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Exclusive remedy for COVID-19 claims hangs in the balance in California case

A lawsuit pending in a California appeals court threatens to upend a more than century-old workers compensation provision that legal experts say could subject employers to potentially unlimited tort liability and trigger an avalanche of litigation.

In the case of Matilde Ek v. See’s Candies Inc., the worker alleges she contracted COVID-19 while working on the packing line at a See’s Candies Inc. distribution plant in Carson, California, in March 2020 and that she later exposed her 72-year-old husband to the novel coronavirus, which killed him one month later.

Ms. Ek alleges that the plant lacked sufficient safeguards against infection, ultimately causing Mr. Ek’s death. In response, See’s Candies invoked the “exclusive remedy” rule, which bars such negligence suits as part of the grand bargain of the workers comp system in California. Litigators say the exclusive remedy rule has shielded employers from civil court liability lawsuits for over 100 years.

But a trial court in Los Angeles in April 2021 allowed the case to continue, issuing a ruling that an opposing coalition of state and national employer groups argued in an amicus brief “flies in the face of the derivative injury rule” — a workers comp provision that prohibits injured employees from suing their employer for injuries that are collateral to or derivative of a compensable workplace injury.

In opposing See’s Candies’ objection, the judge cited a 2016 mesothelioma case, Kesner v. Superior Court, in which the California Supreme Court ruled employers have a “duty to exercise reasonable care to prevent the spread of pathogens, conditions, contaminants, toxins to foreseeable third parties.” The case allowed an employee’s spouse to proceed with a civil claim where it was alleged that the spouse developed mesothelioma from inhaling asbestos fibers on the employee’s clothing. In the See’s Candies case, the trial judge held that the COVID-19 transmission was similar and was grounds to allow the case to move forward.

In a brief filed with the appeal in California’s 2nd District Court of Appeal, the employer coalition argues that the trial court’s ruling violates the provisions of the derivative injury rule in such a way that “a large swath of COVID-related claims stemming from workplace conduct would be placed outside the scope of the workers compensation system.”

Workers comp and employment attorneys in and outside of California echoed these concerns.

“The fear is it’s going to create just a flood of potential lawsuits,” said Jeffrey Adelson, general counsel, Adelson McLean APC in Newport Beach, California. “The concern I have with this case is it is hinging on a very thin wire; it’s basically the interpretations of words. What is collateral or derivative of a workplace injury?”

And it’s not just about COVID-19, Mr. Adelson said.

“At what point does it stop? There could be a never-ending chain of regression if this exception is taken away.”

Davis Walsh, partner at McGuireWoods LLP in Richmond, Virginia, and lead editor of the book, Infectious Disease Litigation: Science, Law, and Procedure, said the “duty of care” provision cited in the asbestos case has pros and cons. But in the face of breakthrough infections, vaccine opposition and speculated booster guidance, eliminating liability risk for employers will be difficult if such a case is won by the worker.

“The consequence of this is that businesses, regardless of the actions they take to prevent the spread of COVID in the workplace, are going to get sued — some being found liable,” Mr. Walsh said.

“Thus far, outside of the workers comp world, we’ve generally seen a very limited number of lawsuits related to tracking COVID. Now that the courts have allowed these cases to proceed, I think that’s going to change — we’re going to see more of those types of lawsuits,” Mr. Walsh added.

Gregory Grinberg, managing partner of Gale, Sutow & Associates APC in Cypress, California, said that, if the decision stands, industrial COVID-19-transmission deaths could mimic asbestos liability litigation.

“If the court allows this, employers will likely find themselves facing liability in both the civil tort arena as well as before the Workers’ Compensation Appeals Board,” Mr. Grinberg said.

In turn, Mr. Grinberg said, a second-hand implication of the ruling may be an uptake in different lines of liability coverage, “so that an early settlement of a workers compensation claim does not prejudice the defense of a civil tort claim.”

The case is pending in the appellate court and as of late September, oral arguments have not been scheduled.

This article was first published in Business Insurance.

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