Potter v. Arizona So. Coach Lines, Inc.

• Decision Date: 15 June 1988
• Docket Number: No. B026057,B026057
• Citation: 248 Cal.Rptr. 284,202 Cal.App.3d 126
• Parties: Joseph L. POTTER, et al., Plaintiffs and Appellants, v. ARIZONA SOUTHERN COACH LINES, INC., et al., Defendants and Respondents. Civ.
• Court: California Court of Appeals Court of Appeals

Page 284

248 Cal.Rptr. 284

202 Cal.App.3d 126

Joseph L. POTTER, et al., Plaintiffs and Appellants, v. ARIZONA SOUTHERN COACH LINES, INC., et al., Defendants and Respondents.

Civ. No. B026057.

Court of Appeal, Second District, Division 6, California.

June 15, 1988.

Chern, Brenneman & Garcia, and Gertrude D. Chern, Santa Maria, for plaintiffs and appellants Joseph L. Potter and Rita Potter

Fitzpatrick & Barbieri and Evans J. Barbieri, San Luis Obispo, for defendants and respondents Arizona Southern Coach Lines, Inc., and Michael Parzych.

STEVEN J. STONE, Presiding Justice.

Does the California Workers' Compensation Law preclude civil action by a former employee for damages incident to employer's failure to notify of employment termination which triggered the statutory right to convert the group insurance coverage to an individual policy? (Lab.Code, §§ 2800.2, 2922; Ins.Code, §§ 12689, 10209; Health & Saf.Code, § 1373.6.) We hold it does under the facts of this case.

Joseph Potter and wife Rita appeal from an order dismissing Arizona Southern Coach Lines, Inc. (Arizona) and Michael Parzych as defendants after their demurrer to appellants' Third Amended Complaint was sustained without leave to amend. Appellants filed suit in the Santa Barbara Superior Court against Joseph Potter's employer Arizona, Michael Parzych, his supervisor, and several insurance companies, alleging wrongful termination after Potter sustained a work-related injury, breach of contract, breach of covenant of good faith and fair dealing, negligence per se, breach of fiduciary duty, estoppel, negligent and intentional infliction of emotional distress and violation of statute.

After the court sustained three demurrers, appellants filed a Third Amended Complaint deleting any reference to work-related injury, alleging, basically, that Arizona discharged him without notice at a time when it knew, or reasonably should have known, that he was unable to work because of an injury. At that time, Rita Potter was suffering from a life-threatening illness which required extensive and costly medical treatment; Joseph Potter had previously sustained a serious and permanent injury which would also require extensive medical expense. Arizona fired Potter some time between November 12, 1984 and November 30, 1984, however, Potter did not learn of this until April 2, 1985 when the group insurer notified appellants that their major medical insurance policy had been cancelled because of Potter's employment termination. Neither Arizona nor the group insurers notified appellants of their statutory right to convert group to individual coverage without further proof of insurability.

Arizona again demurred and attached documents to its pleadings reflecting the existence of a Workers' Compensation action and a personal injury suit in San Luis Obispo Superior Court. The trial court held that it had no jurisdiction due to the exclusivity of the workers' compensation law for the alleged acts, and sustained the demurrer without leave to amend.

DISCUSSION

Appellants contend that the cause of action for negligence based upon violation of Labor Code section 2922 for failure to give notice of termination, and causes of action for breach of covenant of good faith and fair dealing, breach of contract, negligence per se, negligent infliction of emotional distress and intentional infliction of emotional distress, all of which incorporate facts related to violation of the statutory right to insurance conversion, are not within the exclusive jurisdiction of workers' compensation.

When evaluating the trial court's sustaining a demurrer without leave to amend, the appellate court accepts as true all well-pleaded factual allegations, however odd or improbable. (Argonaut Ins. Co. v. Superior Court (1985) 164 Cal.App.3d 320, 323, 210 Cal.Rptr. 417; Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170, 164 Cal.Rptr. 839, 610 P.2d 1330.) We must construe pleadings liberally with the view of achieving substantial justice between the parties. (Code Civ.Proc., § 452; Foster v. Xerox Corp. (1985) 40 Cal.3d 306, 312, 219 Cal.Rptr. 485, 707 P.2d 858.)

