Applicant wished to travel to California to complete her medical-legal evaluations. Defendant objected, contending that allowing applicant to travel to California was contrary to California’s public policy and CDC’s health guidelines. Defendant claimed that the travel would expose them to unnecessary liability. Instead, defendant proposed that all discovery necessitating travel to California be stayed until such time as it was safe to travel, whenever that may be. The parties proceeded to a Priority Conference on the issue. At the Conference, the WCJ issued an Order as follows: “DEF is ordered to arrange QME appointments with Dr. Moore, Dr. Stewart, and Dr. Smith. DEF objection re: risk of travel is noted, but not a basis to prevent exams from taking place or Applicant traveling to CA.” Defendant filed a Petition for Removal contending that the order would cause substantial prejudice and irreparable harm. The Court denied the removal petition finding that applicant was willing to make the trip, the physicians were willing to conduct the examinations and that Governor Newsom’s Order regarding travel restrictions did not apply to residents of other states.
Summary: A stipulation to an industrial injury is sufficient to establish an employer’s liability for the Supplemental Job Displacement Benefit (SJDB) Voucher. Discussion: Applicant sustained industrial injury in a cumulative trauma on 9/4/2015. At some point, the claim resolved by way of C&R. Settlement of the Supplemental Job Displacement Benefit Voucher was not noted in the C&R documentation (nor was it initialed). Subsequently, applicant claimed the SJDB, and the issue went to trial as to whether applicant’s voluntary resignation precluded issuance of the voucher and whether the WCAB lacked jurisdiction to determine eligibility for the voucher after the C&R was final. Upholding the WCJ, the WCAB relied on the prior en banc decision in Dennis v. State of CA (2020) 85 CCC 389 where the employer’s inability to make a bona fide offer of regular, modified, or alternative work did not release the statutory obligation to provide a voucher under Labor Code 4658.7. The employer must make the offer to avoid liability under the statute. Here, the amended Pre-Trial Conference statement stipulated to an industrial injury, although a prior version did not. The facts are unclear as to whether there was any evidence of permanent disability, or even an industrial injury, but the WCAB determined that the stipulation was sufficient to establish liability for the voucher. NOTABLY, Chair Zalewski took it upon herself to concur and dissent, and write separately, that to the extent the majority opinion could be read to support settlement of the voucher under any conditions, she dissents. She specifically disavows Beltran, opining that Labor Code 4658.7 and its legislative history expressly preclude “cashing out” the voucher under any circumstances. The wrong panel could eventually throw Beltran right out the window.
Gonzalez v. Aerotec Alloys 2020 Cal. Wrk. Comp. P.D. LEXIS 423 (Board Panel Decision)
Summary: Whether a psychiatric injury arises from actual events of employment is a factual/legal issue for the WCJ and not a medical issue.
Discussion: Applicant was employed as a metal pourer for Aerotec Alloys from 11/25/2002 through 5/29/2018 and claimed injuries to his psyche. Defendant denied the claim raising the good faith personnel defense pursuant to Labor Code 3208(h), statute of limitations, and post-termination defense. Applicant was terminated for failing to return to work after a suspension/vacation. Applicant began treating with Dr. Grewal on 7/31/2018. Dr. Grewal indicates that applicant’s injury was the result of actual events of his employment which are described as having issues and arguments with his supervisor and an engineer. Applicant told Dr. Grewal that he was being discriminated against and mistreated. Applicant was then seen by QME Dr. Drucker on 5/9/2019. The QME indicated that this is a stress claim which involves two supervisors, one of whom harassed applicant directly and one who harassed him indirectly. On 10/16/2020, the Court issued its Findings of Fact in which it found that applicant failed to meet his burden regarding sustaining injury to his psyche AOE/COE. The WCJ noted that the first determination to be made with respect to the compensability of an alleged psychiatric injury is whether actual events of employment are involved. Applicant has the burden of proving industrial causation of injury. When there is conflicting testimony on matters of fact and there are issues of credibility of witnesses, the decision is solely for the trier of fact. Applicant thereafter filed a Petition for Reconsideration. The WCAB agreed that the question of whether the alleged cause of injury involved actual events of employment is a factual/legal determination made by the WCJ, not a medical determination. Applicant testified that the supervisors would make fun of him and laugh and that he was intimidated. He further testified that he saw the supervisor laughing, but never heard what he was saying and did not know what they were laughing about. In contrast, the supervisor testified to never laughing at, ridiculing, bullying, or following applicant. Applicant’s attorney failed to provide any additional witnesses beyond applicant. Thus, the only testimony contradicting the supervisors was that applicant believed that two supervisors were laughing at him because they would look at him when they were talking. The belief that something may be happening is insufficient for a finding that actual events of employment are involved when applicant testified that he did not know what they were saying or laughing about. The determination that actual events were not involved was based on the credibility of the witnesses regarding whether or not applicant was actually laughed at. Accordingly, the WCAB agreed with the WCJ finding that applicant did not meet his burden of proof to establish that his injury was caused by actual events of employment.
