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A Cautionary Tale.... Involving a Classic Battle Between Good and Evil

 

From the Desk Of: Scott M. Tilley, Esq.

Managing Attorney, San Bernardino

Certified Specialist, Workers' Compensation Law,

The State Bar of California,

Board of Legal Specialization

 

Okay, so this isn't a story about good and evil.  I needed a good title to draw you in and get you to read about a case you really should know about.  However,  it is a cautionary tale and you should keep this case in the back of your mind anytime you have a cumulative trauma case involving multiple defendants.

 

In Ventura v. Dana Point Cleaners (2019 Cal. Wrk. Comp. P.D. LEXIS 114), the applicant filed a cumulative trauma claim involving two separate insurance carriers. The applicant entered into a compromise and release agreement (C&R) with one of the carriers (Wasco). The second carrier (Zenith) had not been joined before the C&R was finalized and was not a party to the settlement. In the settlement documents, Wasco reserved their rights to contribution from Zenith.   

 

After the C&R with Wasco was approved, the applicant went after Zenith for more money on the same cumulative trauma period. Your initial thought is probably "hey, wait a minute, you already settled your case, Ms. Ventura."  But did she?  Labor Code section 5005 provides the employee may settle all or any part of a cumulative injury claim with any defendant. Such a settlement is not a bar to recovery from any of the remaining defendants for the periods of exposure not specifically settled. 

 

If Ms. Ventura had made an election under Labor Code section 5500.5, that would have been a full resolution of the cumulative trauma for all defendants involved. If Ms. Ventura had made an election, Wasco would have paid everything to the applicant and then would have gone after Zenith for their portion in contribution. In this case, Ms. Ventura did not make an election.  Also, there was no language in the settlement documents stating that claims against Zenith were included in the settlement.

 

The issue of whether Ms. Ventura had the right to seek further benefits from Zenith went to trial. The judge ruled that the C&R entered into between the applicant and Wasco did not bar the applicant from then going after Zenith for benefits on the same cumulative trauma period.  

 

Wasco filed a petition for reconsideration arguing that the settlement did include any claim against Zenith because Wasco wanted contribution from Zenith. If the applicant could go after Zenith on her own, this would be a bar to Wasco's claim for contribution. After all, why should Zenith have to pay twice?

 

Zenith also filed a petition for reconsideration arguing that the C&R was a full and final resolution of all liability for all defendants stemming from the cumulative trauma injury. They apparently felt it would be cheaper to go into contribution proceedings rather than settle with the applicant.

 

The WCAB ruled that the applicant could go after Zenith for benefits as their liability was not resolved with the C&R.

 

Takeaways:

  • If you are the settling defendant and want to go after a codefendant for contribution, make sure that your settlement documents settle all claims with all defendants within the CT period. Ideally, have the applicant elect against you so there is no question that all claims are resolved.

  • If you are not the settling defendant and the applicant never made an election, make an argument that the settling defendant has no right to contribution. Because your liability was not resolved within the C&R, you have potential liability to the applicant. As such, if contribution proceedings move forward, you would be exposed to liability to both the codefendant and the applicant.

Keep in mind, Labor Code section 5005 provides that, where an applicant settles with one defendant, the amount that the settling defendant paid is deducted from what the other defendants would owe but there would be no credit for what the settling defendant paid above their liability.

 

The bottom line is to be careful.   If you have one of these situations and want to talk it over, please give us a call. We are always available for consultations.

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