Opinion ID: 2516402
Heading Depth: 2
Heading Rank: 1

Heading: The Alleged Injury

Text: The starting point of our analysis is the alleged injury underlying plaintiffs' claims. This injury is collateral to or derivative of a personal injury sustained and arising out of the course of employment (a compensable injury). ( Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148, 160, 233 Cal.Rptr. 308, 729 P.2d 743 ( Cole ).) Therefore, it falls within the scope of the exclusive remedy provisions. Because workers' compensation exclusivity is statutory in nature, we begin with the pertinent statutory provisions. (See American Psychometric Consultants, Inc. v. Workers' Comp. Appeals Bd. (1995) 36 Cal.App.4th 1626, 1638, 43 Cal.Rptr.2d 254 ( American Psychometric Consultants ).) Subdivision (a) of section 3600 provides in relevant part: Liability for the compensation provided by this division, in lieu of any other liability whatsoever to any person . . . shall, without regard to negligence, exist against an employer for any injury sustained by his or her employees arising out of and in the course of the employment and for the death of any employee if the injury proximately causes death, in those cases where the . . . conditions of compensation concur. . . . (Italics added.) The conditions of compensation applicable to this case include: (1) Where, at the time of the injury, both the employer and the employee are subject to the compensation provisions of this division. [¶] (2) Where, at the time of the injury, the employee is performing service growing out of and incidental to his or her employment and is acting within the course of his or her employment. [¶] (3) Where the injury is proximately caused by the employment, either with or without negligence. ( Ibid. ) Subdivision (a) of section 3602 then provides that: Where the conditions of compensation set forth in Section 3600 concur, the right to recover such compensation is . . . the sole and exclusive remedy of the employee . . . against the employer. . . . (Italics added.) Finally, section 5300, subdivision (a) states that proceedings [f]or the recovery of compensation, or concerning any right or liability arising out of or incidental thereto shall be instituted before the [WCAB] and not elsewhere, except as otherwise provided in Division 4. . . . (Italics added.) The Legislature has extended the protection of these exclusive remedy provisions to workers' compensation insurance carriers by defining the term employer to include insurer. (§ 3850, subd. (b).) Thus, these insurers retain immunity from lawsuit as the `alter ego' of the employer. ( Unruh, supra, 7 Cal.3d at p. 625, 102 Cal.Rptr. 815, 498 P.2d 1063, italics omitted.) Employees may, however, bring suit against any person other than [their] employer [or their employer's workers' compensation insurer] who proximately caused [their] injury. ( Marsh, supra, 49 Cal.3d at p. 6, 259 Cal.Rptr. 733, 774 P.2d 762, italics omitted; see also § 3852.) Together, these provisions establish that the liability of employers and insurers for industrial injury which results in occupational disability or death is limited to workers' compensation remedies. ( Livitsanos v. Superior Court (1992) 2 Cal.4th 744, 752, 7 Cal.Rptr.2d 808, 828 P.2d 1195, italics omitted ( Livitsanos ).) Where the essence of the wrong is personal physical injury or death, the action is barred by the exclusiveness clause no matter what its name or technical form if the usual conditions of coverage are satisfied. ( Cole, supra, 43 Cal.3d at p. 160, 233 Cal. Rptr. 308, 729 P.2d 743.) In other words, the exclusivity provisions encompass all injuries collateral to or derivative of an injury compensable by the exclusive remedies of the WCA. ( Snyder, supra, 16 Cal.4th at p. 997, 68 Cal.Rptr.2d 476, 945 P.2d 781.) Thus, the trigger for workers' compensation exclusivity is a compensable injury. An injury is compensable for exclusivity purposes if two conditions exist. First, the statutory conditions of compensation must concur. (See § 3600, subd. (a).) For example, if the injury arises out of and in the course of the employment, the exclusive remedy provisions apply notwithstanding that the injury resulted from . . . intentional conduct . . . even though the . . . conduct might be characterized as egregious. ( Shoemaker, supra, 52 Cal.3d at p. 15, 276 Cal.Rptr. 303, 801 P.2d 1054.) Second, the injury must cause a disability or the need for medical treatment. ( Gomez v. Acquistapace (1996) 50 Cal.App.4th 740, 748, 57 Cal.Rptr.2d 821 ( Gomez ).) `Injury' includes any injury or disease. . . .