Braulio Ruvalcaba was employed by Santa Cruz City Schools as a custodian. In 2016, he suffered a back injury on the job. Keenan & Associates was the District’s workers’ compensation claims administrator.He returned to work with basic accommodations and was able to perform essential job duties for nine months. However on January 9, 2018 the District terminated his employment.
On March 30, 2020, Ruvalcaba filed his First Amended in Complaint Santa Cruz Superior Court (19-CV-00488) against Santa Cruz City Schools and Keenan and Associates alleging (1) disability discrimination under California Government Code (“Gov. Code”) § 12940(a); (2) failure to accommodate under Gov. Code § 12940(m); (3) failure to engage in a good-faith interactive process under Gov. Code § 12940(n); (4) failure to prevent discrimination under Gov. Code § 12940(k) (against the District only); and (5) wrongful termination in violation of public policy.
The plaintiff alleged that Keenan provided misleading information to the District, leading to the mistaken belief that Ruvalcaba was too injured to continue working. Specifically Keenan allegedly instructed the District to disregard medical information not provided by Keenan itself. And Keenan allegedly withheld medical reports that would have shown Ruvalcaba’s ability to perform his job, even without accommodations. This conduct was claimed to have aided, abetted, incited, coerced, or compelled the District’s failure to accommodate and wrongful termination.
According to media information, Keenan conceded that it failed to transmit accurate medical information to the District, it claimed these were innocent mistakes and oversights rather than intentional efforts to discriminate against plaintiff or get him fired. Keenan claimed that the District was solely responsible for the decision to terminate plaintiff and its refusal to rehire him, and that it was not appropriate for the District to blame Keenan for those decisions.
The jury trial lasted 17 days. They returned verdicts against Keenan on May 23 and May 24, 2022. The verdict against Keenan totaled $6,908,000 for compensatory itemized damages related to emotional distress and $27,600,000 in punitive damages.The total verdict amounted to $34,508,000 against Keenan, with the District also liable for portions of the noneconomic damages.
AP Keenan is a division of Assured Partners, Inc., the eleventh largest insurance broker in the United States and a company with more than $1.6 billion in annual revenues according to its own website. Ironshore Indemnity issued Excess Financial Institutions Professional Liability policy to Assured Partners, for the policy period October 1, 2019 to October 1, 2020. It followed Insurance Agents and Brokers Professional Liability Policy issued by Allied World Insurance Company (“Allied”), for the policy period October 1, 2019 to October 1, 2020, with limits of $15,000,000. The MAIC Policy provides excess coverage over the followed policy with an aggregate limit in the amount of $10,000,000 excess of $15,000,000. The Ironshore Indemnity Policy provides an aggregate limit of $10,000,000 excess of the total $25,000,000 limits of the Followed Policy and the MAIC Policy.
Ironshore is a subsidiary of Liberty Mutual Insurance Company. Its lawsuit Ironshore Indemnity, Inc. v. Keenan & Associates (Case No. 2:25-cv-03310) was filed on April 15, 2025 in the United States District Court for the Central District of California, and it is a declaratory judgment action asking the court to determine whether it has a duty to defend or indemnify Keenan for the Ruvalcaba judgment.
Ironshore asserts that California Insurance Code Section 533, prohibits insurers from covering losses caused by an insured’s willful acts. The lawsuit points to the Ruvalcaba jury’s findings and answers to questions required for the verdict. And Ironshore claims these findings support that Keenan intentionally conspired with the school district and acted with “willful, malicious, and oppressive” conduct. Ironshore asserts that both the compensatory and punitive damages fell outside its policy’s coverage. The company also noted that its policy followed the terms of the Allied World policy, which excluded amounts uninsurable under applicable law, further reinforcing its stance.
The Ruvalcaba case, and its aftermath, is highly significant to the California workers’ compensation industry. The California Labor Code section 3762, along with related regulations and privacy laws, impose specific restrictions on the release of medical reports by a workers’ compensation claims administrator to the employer involved in the claim. However, these restrictions are nuanced and depend on the context, the purpose of the disclosure, and compliance with privacy laws such as the California Confidentiality of Medical Information Act (CMIA) and federal regulations like the Health Insurance Portability and Accountability Act (HIPAA).
Specifically the claims administrator is authorized to release “Medical information regarding the injury for which workers’ compensation is claimed that is necessary for the employer to have in order for the employer to modify the employee’s work duties.” Otherwise they “are prohibited from disclosing or causing to be disclosed to an employer, any medical information, as defined in Section 56.05 of the Civil Code, about an employee who has filed a workers’ compensation claim.”
In light of the above, some may argue that fine line exists between the juxtaposition of what a claims administrator must release to avoid liability such as what happened in the Ruvalcaba case, or legal liability for disclosing what might be argued as protected medical information that should not have been disclosed. And there seems to be little guidance on use on a case by case basis, especially in cases that contain perhaps hundreds of pages of narrative medical information.