Rea v. Workers' Compensation Appeals Board

127 Cal. App. 4th 625, 25 Cal. Rptr. 3d 828, 2005 Cal. Daily Op. Serv. 2275, 2005 Daily Journal DAR 3118, 70 Cal. Comp. Cases 312, 2005 Cal. App. LEXIS 366
CourtCalifornia Court of Appeal
DecidedMarch 15, 2005
DocketNo. B174785
StatusPublished
Cited by12 cases

This text of 127 Cal. App. 4th 625 (Rea v. Workers' Compensation Appeals Board) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rea v. Workers' Compensation Appeals Board, 127 Cal. App. 4th 625, 25 Cal. Rptr. 3d 828, 2005 Cal. Daily Op. Serv. 2275, 2005 Daily Journal DAR 3118, 70 Cal. Comp. Cases 312, 2005 Cal. App. LEXIS 366 (Cal. Ct. App. 2005).

Opinion

Opinion

NOTT, J.

The primary issue we decide in this case is that the Workers’ Compensation Appeals Board overstepped its authority by implementing new procedures relative to proceedings involving the Uninsured Employers Fund.

INTRODUCTION

Daniel Milbauer was injured on October 17, 1994, while performing his duties as a messenger and courier. Since the employer was illegally uninsured [629]*629for workers’ compensation, Milbauer, through counsel, claimed benefits from petitioner John Rea, Acting Director of the Department of Industrial Relations, as administrator of the Uninsured Employers Fund.1 On or about May 8, 2003, the workers’ compensation administrative law judge (WCJ) issued a decision that Erez Boostan, an individual and doing business as American Runner Attorney Service, is the illegally uninsured employer, and awarded benefits. The Fund petitioned the respondent, Workers’ Compensation Appeals Board (WCAB), for reconsideration and alleged that American Runner Attorney Service, Inc., is the correct illegally uninsured employer, and there is no jurisdiction or liability under section 3716, subdivision (d).2

In an in bank decision,3 the WCAB concluded that substantial evidence supports the illegally uninsured employer’s identity found by the WCJ, and affirmed the award. The WCAB further found that the Fund failed for over eight years to furnish benefits under section 3716, subdivision (b),4 or information regarding the proper employer as required by section 3716, [630]*630subdivision (d)(4).5 The WCAB announced and adopted procedures that, in the future, the Fund may be ordered to appear at priority conferences under section 5502,6 and to assist with discovery of the proper employer. The WCAB explained that the illegally uninsured employer’s disputed identity could be determined by litigation between the employee and the Fund, which would then allow for service of the application and special notice of lawsuit and the Fund’s formal joinder. The WCAB also warned the Fund and its counsel that sarictiohs under section 58137 could be awarded for similar dilatory conduct.

The Fund petitioned the WCAB for reconsideration a second time, and challenged the new procedures adopted and announced by Milbauer I on various grounds. The WCAB in bank8 dismissed the petition because the new procedures did not involve a final appealable order, or a substantial right or liability was not decided.9 In addition, the WCAB contends that the new [631]*631procedures applied to future cases and the Fund is not aggrieved within the meaning of sections 590010 and 5903. 11

The Fund petitions for writ of review and argues that the new procedures in Milbauer I are final orders since WCAB in bank decisions are binding on WCJ’s and WCAB panels.12 The Fund further argues it is aggrieved because WCJ’s are applying the new procedures statewide. The Fund also contends that the WCAB impermissibly legislated changes to jurisdictional requirements under sections 3716, subdivision (d) and 5502, subdivision (f),13 which interfere with the ability of the Director of Industrial Relations to regulate workers’ compensation insurance and seek reimbursement from uninsured employers. Moreover, the Fund claims Milbauer I violates the rulemaking requirements of the Administrative Procedure Act (APA),14 Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571 [59 Cal.Rptr.2d 186, 927 P.2d 296] (Tidewater Marine)15 and section 5307.16 Finally, the Fund argues that Milbauer I authorizes sanctions under section 5813 contrary to section 3716.217 and DuBois.18

[632]*632The WCAB answers that the new procedures under Milbauer I do not involve substantive rights or final appealable orders, and there is no authority that in bank decisions should be treated differently. If Milbauer I is considered .a final decision, the WCAB argues further, then the Fund’s petition for writ of review is untimely.19 Alternatively, the procedures are prospective and the Fund is not newly aggrieved as required by sections 5900 and 5903. Although the WCAB now concedes the Fund may not be ordered to priority conferences under section 5502, the WCAB claims other procedural conferences are not prohibited. More importantly, the WCAB contends, the Fund has a duty to provide benefits and employer information under section 3716, the record shows the Fund failed to do so, and the new procedures, although reasonable, can be challenged in future cases. In addition, the APA expressly allows a precedent decision as an exception to rulemaking requirements,20 and there are numerous in bank decisions that have announced general procedural rules as authorized under the Labor Code. Finally, penalties under section 5813 were not imposed, and are different than the penalties addressed by section 3716.2 and DuBois.

We conclude that the new procedures decided by Milbauer I involve substantial rights and liabilities, and the decision is a final appealable order. The WCAB in bank decided new procedures that change the jurisdictional and liability requirements under sections 3716 and 5502. In addition, because there was no prior notice of the new procedures until Milbauer I issued, the Fund is newly aggrieved and the second petition for reconsideration is proper. Thus, the petition for writ of review from Milbauer II is timely. Moreover, deciding different issues without giving the Fund the opportunity to be heard or present evidence violated due process.

Although there may be substantial evidence to support the WCAB’s finding in Milbauer /, that the Fund failed to comply with section 3716, subdivision (d)(4), we conclude that the new procedures violate sections 3716, 5502, 5307 and the APA. The Fund may not be joined in any proceedings unless a legal person or entity has been identified as the illegally uninsured employer in the application and special notice of lawsuit, and said employer has been served with the application and special notice of lawsuit [633]*633in the manner provided for service of a summons in the Code of Civil Procedure. The Code of Civil Procedure includes procedures for service and default or default judgment, even when the true identity of the defendant is unknown. In regards to the APA and section 5307, the procedures announced in Milbauer I are new, general, and interpret and specifically implement section 3716, and are more like regulations than precedent which contain general legal or policy determinations that are likely to recur. Because we conclude that the new procedures violate the Labor Code and APA, we need not decide whether the WCAB determined that section 5813 extends to the Fund. Accordingly, the new procedures decided in Milbauer I and the decision in Milbauer II are annulled, and the matter is remanded for further proceedings consistent with this opinion.

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Bluebook (online)
127 Cal. App. 4th 625, 25 Cal. Rptr. 3d 828, 2005 Cal. Daily Op. Serv. 2275, 2005 Daily Journal DAR 3118, 70 Cal. Comp. Cases 312, 2005 Cal. App. LEXIS 366, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rea-v-workers-compensation-appeals-board-calctapp-2005.