The insured employer adequately pled its claims against the California State Compensation Insurance Fund (SCIF), allowing it to survive a demurrer. Edward Carey Constr. Co. v. State Compensation Insurance Fund, 2011 Cal. App. LEXIS 457 (Cal. Ct. App. March 25, 2011, certified for publication April 20, 2011).
Edward Carey Construction Co. (CCC) had a workers compensation policy from SCIF. During the policy period, CCC's employee, Edward Carey, suffered a work-related injury. When notified of the injury, SCIF respond that the policy had been cancelled. As a result, CCC was required to pay for Carey's medical treatment not covered by his health insurance. CCC also had to hire counsel to obtain benefits under the policy.
CCC was successful in obtaining a ruling in arbitration that its policy with SCIF was in full force and effect at the time of Carey's injury. When SCIF refused to reimburse CCC's attorney fees for the arbitration and the full amount of benefits owed under the policy, CCC filed suit.
SCIF filed a demurrer, arguing that the Workers Compensation Appeals Board had exclusive jurisdiction over the claims alleged in the complaint. The trial court granted the demurrer.
The Court of Appeals reversed. The court relied on a host of cases addressing similar issues, including Courtesy Ambulance Serv. v. Superior Court, 8 Cal. App. 4th 1504 (1992), Sec. Officers Service, Inc. v. State Compensation Ins. Fund, 17 Cal. App. 4th 887 (1993), and Maxon Indus., Inc. v. State Compensation Ins. Fund, 16 Cal. App. 4th 1387 (1993). These cases established that the insured employer had different and distinct rights against its workers' compensation carrier than an employee claimant. Moreover, as a party to the insurance contract, the employer could sue for breach of contract if the insurer failed to perform. This included suing under"bad faith" principles for tortuous breach of the implied covenant of good faith and fair dealing. Legal fees incurred in enforcing its rights under the policy were also recoverable by CCC.
