The California Insurance Commissioner announced several appointments including naming Timothy Hyamn as the newest member of the California Insurance Guarantee Advisory (CIGA) Board of Directors, Bryan Little as the newest member of the Workers’ Compensation Insurance Rating Bureau (WCIRB) Governing Committee, Michael Golden and Nona Tirre Mirande as reappointed members to the California Automobile Assigned Risk Plan (CAARP) Advisory Board, and Ophir Bruck, Stephanie Chan, and Thomas Connell Wilson as reappointed members to the California Organized Investment Network (COIN) Advisory Board.

The Governor and California State Legislature created CAARP to provide auto insurance for motorists unable to obtain coverage in the private market due to their driving records or other extraordinary circumstances. One program within the plan — the California Low Cost Auto Program — aims to provide affordable liability insurance to income-eligible good drivers by assigning them to private insurers based upon the companies’ share of the auto insurance market. The CAARP Advisory Committee provides policy advice to Commissioner Lara on matters affecting the operation of its programs.

The CIGA Board of Governors oversees the guarantee association’s general operations and management in order to protect policyholders in the event of an insurance company insolvency. Established in 1969 by the Governor and California State Legislature, CIGA comprises all insurance companies admitted to sell homeowners, workers’ compensation, automobile, and other specified property and casualty lines of insurance in California.

The California Organized Investment Network (COIN) was established in 1996 within the Department of Insurance to guide insurers on making financially sound investments that yield environmental benefits throughout California and social benefits within the State’s underserved communities. Commissioner Lara has prioritized COIN investments which drive affordable housing, support small businesses, combat climate change, and encourage investors to utilize diverse investment managers more. The COIN Advisory Board provides guidance to the Commissioner and the COIN program to meet its mission and chief priorities.

The WCIRB Governing Committee sets policy, oversees WCIRB management, and reviews all issues involving pure premium rates, classifications, rating plans, rating systems, manual rules and policy, and endorsement forms. The WCIRB is a private organization licensed by the Department for the purpose of collecting, analyzing, and compiling rating data, with funding coming from assessments of its insurance company members. All workers’ compensation insurance companies in California are required by law to be members of the WCIRB.  

The next CAARP Advisory Committee meeting is August 20 and August 21, 2024, the next CIGA Board of Governors meeting is August 13 and August 14, 2024, the next COIN Advisory Board meeting is November 7, 2024, and the next WCIRB Governing Committee meeting is September 25, 2024.

More details are available at: www.insurance.ca.gov/boards. Public members of the CAARP Advisory Committee receive $250 per meeting. All other positions are uncompensated.

Javier Hidalgo claimed injury to various body parts while employed by defendant Ducoing Management Inc., as a laborer on January 26, 2023.  On October 11, 2023, the matter proceeded to trial on several issues including earnings. The employee claimed $1,658.46 per week. The employer/carrier claimed $620.00 per week.

Hidalgo testified that he was hired to work full time, was to be provided lodging. He lived at a hotel during his employment, and would be at different locations. One week he would be in San Francisco and the following week in Sacramento. He agreed that the employer provided the lodging.

According to the Applicant, he was hired 3 months prior to his injury. On the first day of work he went to Modesto. He was taken there by a person and then on the same day at the end of the workday he was taken to Oakland. He was then provided lodging in Oakland. He was in Oakland for about a week. He was provided lodging the entire time he was in Oakland and given money for food. After being in Oakland, he went to Salinas and then Sacramento where the employer also provided food and lodging.

He estimated that he worked about 75 out of 90 days for the employer. He stated he was still provided a hotel by the employer for the 15 days he did not work. He worked in Bakersfield for about week. That is the last location he recalled working at.

Applicant was provided with lodging for the entire three month period and never went back home or to Orange County. During the three months he worked there if he had any mailed he used the foreman’s P.O. box in Oakland. He stated he was injured in Bakersfield which resulted in hospitalization for about a week at a trauma hospital then he was sent to a rehabilitation hospital. Thereafter, he went to stay with his sister.

