The California Self-Insurers’ Security Fund is a nonprofit organization charged by the state Legislature with continuing payment of workers’ compensation claims when a self-insured entity is unable to do so. When the Fund steps in to provide such payments, it is required by law to seek reimbursement from the employer. The law permits groups of employers to band together into self-insurance groups, and the Fund is also responsible for paying workers’ compensation claims when such groups cannot.

The Healthcare Industry Self-Insurance Program is one such group. In 2013, the California Department of Industrial Relations ordered the Fund to assume the Program’s workers’ compensation claims.

The Fund hired the law firm of Nixon Peabody to represent it in order to seek reimbursement from the employer group. In November 2013, the Fund filed a lawsuit naming 304 members of the Program as defendants, approximately 170 of which have since settled.

Attorney Andrew Selesnick served as Chair of the Health Care Department at Michelman & Robinson, LLP (M&R), overseeing and managing a team of attorneys who represented clients in the healthcare industry. Since 2014, M&R served as attorneys for employer defendants in this collection case. The representation of those parties was handled primarily by four attorneys at M&R, including Selesnick. Selesnick was actively involved in the case, including participation in a confidential discussion pertaining to moving parties’ liability and damages.

In February 2017, Selesnick left M&R and joined the Nixon Peabody law firm. Nixon Peabody was promptly advised of the potential conflict issue by M&R. On or about March 8, Selesnick “parted ways” with Nixon Peabody.

On March 15, moving parties filed a motion to disqualify Nixon Peabody. They argued that Selesnick had done prior work for the moving parties in the same action, and as a result, Nixon Peabody and all its attorneys had a conflict of interest as a matter of law. M&R claimed that Selesnick had not shared confidential information with them, and the firm had put an “ethical wall” in place. The trial court granted the motion and M&R appealed. The Court of Appeal reversed in the published case of California Self-Insurers Security Fund v Superior Court, concluding that “automatic disqualification was not required under the facts.”

There “is no question that if Selesnick were seeking to represent the Fund, he could not do so. There is also no question that if Selesnick continued to work at Nixon Peabody, the entire firm would be disqualified. The question that is left is whether Nixon Peabody and all its attorneys are also prohibited from representing the Fund given all the relevant facts, including that Selesnick no longer works at Nixon Peabody, and was only there for a very brief period.”

“We conclude the trial court must perform an analysis regarding whether confidential information was, indeed, transmitted from Selesnick to the attorneys working on the matter at Nixon Peabody.” The question, then, is whether Selesnick’s tenure at the firm endangers the duty of confidentiality he owes to real parties; if it does, disqualification is required. If it does not, then the court must exercise its discretion to determine whether other reasons compel disqualification.