West American Ins. Co. v. Valles CA2/1 ( 2020 )

Filed 11/20/20 West American Ins. Co. v. Valles CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
WEST AMERICAN INSURANCE B296771
COMPANY,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BC697805)
v.
LUIS VALLES,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of
Los Angeles County, William F. Fahey, Judge. Reversed and
remanded with instructions.
Law Office of Fred Hanassab, Fariborz Fred Hanassab;
Jeff Lewis Law, Jeffrey Lewis and Sean C. Rotstan for Defendant
and Appellant.
Lindahl Beck and Kelley K. Beck for Plaintiff and
Respondent.
____________________________
Luis Valles appeals from a declaratory judgment entered in
favor of West American Insurance Company (WAIC). The
trial court ruled that Valles could not recover medical expenses
and full wage loss through an uninsured motorist policy issued by
WAIC because Valles could have, but did not, obtain those
benefits through workers’ compensation.
We conclude the judgment was premature given Valles’s
pending workers’ compensation claim, the resolution of which
may undercut critical factual assumptions underlying the
judgment for which there was no record. Accordingly, we reverse
the judgment, and instruct the trial court to stay further
proceedings pending resolution of Valles’s workers’ compensation
claim.
FACTUAL AND PROCEDURAL BACKGROUND
The evidentiary record in this case is slim at best. No
witnesses appeared at trial, and the only evidence introduced at
trial was a copy of WAIC’s insurance policy.1 Our summary of
the underlying facts is taken from WAIC’s proposed findings of
1 The appellate record contains some additional documents
not introduced at trial. WAIC attached to its complaint a copy of
what appears to be Valles’s application for adjudication of a
workers’ compensation claim by the Workers’ Compensation
Appeals Board. Following trial, Valles’s counsel filed Valles’s
proposed findings of fact and conclusions of law, which included a
declaration from Valles’s counsel attaching what appear to be
Valles’s demand for uninsured motorist arbitration and a series
of e-mails between a claims specialist and Valles’s counsel’s office
regarding Valles’s uninsured motorist claim. As noted post, the
trial court did not adopt Valles’s proposed findings of fact and
conclusions of law.
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fact and conclusions of law, which the trial court adopted in full.
We summarize additional facts from the complaint and from
Valles’s proposed findings of fact and conclusions of law, although
the trial court did not adopt them. We provide this factual
summary for context only, and our characterization of the facts is
not binding on any future proceedings. By including facts here,
moreover, we express no opinion as to their validity or
admissibility.
While driving a vehicle belonging to his employer, Valles
was injured in an accident with another vehicle. Valles’s
employer had an insurance policy issued by WAIC that provided
uninsured motorist coverage with a limit of $1 million per
accident (the WAIC policy). The other vehicle involved in the
accident qualified as an uninsured motor vehicle under the WAIC
policy.2
Valles timely filed a claim for workers’ compensation
benefits for his injuries from the accident. According to Valles, he
first obtained medical care through workers’ compensation, “but
he concluded his medical care and treatment, including surgical
procedures, with other medical providers.” Valles then submitted
an uninsured motorist claim to WAIC for medical expenses of
$369,000, as well as future medical expenses and wage loss.
WAIC filed an action for a declaratory judgment as to its
coverage obligations. WAIC invoked an exclusion in paragraph
2 The other vehicle was covered by an insurance policy
with a bodily injury liability limit of $100,000, bringing the
vehicle within the definition of an uninsured motor vehicle to the
extent Valles’s bodily injury damages exceeded $100,000. Valles
purportedly received the full $100,000 from the other motorist’s
insurer.
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C.3 of its policy stating that the uninsured motorist coverage
“does not apply to any of the following: [¶] . . . The direct or
indirect benefit of any insurer or self-insurer under any workers’
compensation, disability benefits or similar law . . . .”
WAIC contended that it would be to the “indirect benefit” of
the workers’ compensation insurer if Valles could “simply elect to
receive medical treatment outside workers’ compensation and
forego pursuing disability benefits,” and instead seek coverage for
treatment and disability from WAIC. Therefore, WAIC asserted,
Valles was precluded from recovering from WAIC what could
have been obtained through workers’ compensation had Valles
pursued those benefits. WAIC further asserted that Valles could
have obtained all necessary medical treatment through workers’
compensation, as well as disability payments, and thus WAIC
should not be responsible for any of it.
As noted above, the parties presented no witnesses or
evidence at trial apart from the WAIC policy, and thus the trial
consisted entirely of argument. Following trial, the parties
submitted proposed findings of fact and conclusions of law. The
trial court adopted WAIC’s proposed findings and conclusions
without modification, which tracked the argument summarized
above.