(§ 3208.) Therefore, the exclusive remedy provisions apply only in cases of such industrial personal injury or death, and the workers' compensation system subsumes all statutory and tort remedies otherwise available for such injuries. ( Shoemaker, supra, 52 Cal.3d at p. 16, 276 Cal.Rptr. 303, 801 P.2d 1054.) Where the alleged injury is neither collateral to nor derivative of an injury that satisfies both of these conditions, then it is not subject to exclusivity. (See Snyder, supra, 16 Cal.4th at p. 997, 68 Cal.Rptr.2d 476, 945 P.2d 781.) Thus, a cause of action predicated on an injury where the basic conditions of compensation are absent is not preempted. ( Livitsanos, supra, 2 Cal.4th at p. 754, 7 Cal. Rptr.2d 808, 828 P.2d 1195.) For example, courts have allowed tort claims in cases where the alleged injurythe aggravation of an existing workplace injurydid not occur in the course of an employment relationship. (See, e.g., Weinstein v. St. Mary's Medical Center (1997) 58 Cal. App.4th 1223, 1235-1236, 68 Cal.Rptr.2d 461 [allowing a medical malpractice claim against the employer because the resulting aggravation of the workplace injury did not arise out of the employment relationship].) Causes of action seeking to recover [e]conomic or contract damages incurred independent of any workplace injury are also exempt from workers' compensation exclusivity. ( Pichon v. Pacific Gas & Electric Co. (1989) 212 Cal. App.3d 488, 501, 260 Cal.Rptr. 677, italics added ( Pichon ).) Indeed, only injuries to the worker's person, as opposed to his property,  are compensable. ( Coca-Cola Bottling Co. of Los Angeles v. Superior Court (1991) 233 Cal.App.3d 1273, 1287, 286 Cal.Rptr. 855 ( Coca-Cola ).) Thus, courts have refused to bar spoliation of evidence or fraud claims where the alleged injurythe loss of a prospective lawsuit against a third partywas not collateral to or derivative of an injury to the worker's person. (See Gomez, supra, 50 Cal.App.4th at pp. 749-750, 57 Cal.Rptr.2d 821 [spoliation of evidence]; Coca-Cola, supra, 233 Cal.App.3d at pp. 1288-1289, 286 Cal.Rptr. 855 [same]; Ramey v. General Petroleum Corp. (1959) 173 Cal.App.2d 386, 400-401, 343 P.2d 787 [fraud]; but see Continental Casualty Co. v. Superior Court (1987) 190 Cal. App.3d 156, 162, 235 Cal.Rptr. 260.) Courts have also allowed an employee to recover economic damages on a wrongful termination claim because the damages arose out of the act of terminationand not out of an injury to the employee's person. (See Pichon, supra, 212 Cal. App.3d at pp. 500-501, 260 Cal.Rptr. 677.) Finally, courts have exempted defamation claims from exclusivity because an injury to reputation does not depend on a personal injury. (See Howland v. Balma (1983) 143 Cal.App.3d 899, 904, 192 Cal.Rptr. 286.) On the other hand, courts have regularly barred claims where the alleged injury is collateral to or derivative of a compensable workplace injury. For example, courts have barred employees from suing for psychic injuries caused by their termination (see Semore v. Eric Pool (1990) 217 Cal. App.3d 1087, 1104-1105, 266 Cal.Rptr. 280), or their employer's abusive conduct during the termination process (see Gates v. Trans Video Corp. (1979) 93 Cal.App.3d 196, 199-201, 206,155 Cal.Rptr. 486). Courts have also consistently held that injuries arising out of and in the course of the workers' compensation claims process fall within the scope of the exclusive remedy provisions because this process is tethered to a compensable injury. Indeed, every employee who suffers a workplace injury must go through the claims process in order to recover compensation. Thus, we have barred all claims based on disputes over the delay or discontinuance of [workers' compensation] benefits ( Marsh, supra, 49 Cal.3d at p. 7, 259 Cal.Rptr. 733, 774 P.2d 762), including those claims seeking to recover economic or contractual damages caused by the mishandling of a workers' compensation claim (see Stoddard v. Western Employers Ins. Co. (1988) 200 Cal.App.3d 165, 168-169, 172, 245 Cal.Rptr. 820 ( Stoddard ) [barring claims where the employee alleged economic damages due to delays in benefit payments]; Mottola v. R.L. Kautz & Co. (1988) 199 Cal.App.3d 98, 109, 244 Cal.Rptr. 737 ( Mottola ) [barring a breach of contract claim based on the refusal to pay benefits] ). Likewise, claims seeking compensation for services rendered to an employee in connection with his or her workers' compensation claim fall under the exclusive jurisdiction of the WCAB. (See Bell v. Samaritan Medical Clinic, Inc. (1976) 60 Cal.App.3d 486, 490, 131 Cal.Rptr. 582 [physician may not sue to recover fees for services rendered to an injured employee]; Workmen's Comp. Appeals Bd. v. Small Claims Court (1973) 35 Cal.App.3d 643, 647, 111 Cal.Rptr. 6 [physician may not sue to recover fees for testimony at a WCAB hearing].) In this case, plaintiffs seek to recover the economic damage to their businesses resulting from the failure to receive full and timely payment on their lien claims before the WCAB. These damages arise out of the alleged mishandling of plaintiffs' lien claims. Plaintiffs concede that their underlying lien claims sought to recover compensation for medical services provided to workers injured in the course of their employment. Thus, the alleged injury underlying all of plaintiffs' causes of action is collateral to or derivative of a compensable workplace injury and falls within the scope of the exclusivity provisions. (See Marsh, supra, 49 Cal.3d at pp. 7-8, 259 Cal.Rptr. 733, 774 P.2d 762; Stoddard, supra, 200 Cal.App.3d at pp. 168-169, 172, 245 Cal. Rptr. 820.) In reaching this conclusion, we reject plaintiffs' narrow interpretation of the exclusive remedy provisions. The mere fact that plaintiffs are medical providers, and not employees, does not preclude the application of these provisions. The rights of lien claimants derive from the rights of injured employees. ( Fox v. Workers' Compensation Appeals Bd. (1992) 4 Cal.App.4th 1196, 1204, 6 Cal. Rptr.2d 252.) Therefore, plaintiffs stand in the place of the employees with respect to claims for workers' compensation benefits, and plaintiffs' rights cannot exceed employees' rights. Because employees are limited to WCA remedies for all injuries caused by wrongful delays or refusals to pay (see, e.g., Marsh, supra, 49 Cal.3d at pp. 7-8, 259 Cal.Rptr. 733, 774 P.2d 762; Stoddard, supra, 200 Cal.App.3d at p. 172, 245 Cal.Rptr. 820; Mottola, supra, 199 Cal.App.3d at p. 109, 244 Cal.Rptr. 737), plaintiffs are limited to the same. Indeed, we established long ago that the WCAB has exclusive jurisdiction over all claims for compensation against an employer or insurance carrier involving medical, surgical and hospital treatment to injured employees.... ( Independence Indemnity, supra, 2 Cal.2d at p. 406, 41 P.2d 320, italics added.) Plaintiffs' decision to forgo recovery on their individual lien claims and to seek only economic damages also does not insulate their claims from the exclusivity provisions. Unlike the economic damages alleged in Coca-Cola, supra, 233 Cal. App.3d at pages 1288-1289, 286 Cal.Rptr. 855, and Pichon, supra, 212 Cal.App.3d at pages 500-501, 260 Cal.Rptr. 677, the damage to plaintiffs' businesses was proximately caused by the alleged mishandling of lien claims before the WCAB. Therefore, plaintiffs' alleged injury was not independent of a compensable injury. ( Pichon, supra, 212 Cal.App.3d at p. 501, 260 Cal. Rptr. 677.) In any event, plaintiffs' proposed distinction is meaningless. Every time an insurer fails to timely pay a valid lien claim, the aggrieved medical provider suffers economic damages. Accordingly, plaintiffs' causes of action do not fall outside the scope of the exclusive remedy provisions by virtue of the remedy they seek. (See Marsh, supra, 49 Cal.3d at pp. 7-8, 259 Cal.Rptr. 733, 774 P.2d 762.) A contrary result would create a huge loophole in the workers' compensation system and eviscerate the compensation bargain. Employees often suffer economic damages when they suffer workplace injuries or fail to receive prompt payment of their medical bills. Under plaintiffs' logic, these employees could circumvent the workers' compensation system by asserting claims for economic damages even though their claims derive from their workplace injuries. This circumvention of the system, if allowed, would destroy the careful balancing of employee-employer rights created by the WCA and effectively breach the compensation bargain. Finally, our recent decision in City of Moorpark v. Superior Court (1998) 18 Cal.4th 1143, 77 Cal.Rptr.2d 445, 959 P.2d 752 ( City of Moorpark) is inapposite. In City of Moorpark, an