About 15 years ago he worked with the same employer doing the same work and that lodging was not provided during that employment.

According to an employer’s witness, the Applicant stayed at hotels or lodges that the employer paid for. The employer did not give Applicant any money directly for lodging. Lodging was considered a business expense. The employer made the arrangements for lodging and covered for lodging outside of Anaheim. The employer would not cover for any lodging near Anaheim. Applicant was given a per diem check for food. The company only gave money for food to employees working off-site outside of Anaheim. The per diem for food was provided when traveling.

After a trial the WCJ found, in pertinent part, that applicant’s lodging and food allowance are considered part of his wages; that applicant’s weekly earnings are $1,439.10 a week.

The Defendant filed a Petition for Reconsideration, which contended in part that the WCJ erred in considering applicant’s lodging and food allowance as part of his wages. Reconsideration was granted in the panel decision of Hidalgo v Ducoing Management Inc -ADJ17503090 (March 2024).

Labor Code section 4453(c)(1), provides that “[w]here the employment is for 30 or more hours a week and for five or more working days a week, the average weekly earnings shall be the number of working days a week times the daily earnings at the time of the injury.” With respect to whether specific items, such as food and lodging, are included in the computation of average weekly earnings, the WCAB panel looked to section 4454 which states “average weekly earnings shall not include any sum which the employer pays to or for the injured employee to cover any special expenses entailed on the employee by the nature of his employment, .”

Remuneration is defined by Black’s Law Dictionary as “Payment; reimbursement. Reward; recompense; salary; compensation.” (Black’s Law Dict. (6th ed. 1990) p. 1296, col. 1.)

The analysis of whether lodging and meals are “remuneration” as opposed to “special expenses” is outlined in Burke v. Workers’ Comp. Appeals Bd. (2009) 74 Cal.Comp.Cases 359, as follows: In the context of employment, remuneration is payment or reward for services rendered. The plain meaning of “remuneration” does not include reimbursement for costs or expenses. When an employee’s expenses “entailed by the nature of [her] employment” are paid by an employer, an exchange of services for payment does not take place and the applicant does not obtain an advantage from the transaction. Determining whether fuel, lodging, and meals are “remuneration” or “special expenses” requires an analysis of several factors including whether they were provided in exchange for services, whether they are an advantage to the applicant, and whether they are provided to the applicant only while the applicant is performing employment duties.

With respect to meals, Burke provides the following: “Meals are remuneration if the employee is provided with meals in exchange for services and the meals are an economic advantage to applicant. For example, in Watson v. Workers’ Comp. Appeals Bd. (Ramirez) (1980) 45 Cal.Comp.Cases 50 (writ den.), the value of meals were included in the calculation of applicant’s earnings as a waitress. The applicant was relieved of the necessity of providing herself with the meals … and, therefore, her employer’s provision of the meals was an economic advantage to the applicant.”

Because all of Hildago’s “jobsites in 2022 and 2023 were away from home, it logically follows that applicant received a per diem for all of the days worked in 2022 and 2023. However, there was no evidence presented that the per diem for meals was part of his remuneration or understood to be an economic advantage to applicant above and beyond his wages.”

Turning to whether the cost of applicant’s lodging is remuneration for purposes of calculating his average weekly earnings, the WCAB noted that “the evidence is less clear cut.”

“Upon return, the WCJ should consider whether lodging was an expense necessitated by the nature of applicant’s employment, and whether payment for lodging provided any bargained for economic advantage to applicant.”

Chronic musculoskeletal (MSK) pain affects one in three individuals worldwide. MSK pain is a leading cause of work-related disability and productivity impairment, broadly impacting all industry sectors. Productivity impairment can occur through presenteeism (i.e. decreased work performance due to pain) and absenteeism (i.e. missing working hours), and can ultimately lead to early retirement, all imposing a strain to the workforce.

