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Carlos Uribe suffered an industrial injury in September 2010 during his employment with XCEL Mechanical Systems, Inc., and he thereafter filed a workers’ compensation claim. At the time of Uribe’s injury, XCEL was insured for workers’ compensation by Reliance Insurance. Reliance was subsequently declared insolvent and placed in liquidation. CIGA assumed administration of Uribe’s claim.

Nearly 20 years after Uribe’s injury, on August 3, 2020 CIGA petitioned to join Zurich in the workers’ compensation proceeding based on a December 17, 2018 report prepared by the WCIRB showing that Zurich provided coverage for XCEL during the policy period from February 1, 2000 through February 1, 2001. On September 1, 2020 the Board ordered Zurich joined as a party defendant, and Zurich subsequently denied liability.

The parties arbitrated the issue of Zurich’s liability for payments made on Uribe’s claim. The arbitrator denied CIGA’s petition, finding CIGA’s claim that Zurich provided coverage for XCEL with respect to Uribe’s injury was not supported by substantial evidence. Therefore, CIGA was required to continue to administer Uribe’s claim and pay all lawful benefits, without reimbursement from Zurich.

CIGA filed a petition with the Board for reconsideration of the arbitrator’s ruling on August 31, 2021.On December 7, 2021, Zurich requesting the Board dismiss it from the proceeding because the arbitrator’s decision had become final. Zurich noted the Board did not act on the petition before the 60-day deadline, and CIGA did not file a petition for review in the Court of Appeal pursuant to section 5950 within 45 days from the date the petition for reconsideration was denied by operation of law.

CIGA submitted a reply brief in which it argued the Board retained jurisdiction over CIGA’s petition for reconsideration because the petition had not been forwarded to the Board’s reconsideration unit until October 6, 2021, a month and a half after CIGA filed its petition.

The Board failed to act (again) until June 13, 2022. By this time, more than nine months had passed since CIGA had filed its petition for reconsideration. The Board issued an order granting the petition for reconsideration for the purpose of allowing an opportunity for further study of the factual and legal issues (a “grant-for-study” order).

Zurich filed a petition for writ of mandate in the Court of Appeal requesting it issue an order directing the Board to rescind its June 13, 2022 order and dismissing Zurich as a defendant. The Court of Appeal issued an order to show cause requesting the Board address the issues raised by Zurich. The Board sought to justify its late decision on the basis its delay was the result of an “administrative irregularity” in the workers’ compensation appeals process that delayed transmission of CIGA’s timely filed petition to the Board. The Court of Appeal rejected the Board’s argument and agreed with Zurich in the published case of Zurich Am. Ins. Co. v. Workers’ Comp. App. Bd – B321864 (December 2023).

Under Labor Code section 5909, the last day for the Board to act on CIGA’s petition was November 1, 2021, the first business day following expiration of the 60-day period. (See Cal. Code Regs. tit. 8, § 10600, subd. (b) [“Unless otherwise provided by law, if the last day for exercising or performing any right or duty to act or respond falls on a weekend, or on a holiday for which the offices of the Workers’ Compensation Appeals Board are closed, the act or response may be performed or exercised upon the next business day.”].)

The Board relies on an exception to section 5909’s 60-day deadline recognized over three decades ago by the Court of Appeal in Shipley v. Workers’ Comp. Appeals Bd. (1992) 7 Cal.App.4th 1104 (Shipley), which found the 60-day deadline was tolled because the claimant diligently inquired into the status of his petition for reconsideration and the Board misled the claimant to believe his petition would be considered once the lost file on his case was retrieved or reconstructed.

However the Court of Appeal responded that “Because section 5909 divests the Board of jurisdiction to consider a deemed-denied petition for reconsideration after 60 days has passed, we disagree with the conclusion in Shipley, supra, 7 Cal.App.4th at page 1108 that a petitioner has a due process right to review by the Board after the deadline.”

“But even if Shipley can be read to apply equitable principles to allow the Board to consider a petition for reconsideration beyond the statutory deadline, the exception must be applied only (1) where a diligent petitioner’s rights were violated due to the fault of the Board (such as a lost petition), and (2) the Board misled the petitioner in a manner that deprived the petitioner of a right to review by the Board or the appellate courts.”

The Board also argued that “the workers’ compensation appeals process system is inefficient, with petitions electronically filed or submitted to a district office being lost or, as here, the arbitrator failing to submit the arbitration record to the Board.”

In response the Court of Appeal said “We reject the Board’s assertion it is powerless to address these failures. Nor is the remedy for the Board to ignore the Constitutional mandate in article XIV, section 4 that the Board “expeditiously” determine matters under the Workers’ Compensation Act (§ 3201 et seq.). Petitioners must be diligent-promptly inquiring of the Board as to the status of their petitions and, if the Board does not act within the 60-day time period, seeking review of the deemed-denied petition under section 5950 within 45 days. Had CIGA timely filed a petition for review, it could have obtained judicial review of the arbitrator’s initial decision.”

The Court of Appeal then held that after 60 days the administrative process is final, and a petitioner has 45 days under section 5950 in which to seek a writ of review of the decision of the workers’ compensation judge or arbitrator by the Court of Appeal or Supreme Court. It therefore issued a writ of mandate directing the Board to rescind its order granting CIGA’s petition for reconsideration and ordering Zurich dismissed as a party defendant from the proceeding.