employee alleged that her employer terminated her because of her physical disability and asserted, among other things, violations of the California Fair Employment and Housing Act (FEHA) (Gov.Code, § 12900 et seq.), and wrongful termination in violation of public policy ( Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 178, 164 Cal.Rptr. 839, 610 P.2d 1330) ( Tameny claim). The employer demurred, contending that section 132a was the employee's exclusive remedy. The trial court overruled the demurrer. The Court of Appeal denied the employer's petition for writ of mandate, and we affirmed. ( City of Moorpark, supra, 18 Cal.4th at pp. 1149, 1161, 77 Cal.Rptr.2d 445, 959 P.2d 752.) In concluding that FEHA and Tameny claims fall outside the scope of the exclusive remedy provisions, we observed that the existence of a workers' compensation remedy does not by itself establish that the remedy is exclusive. ( City of Moorpark, supra, 18 Cal.4th at p. 1154, 77 Cal.Rptr.2d 445, 959 P.2d 752.) Only remedies found in division 4 of the Labor Code are exclusive. Because section 132a is located in division 1, we concluded it does not provide the exclusive remedy for disability discrimination. ( City of Moorpark, at pp. 1154-1155, 77 Cal.Rptr.2d 445, 959 P.2d 752.) We also held that section 5300 only makes the WCAB the exclusive forum for pursuing a section 132a claim and does not establish that the section 132a claim is the employee's exclusive remedy. ( City of Moorpark, at pp. 1155-1156, 77 Cal.Rptr.2d 445, 959 P.2d 752.) Here, unlike section 132a, the provisions that create the remedies for the mishandling of workers' compensation claimssections 4603.2, 4622 and 5814 are located in division 4. These remedies are therefore exclusive. (See City of Moorpark, supra, 18 Cal.4th at pp. 1154-1155, 77 Cal.Rptr.2d 445, 959 P.2d 752.) Sections 4603.2 and 4622 give medical providers their sole remedy for delayed payment and impose a 10 percent penalty plus interest if the employer fails to pay their medical bills within 60 days under certain conditions. [6] (See American Psychometric Consultants, supra, 36 Cal.App.4th at p. 1640, 43 Cal.Rptr.2d 254, fn. omitted [the Legislature enacted sections 4603.2 and 4622 in order to ensure that the bills of medical providers were promptly paid, and that protests or objections to the bills were promptly raised and adjudicated].) Section 5814 then provides the exclusive remedy for employees [w]hen [the] payment of compensation has been unreasonably delayed or refused  and states that the full amount of the [WCAB] order, decision or award shall be increased by 10 percent.... (Italics added.) Section 5300 further states that the WCAB is the exclusive forum for resolving disputes relating to the remedies provided in division 4. Consequently, the workers' compensation system encompasses all disputes over coverage and payment. ( Marsh, supra, 49 Cal.3d at p. 8, 259 Cal.Rptr. 733, 774 P.2d 762, italics added; see also Schlick v. Comco Management, Inc. (1987) 196 Cal. App.3d 974, 981, 242 Cal.Rptr. 241 ( Schlick ) [Where compensation is available under [division 4 of] the act for the alleged misconduct, . . . the [WCAB] has exclusive jurisdiction].) The existence of a penalty provision covering defendants' alleged misconduct does not alter our analysis. Section 129.5, found in division 1, does not create a remedy against workers' compensation insurers. Instead, it gives the Administrative Director of the Division of Workers' Compensation (DWC) the power to impose an administrative or civil penalty on insurers who unreasonably delay or refuse payment of compensation. ( Ibid. ) Potential penalties include a civil penalty, not to exceed one hundred thousand dollars ($100,000) ( id, subd. (d)), and revocation of an insurer's certificate of authority. ( Id, subd. (d)(4).) [7] The director may impose these penalties in addition to any other remedy available under the WCA, including the penalties provided by sections 4603.2, 4622, and 5814. Thus, section 129.5 does not affect the exclusivity of remedies in division 4. Indeed, the Legislature's enactment of a penalty provision as opposed to a remedy provisionequally suggests an intent to have the DWC, rather than private litigants, address the type of insurer misconduct alleged here. Accordingly, the alleged injury underlying plaintiffs' claims falls within the scope of the exclusive remedy provisions.