Zurich Am. Ins. Co. v. Workers' Comp. App. Bd.

316 Cal.Rptr.3d 264

ZURICH AMERICAN INSURANCE COMPANY, Petitioner,

v.WORKERS’ COMPENSATION APPEALS BOARD, Respondent;

California Insurance Guarantee Association, Real Party in Interest.

B321864

Court of Appeal, Second District, Division 7.

Filed December 18, 2023

ORIGINAL PROCEEDING; petition for writ of mandate. Petition granted. (W.C.A.B. No. ADJ487398)

Law Offices of Tracey Lazarus and Patrick D. O’Keeffe for Petitioner.

Allison J. Fairchild for Respondent.

Guilford Sarvas & Carbonara and Justin P. Harrison for Real Party in Interest.

FEUER, J.

Labor Code section 5909 provides that if the Workers’ Compensation Appeals Board (Board) does not act on a party’s petition for reconsideration of a decision by the workers’ compensation judge (or arbitrator) within 60 days, the petition is "deemed to have been denied."¹ In this case, the Board granted a petition for reconsideration filed by real party in interest, California Insurance Guarantee Association (CIGA), more than nine months after CIGA filed its petition. The Board sought to justify its late decision on the basis its delay was the result of an "administrative irregularity" in the workers’ compensation appeals process that delayed transmission of CIGA’s timely filed petition to the Board. Zurich American Insurance Company seeks a writ of mandate directing the Board to rescind its order granting CIGA’s petition, arguing the petition had already been denied by operation of law under section 5909.

In response, the Board relies on an exception to section 5909’s 60-day deadline recognized over three decades ago by the Court of Appeal in Shipley v. Workers’ Comp, Appeals Bd. (1992) 7 Cal.App.4th 1104, 9 Cal.Rptr.2d 345 (Shipley), which found the 60-day deadline was tolled because the claimant diligently inquired into the status of his petition for reconsideration and the Board misled the claimant to believe his petition would be considered once the lost file on his case was retrieved or reconstructed.

We conclude the language and purpose of section 5909 show a clear legislative intent to terminate the Board’s jurisdiction to consider a petition for reconsideration after the 60 days have passed, and thus, decisions on the petition made after that date are void as in excess of the agency’s jurisdiction. After 60 days the administrative process is final, and a petitioner has 45 days under section 5950 in which to seek a writ of review of the decision of the workers’ compensation judge or arbitrator by the Court of Appeal or Supreme Court. The Board’s contrary interpretation—that it retains jurisdiction to consider a petition well after the 60-day deadline has run— would deprive the parties of finality and create uncertainty as to when the clock begins to run on a petitioner’s right to seek judicial review.

Because section 5909 divests the Board of jurisdiction to consider a deemed-denied petition for reconsideration after 60 days has passed, we disagree with the conclusion in Shipley, supra, 7 Cal.App.4th at page 1108, 9 Cal.Rptr.2d 345 that a petitioner has a due process right to review by the Board after the deadline. But even if Shipley can be read to apply equitable principles to allow the Board to consider a petition for reconsideration beyond the statutory deadline, the exception must be applied only (1) where a diligent petitioner’s rights were violated due to the fault of the Board (such as a lost petition), and (2) the Board misled the petitioner in a manner that deprived the petitioner of a right to review by the Board or the appellate courts.

The Board asserts the workers’ compensation appeals process system is inefficient, with petitions electronically filed or submitted to a district office being lost or, as here, the arbitrator failing to submit the arbitration record to the Board. We reject the Board’s assertion it is powerless to address these failures. Nor is the remedy for the Board to ignore the Constitutional mandate in article XIV, section 4 that the Board "expeditiously" determine matters under the Workers’ Compensation Act (§ 3201 et seq.). Petitioners must be diligent—promptly inquiring of the Board as to the status of their petitions and, if the Board does not act within the 60-day time period, seeking review of the deemed-denied petition under section 5950 within 45 days. Had CIGA timely filed a petition for review, it could have obtained judicial review of the arbitrator’s initial decision.