Lua v. Lua’s Bldg. Servs. 2021 Cal. Wrk. Comp. P.D. LEXIS 58 (Board Panel Decision)
Summary: Mere deviation by an employee from a strict course of duty does not release the master from liability. In order to have such an effect, the deviation must be shown substantially to amount to an entire departure. Discussion: Applicant, Miguel Lua, employed as a journeyman on 4/30/2018 by Lua’s Building Services, sustained an injury arising out of and in the course of employment to his head, brain, and right wrist. Defendant argues that applicant materially deviated from his errand at the time of the motor vehicle accident that caused his injuries. Applicant testified that the reason he was driving late at night on 4/30/2018 was to return his employer’s boat to Hollister. Applicant was involved in a motor vehicle accident around 9:23 pm. Applicant testified that he left the McDonald’s on San Felipe Road in Hollister shortly before the accident occurred. Applicant also testified that he has no set time for breaks. The employer told him that he can stop for food when he is hungry or take a nap when he is tired. Applicant had not felt hungry until he reached Hollister. He planned to eat at Lua’s shop. He did not eat at the restaurant because it was late. He drove at the 55 MPH speed limit to get from that McDonald’s to Lua’s yard. The WCAB found that although applicant’s reasons for driving at that particular time when the accident occurred were in part personal and in part professional, he is not barred from compensation because his reasons were two-fold. The WCAB cited to Lockheed Aircraft Corp. v. Industrial Acc. Com., and Argonaut Ins. Co. v.
I.A.C.: “The status of an employee acting in the course of his employment is not destroyed by the fact that he may be pursuing a dual purpose. If he is carrying out some duty or right in connection with his employment, and combines with it an object of his own, he is still considered to be acting in the course of his employment where the employee is combining his own business with that of his employer, or attending to both at substantially the same time, no nice inquiry will be made as to which business he was actually engaged in at the time of injury, unless it clearly appears that neither directly or indirectly could he have been serving his employer.”
Applied Materials v. WCAB 2021 86 CCC 331
Summary: An applicant was entitled to an unapportioned 100 percent award due to post-traumatic stress disorder caused directly and entirely by the primary treating workers’ compensation physician’s sexual misconduct. Discussion: A worker claimed three industrial injuries from 1996 until 2008: a specific injury in 2001, a specific injury in 2005, and a cumulative trauma injury through her last day of work in 2008. Applicant was evaluated by a psychiatric QME, Dr. Sidle, for the 2008 CT claim. In 2013, when Dr. Sidle saw applicant, he felt that she was severely depressed and suicidal and that she urgently needed inpatient psychiatric treatment. Subsequent evaluations revealed that applicant had been engaging in a sexual relationship with her treating pain management physician. According to the applicant, the pain doctor had made multiple suggestive comments to her in his office beginning in 2012 indicating they should become involved. Over the ensuing year, he engaged in increasingly bold sexually provocative actions and comments. Beginning in 2013, he showed up multiple times at her house and they engaged in sexual intercourse. As a result, the applicant became increasingly anxious and depressed. The applicant ultimately started refusing to engage in sexual activity. The records show that he contacted her over 70 times between May and November of 2013. The injured worker testified that her physician controlled her medication and her entitlement to benefits including Social Security Disability as well as workers’ compensation benefits, and she felt she was stuck in a relationship because he was her physician. In January 2016, after she disclosed additional details about her sexual contacts with the physician, Dr. Sidle diagnosed her with post-traumatic stress disorder (PTSD). Dr. Sidle reported the worker had a Global Assessment of Function (GAF) score of 45 but also opined that she was 100 percent permanently disabled based on her psychiatric condition alone and unable to work. Dr. Sidle later testified that the disability was entirely due to her PTSD, which was due entirely to her sexual relationship with the pain doctor. On the primary issue for appeal, the 6th District Court of Appeal held that the worker’s psychiatric disability that arose out of her sexual exploitation by the doctor was compensable. It rejected the argument that the worker broke the chain of industrial causation when she entered into a personal relationship with her doctor outside of the medical setting, and that her PTSD did not arise out of the employment because the sexual activity between the doctor and applicant occurred in her home, did not involve medical treatment, and was consensual. The Court explained that a worker is entitled to compensation for a new or aggravated injury that results from medical treatment of an industrial injury.
Alex v. All Nation Security Services, Inc. 2021 Cal. Wrk. Comp. P.D. LEXIS 139
Summary: The performance of a duty in an unauthorized manner does not take the employee outside the course of employment. Discussion: Applicant was employed as a security officer/guard by All Nation Security Services, Inc. on August 24, 2017. During his shift, a homeless person came inside the lobby of the Greyhound bus station. The person was dancing, speaking badly in the lobby, and disrupting bus passengers. An employee asked applicant to escort the homeless person outside. Applicant asked the person to leave. The person did not leave and cursed at applicant. Applicant then chased the person outside the building and tripped on the sidewalk, outside of the bus
