The Cruel Bite of 5500.5
The Cruel Bite of Labor Code section 5500.5
Hello, dear readers! As some of you are recovering from your Easter Egg hunts and others are getting ready to buy up the temporarily discounted but always delicious Cadberry Eggs, your humble blogger stands (or sits) vigilante and determined to report to you the victories and vices, the happiness and horror, the good and the bad of California’s wonderful workers’ compensation system.
As my sharp and well-read readers recall, Labor Code section 5412 defines the “date of injury” for cumulative trauma – the first date that the employee suffers disability from an injury, and knows or should have known that the disability was caused by his or her employment. In other words, the moment the light bulb goes off in that nuclear plant worker’s head that maybe the nuclear plant is causing him to glow in the dark (if one can call that awesome skill suffering a disability).
Meanwhile, Labor Code section 5500.5 limits liability for cumulative trauma to those insurers/employers that employed the (allegedly) injured worker for one year prior to the earlier of (1) the date of injury; or (2) the last date of harmful exposure.
We see this in asbestos cases a lot – you could have a worker not suffering any noticeable injury for many years after the last harmful date of exposure. We see this in repetitive action cases too – a worker could suffer a disability, like a strained back with time off, and then return to work and continue working (and continuing the harmful exposure).
And so, I bring to your attention the recent panel decision in the matter of Debra Crawford v. Guidant Corporation. Ms. Crawford was found to be totally permanently disabled due to a cumulative trauma sustained while employed by Guidant. Guidant, during the relevant period, was insured by two insurers (one after the other, of course) – One Beacon and Reliance. When Reliance followed the Titanic under the water’s surface, CIGA stepped in to lock shields with One Beacon and repel the claim… not so much.
CIGA, the California Insurance Guarantee Association, is the insurer for last resort in cases where the proper insurer is no more. However, CIGA will not step in and pay out unless it is the ONLY insurer – if another is available, CIGA bows out, even if the other insurer covered just one day of the 365 under Labor Section 5500.5, and the other 364 days were covered by a now insolvent insurer, the 1-day insurance company gets to absorb the entire claim.
Naturally, in the Crawford matter, the coverage dates for the injury were important. After all, a person who is 100% permanently disabled basically gets temporary total disability benefits for the rest of his or her life.
One Beacon successfully proved at trial that the “date of injury” should be considered December 9, 1996, which was applicant’s last date of harmful exposure and employment. Because One Beacon’s actual coverage of Guidant ended on September 1, 1995, there was the feeling of relief and a bullet dodged… until the ricochet came from the Workers’ Compensation Appeals Board.
Granting CIGA’s petition for reconsideration, the WCAB found that applicant’s 5500.5 liability period actually ran from August 22, 1995-1996, because applicant’s first suffered disability was a temporary disability order from August 1996. So in One Beacon’s case, coverage of 10 days out of the year for Guidant landed them with 100% of the liability for medical treatment and temporary disability benefits that will last as long as the applicant does.
If CIGA were not involved, One Beacon could grumble as it paid 3% of the costs and watched as the balance was carried by the other insurer (or insurers). Instead, it’s forced to weep uncontrollably and curse the name of the long-gone (and ironically named) Reliance Insurance Company as it carries the full load.
But don’t worry – Beacon will recover these costs through its premiums, and the businesses that pay those premiums will recover their costs from you and me, the California consumer.