Generally, a person who suffers a work-related injury must seek relief within the workers' compensation system, and all proceedings must be before the Workers' Compensation Appeals Board (WCAB). (Lab.Code, §§ 3600, 3601, 5300.) The special forum of the WCAB operates under rules of procedure and evidence substantially different from those in the superior court, all of which are liberally construed in favor of the workers' claim. (Lab.Code § 3202.) ( Argonaut Ins. Co. v. Superior Court, supra, 164 Cal.App.3d 320, 323, 210 Cal.Rptr. 417.) The intent of this special forum is to compensate the worker quickly and its jurisdiction controls even though a worker might have a better claim against the employer in a civil action brought in superior court. (Ibid.; Everfield v. State Comp. Ins. Fund (1981) 115 Cal.App.3d 15, 19, 171 Cal.Rptr. 164.) Failure of the Legislature to include in the workers' compensation law an element of damages recoverable at common law cannot be corrected judicially. (Spratley v. Winchell Donut House, Inc. (1987) 188 Cal.App.3d 1408, 1414, 234 Cal.Rptr. 121.)

Appellants assert that the workers' compensation law was intended to apply solely to physical injury and death and not to contractual or statutory violations. They further argue that Labor Code section 132a, which prohibits discrimination by employers against workers who are injured in the course and scope of their employment, is concerned specifically with preventing discharge or threat of discharge against an employee who has filed or intends to file a claim with the WCAB or who testifies in another employee's case before the appeals board. Their causes of action against the employer, they assert, recite wrongs entirely independent of any industrial injury. Appellants interpret Labor Code section 132a too narrowly. In Judson Steel Corp. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 658, 667, 150 Cal.Rptr. 250, 586 P.2d 564, the Supreme Court concluded that section 132a serves a remedial function by providing compensation to an aggrieved worker for discrimination incurred as a result of the worker's injury. ( Id., at p. 668, 150 Cal.Rptr. 250, 586 P.2d 564.) "The policy of protection which the workers' compensation laws declare can only be effectuated if an employer may not discharge an employee because of the employee's absence from his job as the consequence of an injury sustained in the course and scope of employment." ( Id., at p. 669, 150 Cal.Rptr. 250, 586 P.2d 564.)

Labor Code section 3600 provides that in lieu of any other liability whatsoever to any person, liability for the compensation "... shall, without regard to negligence, exist against an employer for any injury sustained by his or her employees arising out of and in the course of the employment ... in those cases where the following conditions of compensation concur: [p ] (1) Where, at the time of the injury, both the employer and the employee are subject to the compensation provisions of this division. [p] (2) Where, at the time of the injury, the employee is performing service growing out of and incidental to his or her employment and is acting within the course of his or her employment. [p] (3) Where the injury is proximately caused by the employment, either with or without negligence."

Pursuant to section 3602, "(a) Where the conditions of compensation set forth in Section 3600 concur, the right to recover such compensation is, ... the sole and exclusive remedy of the employee ... against the employer, ..." In all cases where the conditions of compensation set forth in Section 3600 do not concur, the employer's liability is not governed by the Workers' Compensation Act. ( § 3602, subd. (c).)

Implicit in the workers' compensation laws is the concept that the statutes relate generally to the legal status or relationship between employer and employee. (Bell v. Industrial Vangas, Inc. (1981) 30 Cal.3d 268, 276-277, 179 Cal.Rptr. 30, 637 P.2d 266.) The legislative purpose is to compensate for losses resulting from the risks inherent in the particular industry to which the employee is exposed. ( Id. at p. 277, 179 Cal.Rptr. 30, 637 P.2d 266.) The employer's liability is not based upon any act or omission, but solely upon the existence of a contractual relationship of the employee to the employment from which the injury arose during the course of the employment. (Ibid.) However, the "historic tradeoff" of speedy, no-fault recovery of compensation to the employee in exchange for limited liability in the exclusive forum of workers' compensation "did not encompass the giving up of rights not yet in being." ( Id., at p. 278, 179 Cal.Rptr. 30, 637 P.2d 266.)

Labor Code sections 2800.2, 2800.3, Insurance Code sections 12670 et seq., and Health and Safety Code section 1373.6 all concern the right of an employee or member of a group plan who becomes ineligible for group coverage to convert to an individual policy without proof of insurability. ¹ The legislative intent expressed in Insurance Code section 12670 is to make certain that an insured covered by a group policy, who becomes ineligible for such coverage, has access to minimum benefits by requiring employers, employee organizations, and other entities which provide such coverage to their employees or members to also make available conversion policies and to guarantee that insurers offer such conversion policies. Significantly, all pertinent code sections place the burden of notification to timely convert from the group coverage solely upon the employer who is to give notice of conversion rights within 15 days of coverage termination. (See Lab.Code, § 2800.2; Ins.Code, § 12689; Health & Saf.Code, § 1373.6.) The employee then has 31 days after termination in which to choose a particular conversion policy. (Ins.Code, § 12687.)

Appellan...