Workers’ Compensation Is Not Always an Exclusive Remedy

Right to Augment Workers’ Comp Benefits Limited to Worker

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In California, where an employee is injured in the course and scope of his or her employment, workers’ compensation is generally the exclusive remedy of the employee and his or her dependents against the employer. The “exclusivity rule” is based upon a presumed compensation bargain where the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort.

In Lefiell Manufacturing Co v. the Superior Court of Los Angeles County, No. S192759 (Cal. 08/20/2012) the California Supreme Court accepted the fact that, contrary to general knowledge, there are limited statutory exceptions to the exclusivity rule that authorize the injured worker to seek to augment the workers’ compensation benefits by bringing an action at law for damages against the employer. One such exception is found in Labor Code § 4558, called the “power press exception.”

Section 4558 authorizes an injured worker to bring a civil action for tort damages against his or her employer where the injuries were “proximately caused by the employer’s knowing removal of, or knowing failure to install, a point of operation guard on a power press,” where the “manufacturer [had] designed, installed, required or otherwise provided by specification for the attachment of the guards and conveyed knowledge of the same to the employer.” (§ 4558, subds. (b) & (c).)

A worker injured while operating a power press without a point of operation guard brought a civil suit against his employer under the power press exception that included a claim for loss of consortium on behalf of his spouse, predicated on the facts allegedly establishing the section 4558 violation.

The Supreme Court was called upon to determine the viability of the spouse’s loss of consortium claim.

Court of Appeal Decision

The Court of Appeal concluded the spouse’s loss of consortium claim as pleaded in the civil action remained viable. The court believed that because section 4558 authorized the injured worker to sue his employer in a court of law for his power press injuries, the claims of both the worker and his dependent spouse fell outside the workers’ compensation system altogether, and accordingly, the exclusivity rule did not apply or bar the spouse’s loss of consortium claim.

Factual and Procedural Background

O’Neil Watrous and Nidia Watrous, his spouse filed a civil action against LeFiell Manufacturing Company for injuries suffered by employee while operating a “FENN 5f” swaging machine while working for LeFiell.  LeFiell contended Mrs. Watrous lacked standing to pursue or join in any cause of action for tort damages arising from the power press injury, and that her loss of consortium claim for damages was likewise barred by the exclusivity rule and did not fall within any of the recognized statutory exceptions to that rule.

Discussion

Based on the statutory language, California courts have held workers’ compensation proceedings to be the exclusive remedy for certain third party claims deemed collateral to or derivative of the employee’s injury.

As a factual matter, Mrs. Waltrous’ claim for loss of consortium was unquestionably derivative of, and dependent on, Mr. Waltrous’ industrial injuries.

The Supreme Court concluded that Section 4558 is an exception to the workers’ compensation exclusivity rule only to the extent that it authorizes an employee who suffers a power press injury to seek to augment his or her recovery under the workers’ compensation system.

Decision

The Supreme Court stated that the  “remedy of tort damages in an action at law pursuant to the power press exception is intended to augment, and not replace, the remedies otherwise available to compensate for the industrial injury under the workers’ compensation system.” If the injured worker prevails in his or her suit the employer is entitled to a setoff or credit against that judgment or settlement for any workers’ compensation benefits paid to the worker.

Where the worker’s power press injuries do not prove fatal, the Legislature has expressly restricted standing to bring the action at law to the injured worker alone. The availability of a civil remedy for the injured worker, to augment his or her workers’ compensation benefits does not take the case outside of the workers’ compensation system.

Notwithstanding the availability of a civil cause of action for workers who suffer power press injuries, claims arising from the industrial accident that caused those injuries fundamentally remain compensable under the workers’ compensation system.

As a result the Supreme Court decided that under settled principles of workers’ compensation law, the exclusivity rule bars a dependent spouse’s claim for loss of consortium and limits her to recovery available only under the workers’ compensation system. It ordered, therefore, the trial court to sustain LeFiell’s demurrer to the loss of consortium cause of action.

ZALMA OPINION

The workers’ compensation system was designed to be an exclusive remedy for an injured worker and his or her dependents. The California Legislature created an exception to the exclusive remedy to augment the benefits paid to the injured worker. If it wanted to augment the spouse who lost the spousal services of the injured worker it could have so written the statute.

Of course, by enacting an exception to the exclusive remedy bargain, breaches the bargain entered by the state with its employers that had the employer assume liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability.

© 2012 – Barry Zalma

Barry Zalma, Esq., CFE, has practiced law in California for more than 40 years as an insurance coverage and claims handling lawyer. He also serves as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. Mr. Zalma serves as a consultant and expert, almost equally, for insurers and policyholders.

He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant.

Mr. Zalma recently published the e-books, “Zalma on Insurance Fraud – 2012″; “Zalma on Diminution in Value Damages – 2012,”“Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,” “Zalma on Rescission in California,” “Arson for Profit”  and others that are available at www.zalma.com/zalmabooks.htm.

Mr. Zalma can also be seen on World Risk and Insurance News’ web based television program “Who Got Caught” with copies available at his website at http://www.zalma.com.

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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