The trial court issued the following declaratory judgment in
favor of WAIC: “A. Valles is not entitled to recover in settlement
or arbitration of his [uninsured motorist] claim against WAIC for
past or future medical expenses, because he could have obtained
(and might still obtain) reasonably necessary medical treatment,
and benefits for same, through the workers’ compensation
system, rather than electing to incur medical expenses outside of
workers’ compensation and claiming them as part of his
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[uninsured motorist] claim; and [¶] B. Valles is not entitled to
recover in settlement or arbitration of his [uninsured motorist]
claim against WAIC for past or future wage losses, based upon a
claimed disability, without offset for disability benefits that could
have been recovered (or may yet be recovered) as workers’
compensation benefits if pursued.”
Valles timely appealed.
DISCUSSION
“Under Insurance Code section 11580.2 . . . , automobile
insurance policies must offer [uninsured motorist] coverage and
provide for binding arbitration of certain disputes relating to
[uninsured motorist] benefits.” (Case v. State Farm Mutual
Automobile Ins. Co., Inc. (2018) 30 Cal.App.5th 397, 403 (Case).)
Insurance Code3 section 11580.2 “sets forth a mandatory
minimum required by law,” and therefore “[a] policy that
purports to limit or provide more restrictive coverage will not be
given effect.” (Daun v. USAA Casualty Ins. Co. (2005)
125 Cal.App.4th 599, 606.)
“Section 11580.2 includes two provisions designed to
prevent double recovery of [uninsured motorist] benefits and
workers’ compensation benefits for the same injury.”
(Case, supra, 30 Cal.App.5th at p. 403.) Those provisions are
found under section 11580.2, subdivisions (f) and (h). (Case,
at pp. 403–404.)
Under section 11580.2, subdivision (h)(1), “Any loss payable
under the terms of the uninsured motorist . . . coverage to or for
any person may be reduced: [¶] . . . By the amount paid and the
3 Undesignated statutory citations are to the Insurance
Code.
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present value of all amounts payable to him or her . . . under any
workers’ compensation law, exclusive of nonoccupational
disability benefits.”
To ensure the uninsured motorist arbitrator can determine
the amount to offset under section 11580.2, subdivision (h), the
statute imposes a stay on the uninsured motorist arbitration
“until the insured’s physical condition is stationary and ratable”
in the workers’ compensation system. (§ 11580.2, subd. (f).) Put
another way, section 11580.2, subdivision (f) “permits the insurer
to wait until the workers’ compensation award has been
determined before paying benefits to the insured, in the absence
of a showing of good cause.” (Rangel v. Interinsurance Exchange
(1992) 4 Cal.4th 1, 16.) Consistent with this principle, courts
have rejected claims that insurers acted in bad faith by delaying
benefits until certain determinations are made within the
workers’ compensation system. (See, e.g., Rangel, at p. 5; Case,
supra, 30 Cal.App.5th at pp. 414–415.)
According to WAIC, the instant case presents an issue not
addressed by 11580.2 subdivisions (f) and (h), namely, what
happens when a person eligible for workers’ compensation
benefits chooses to bypass that system entirely and seek benefits
from the uninsured motorist insurer instead? Under that
circumstance, there would be no award under workers’
compensation against which to reduce the payment owed by the
uninsured motorist insurer under 11580.2, subdivision (h),
leaving the uninsured motorist insurer to bear the full cost.
WAIC contends, and the trial court accepted, that
section 11580.2 prevents this outcome through language in
subdivision (c)(4), which provides, “The insurance coverage
provided for in this section does not apply either as primary or as
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excess coverage . . . [¶] (4) In any instance where it would inure
directly or indirectly to the benefit of any workers’ compensation
carrier or to any person qualified as a self-insurer under any
workers’ compensation law, or directly to the benefit of the
United States, or any state or any political subdivision thereof.”
As noted above, the WAIC policy contained an exclusion using
similar language. WAIC argues that any payments it makes that
the workers’ compensation carrier otherwise would have made,
but for Valles’s choice to seek medical treatment outside the
workers’ compensation system, are to the indirect benefit of the
workers’ compensation carrier, and therefore are excluded under
section 11580.2, subdivision (c)(4) and the equivalent language in
the WAIC policy.
WAIC’s argument raises a question: If a worker has never
sought benefits under workers’ compensation, how can we know
what benefits that worker might have obtained had he pursued
them? WAIC’s response is Labor Code section 4600, part of the
workers’ compensation statutory scheme, which requires an
employer to provide all medical treatment “reasonably required”
to address the employee’s injuries. (Lab. Code, § 4600, subd. (a).)
WAIC contends that as a matter of law, Valles could have
obtained all necessary medical treatment through workers’
compensation, and therefore, if WAIC were to pay for Valles’s
medical treatment, the workers compensation insurer would
receive an indirect benefit from WAIC’s payment. WAIC makes a
similar argument concerning disability benefits, which WAIC
contends are compensable under workers’ compensation and
provide partial compensation for wage loss.