We issue a writ of mandate directing the Board to rescind its order granting CIGA’s petition for reconsideration and ordering Zurich dismissed as a party defendant from the proceeding.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Underlying Workers’ Compensation Claim

On September 27, 2000 Carlos Uribe suffered an industrial injury during his employment with XCEL Mechanical Systems, Inc., and he thereafter filed a workers’ compensation claim. At the time of Uribe’s injury, XCEL was insured for workers’ compensation by Reliance Insurance. Reliance was subsequently declared insolvent and placed in liquidation. CIGA assumed administration of Uribe’s claim.²

B. CIGA’s Claim Against Zurich

Nearly 20 years after Uribe’s injury, on August 3, 2020 CIGA, which had been paying benefits on Uribe’s workers’ compensation claim, petitioned to join Zurich in the workers’ compensation proceeding based on a December 17, 2018 report prepared by the Workers’ Compensation Insurance Rating Bureau showing that Zurich provided coverage for XCEL during the policy period from February 1, 2000 through February 1, 2001. On September 1, 2020 the Board ordered Zurich joined as a party defendant. On October 13 Zurich sent a letter to Uribe stating that it was handling Uribe’s claim for XCEL, and it was denying liability for Uribe’s injury for lack of medical evidence to support his injury and proof that he was working on a job site insured by Zurich.³

The parties arbitrated whether Zurich was liable for payments made on Uribe’s claim.⁴ On August 23, 2021 the arbitrator denied CIGA’s petition, finding CIGA’s claim that Zurich provided coverage for XCEL with respect to Uribe’s injury was not supported by substantial evidence. Therefore, CIGA was required to continue to administer Uribe’s claim and pay all lawful benefits, without reimbursement from Zurich.

C. CIGA’s Petition for Reconsideration and the Board's Delayed Response

On August 31, 2021 CIGA filed a petition with the Board for reconsideration of the arbitrator’s ruling. Zurich answered the petition on September 7, 2021. Under section 5909, the last day for the Board to act on CIGA’s petition was November 1, 2021, the first business day following expiration of the 60-day period. (See Cal. Code Regs. tit. 8, § 10600, subd. (b) ["Unless otherwise provided by law, if the last day for exercising or performing any right or duty to act or respond falls on a weekend, or on a holiday for which the offices of the Workers’ Compensation Appeals Board are closed, the act or response may be performed or exercised upon the next business day."].)

On December 7, 2021, Zurich filed with the Board a "notice of lodgment"⁵ of the arbitrator’s amended findings, attaching the arbitrator’s decision and requesting the Board dismiss it from the proceeding because the arbitrator’s decision had become final. Zurich noted the Board did not act on the petition before the 60-day deadline, and CIGA did not file a petition for review in the Court of Appeal pursuant to section 5950 within 45 days from the date the petition for reconsideration was denied by operation of law.⁶

On December 13, 2021 CIGA submitted a reply brief in which it argued the Board retained jurisdiction over CIGA’s petition for reconsideration because the petition had not been forwarded to the Board’s reconsideration unit until October 6, 2021, a month and a half after CIGA filed its petition. Thus, CIGA suggested, the Board "may not have been given enough time to properly respond to CIGA’s contentions." Citing Shipley, supra, 7 Cal.App.4th 1104, 9 Cal.Rptr.2d 345, CIGA claimed, "The Board’s jurisdiction continues to the extent its failure to act on CIGA’s petition for reconsideration within 60 days of its filing was due to the Board’s mistake or inadvertence and not caused by petitioner."

The Board failed to act (again) until June 13, 2022. By this time, more than nine months had passed since CIGA had filed its petition for reconsideration. The Board issued an order granting the petition for reconsideration for the purpose of allowing an opportunity for further study of the factual and legal issues (a "grant-for-study" order). The order explained, "[B]ased upon our initial review of the record, we believe reconsideration must be granted to allow sufficient opportunity to further study the factual and legal issues in this case. We believe that this action is necessary to give us a complete understanding of the record and to enable us to issue a just and reasoned decision."

The Board’s June 13 order attached a "notice pursuant to Shipley v. Workers' Comp. Appeals Bd. (1992) 7 Cal.App.4th 1104, 9 Cal.Rptr.2d 345." The notice stated the Board "first received notice of the petition[ ] [for reconsideration] on or about April 13, 2022." Citing Shipley, the notice concluded the "[o]pinion and order granting petition for reconsideration filed simultaneously with this notice may be considered timely if issued within 60 days of the Appeals Board receiving notice of the petition[ ]."

D. Zurich's Petition for Writ of Mandate

In response to the Board’s grant-for-study order, Zurich filed a petition for writ of mandate in this court requesting we issue an order directing the Board to rescind its June 13, 2022 order and dismissing Zurich as a defendant.

In the Board’s letter response, it explained that due to an "administrative irregularity," the Board did not receive CIGA’s petition until after the 60-day time period under section 5909 had passed. Further, the Board pointed out that petitions for...