Seven Years from Injury to an Application, But no Laches Defense Available

In Truck Insurance Exchange v. WCAB, Ng Fung Kwok, B268231 (published 8/11/2016), the California Court of Appeal addressed an issue that regularly arises in workers’ compensation though not as extremely as in this case. Does the concept of laches operate to bar a workers’ compensation claim made many years after the alleged injury, in this case more than 12 years later?

On January 10, 2005, Mr. Kwok was employed as a restaurant manager for Nu Square Corporation. Nu Square was owned by King Cheung, and operated by his sister, Yuk Cheung, who also was Mr. Kwok’s wife. On this date, Mr. Kwok went outdoors in the rain with a ladder in an effort to determine the source of a leak into the restaurant dining area. Later in the day he was found unconscious beside the ladder. He was diagnosed with a brain hemorrhage from which he has never recovered the ability to speak or care for himself.

The evidence accepted by the Court of Appeal was that on the day after the fall Ms. Cheung called her brother (the owner of Nu Square), who was out of the country, to tell him of the injury. No claim form was given to Mr. Kwok and no further action was taken by the restaurant. Seven years later, in July 2012, Ms. Cheung filed an Application for Adjudication of Claim on behalf of her husband. Initially, the insurance carrier, Truck Insurance, accepted that it had coverage for the employer, but denied compensability of the claim, though it did so more than 90 days from its receipt of notice. The denial asserted that the claim was barred by the statute of limitations and by the doctrine of laches. The Workers’ Compensation Judge found that the claim was compensable and not barred by either defense argument. The WCAB agreed, and the defendant appealed to the Court of Appeal.

The Court of Appeal acknowledged that the WCAB has the power to apply the equitable remedy of laches. Laches is the determination that a claim for benefits should be barred by a delay that prevents the defendant from defending itself. “Generally speaking, the existence of laches is a question of fact to be determined by the trial court in light of all of the applicable circumstances, and in the absence of manifest injustice or a lack of substantial support in the evidence its determination will be sustained.” Here the Workers’ Compensation Judge concluded that the telephone call by Ms. Cheung to the owner of Nu Square constituted notice of an industrial injury to the employer. The Court of Appeal agreed that this is substantial evidence supporting the conclusion that the employer, and therefore its workers’ compensation carrier, had notice of the injury (citing Insurance Code §11652, “Notice to or knowledge of the employer is deemed to be notice to or knowledge of the insurer.”). The burden then shifted to the employer to provide the injured worker with a DWC 1, Employee Notice of Claim.

Since notice to the employer constitutes notice to the insurance carrier, the employer and carrier were disqualified from asserting that the lack of knowledge of the claim prevented a timely investigation. Further, Truck Insurance did not argue at trial that there was collusion between the employer and his injured brother-in-law, though doing so may have supported a claim of laches. The Appeals Court also notes that had the employer or carrier provided Mr. Kwok with a claim form, the burden would have shifted to him to initiate the claim within the statutorily permitted time or be barred by the statute of limitations.

This decision illustrates why as a general rule an employer should not ignore the possibility of a workers’ compensation exposure when an injury or illness strikes at work. It is a best practice to give a claim form to the employee who requires medical care beyond first aid or misses a day or more from work as a result of an incident at the workplace and to notify the workers’ compensation carrier that the claim form was delivered. Rarely does ignoring such events benefit the employer; while providing notice to the carrier of the event gives it time to accumulate needed information to determine the availability of defenses should a claim be made.

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August 22, 2016