As noted, the trial court accepted WAIC’s argument and
issued a declaratory judgment barring Valles from recovering
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past or future medical costs from WAIC, or recovering for past or
future wage loss to the extent that loss is recoverable as
disability benefits under workers’ compensation.4
Appealing from that judgment, Valles disputes WAIC’s and
the trial court’s interpretation of section 11580.2, and argues the
statute merely bars double recovery in the event Valles obtains
benefits from workers’ compensation. He asks us to reverse the
judgment. In the alternative, he asks that the matter be
remanded and stayed pending resolution of his unresolved
workers’ compensation claim. Valles contends the trial court
“made assumptions about a possible outcome that is yet
unknown.”
We agree with Valles’s alternative position that the
declaratory judgment in this case was premature, and that the
record needs further development. Among other things, WAIC’s
argument, and the trial court’s judgment, rely on an unstated
assumption that, because Valles chose his own doctors to obtain
medical treatment, workers’ compensation will not cover those
costs. If this assumption is incorrect, and Valles obtains workers’
compensation benefits, then the case no longer fits the factual
scenario advanced by WAIC, in which Valles has entirely
bypassed the workers’ compensation system. Instead, although
we do not decide the question, the case arguably could fall within
4 WAIC concedes that Valles can pursue recovery from
WAIC of elements of damages that would never have been
covered by workers’ compensation, “including his general
damages and lost wages in excess of disability benefit offsets.”
(See Baur v. Workers’ Comp. Appeals Bd. (2009) 176 Cal.App.4th
1260, 1265 [workers’ compensation insurance does not cover
general damages such as pain and suffering].)
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the regime governed by section 11580.2, subdivision (h), under
which WAIC would offset the amounts owed to Valles by
whatever was paid or determined to be payable under workers’
compensation.
The record at this stage is insufficient for us, or the trial
court, to determine which, if either, of the above factual scenarios
applies. It is true that “[e]mployers and their insurers may
establish or contract with a medical provider network to treat
injured employees,” and an injured employee may only seek
treatment outside that network under certain circumstances,
such as when the employee predesignates a personal physician or
the employer fails in its obligation to instruct the employee as to
“ ‘what to do and whom to see.’ ” (Chorn v. Workers’ Comp.
Appeals Bd. (2016) 245 Cal.App.4th 1370, 1377.) Here, no
evidence was presented as to whether Valles’s employer had such
a network, and if so, whether Valles’s circumstances were such
that he could go outside that network. Indeed, there was no
evidence or discussion of this issue at all.
Also, the record is insufficient to justify the breadth of the
declaratory judgment, which precludes Valles from obtaining any
recovery of medical costs from WAIC. It is conceivable that some
of his medical expenses may be, or would have been, denied for a
reason other than the fact that he incurred them outside the
workers’ compensation system. That is, there may be a category
of medical expenses that he could not have recovered through
workers’ compensation even if he had sought them through that
system initially. Even accepting WAIC’s position, Valles
arguably should not be precluded from recovering those costs
from WAIC, because it is not to the workers’ compensation
insurer’s indirect benefit for WAIC to pay costs the workers’
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compensation insurer would never have paid in the first place.
The declaratory judgment does not account for that possibility,
and the record is inadequate for us to rule that such a scenario
would never exist.
At oral argument, WAIC appeared to suggest that, even if
the workers’ compensation system determines Valles is entitled
to benefits, WAIC should not be responsible for any medical costs
in excess of what workers’ compensation awards. This argument
would appear to dissolve the distinction between injured workers
who bypass workers’ compensation to seek treatment, as WAIC
alleges Valles did, and those who pursue all available treatment
through the workers’ compensation system but then seek
additional medical coverage through an uninsured motorist
policy. We are unwilling to decide on this record that there is no
significance to the distinction between those two scenarios; the
question is best resolved once the record makes clear into which
camp Valles falls, if indeed he falls into either. At that point the
parties may make arguments appropriate to Valles’s particular
circumstances, and this opinion should not be read to foreclose
any arguments the parties would wish to make.
We do not intend to catalogue the full range of deficiencies
in the record; the above examples are sufficient to illustrate that
the record leaves many questions unanswered and that it is
premature to decide the issues argued in this appeal.
Accordingly, we express no view regarding any other issues in
this case, including the proper interpretation of section 11580.2,
subdivision (c)(4). At the risk of being repetitive, this opinion
should not be read to foreclose future arguments the parties may
wish to make on a more fully developed record.
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DISPOSITION
The judgment is reversed and the matter remanded. The
trial court is ordered to stay further proceedings pending
resolution of Valles’s workers’ compensation claim. The parties
are to bear their own costs on appeal.
NOT TO BE PUBLISHED.
BENDIX, Acting P. J.
We concur:
CHANEY, J.
FEDERMAN, J.*
* Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.
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