MSK pain-related productivity impairment drives tremendous economic impact at the organizational and societal levels. Total costs of MSK pain-related productivity loss represent up to $335 billion annual spent, outweighing the direct impact of healthcare expenditure.

Current guidelines recommend exercise-based physical therapy combined with education and behavioral interventions as a mainstay treatment for chronic MSK pain. However, insufficient healthcare facilities and professionals, the loss of work hours and travel expenses associated with attending in-person physical therapy sessions, leave many patients with suboptimal or no care. Digital interventions have arisen as a solution to increase access, promoting higher engagement, while driving clinically significant outcomes.

Additionally, evidence suggests that MSK digital interventions are more affordable than conventional in-person rehabilitation.Independently of care delivery mode (digital or in-person), most studies focused on cost-effectiveness from a societal perspective.To date, no study has explored the potential economic impact of digital interventions from an employer perspective.

For these reasons researchers decided to investigate the impact of a DCP in promoting savings associated with recovery of productivity impairment in employees with chronic MSK pain. As a secondary objective, to explore potential savings in different industry sectors. The Study – Recovering work productivity in a population with chronic musculoskeletal pain: unveiling the value and cost-savings of a digital care program – was just published in the Journal of Occupational and Environmental Medicine.

The DCP, developed according to current guidelines,consisted of home-based exercise, education, and cognitive behavioral therapy (CBT) over up to 12 weeks. During enrollment, each participant selected the physical therapist (PT) who supervised the intervention. During the onboarding video call, the PT performed a clinical assessment and prescribed a tailored program.

Exercise sessions were performed at the patient’s convenience (recommended 3 times/week) using an FDA-listed class II medical device composed of motion trackers, a dedicated tablet with a mobile app and a cloud-based portal. The tablet displayed guided exercise sessions through videos with real-time audio and visual biofeedback provided by the motion trackers. Motion data were stored in the cloud-based portal accessible by the assigned PT to asynchronously monitor and adjust the program as needed.

Patient education was provided through a smartphone app in the form of short written articles, focusing on the pathophysiology, pain reconceptualization, active coping skills, the role of exercise, and fear-avoidance behaviors.A CBT program based on mindfulness, acceptance, commitment therapy, and empathy-focused therapy was delivered through email in the form of interactive and audio modules. Patient and PT communication was fostered through a built-in secure chat within the smartphone app available on-demand.

From 11,361 patients screened for study eligibility, 5032 employees from 50 U.S. states started the program. Significant improvements in productivity impairment were observed across all industries, yielding median cumulative savings from $151 (95%CI 128;174) to $294 (95%CI 286;303) per participant at treatment-end. Twelve-months projections estimated median savings of $2916 (95%CI 2861;2972). Additionally, significant improvements in non-work-related daily activities were observed.

These savings, estimated from real-world data, disclosed the underlying burden of presenteeism, which was the major responsible for overall productivity loss. The observed results advocate for the use of a DCP to promote productivity recovery, and to improve quality of life in non-work-related activities, consequently supporting employers in maintaining a competitive workforce, while attaining significant savings.

John’s Grill is “a historic, family-owned, landmark restaurant located in the heart of downtown San Francisco.” Its business, like many others, was heavily impacted by the COVID-19 pandemic and related state and local public health orders.

For example, between March 2020 and September 2020, indoor dining – “the lifeblood of John’s Grill’s business” – was prohibited. After September 2020, indoor dining was limited to 25 percent of restaurant capacity. As a result of these restrictions, “John’s Grill suffered substantial financial losses and had to let 54 workers go.”

Moreover, even absent these restrictions, John’s Grill alleges it “would have had to close and suspend its operations due to the worsening pandemic-level presence of the Coronavirus in, on, and around the Insured Premises.”

John’s Grill sought compensation for its losses from its property insurer, Sentinel Insurance Company, Ltd. Sentinel denied coverage on various grounds, including that the loss or damage claimed by John’s Grill did not fall within the insurance policy’s “Limited Fungi, Bacteria or Virus Coverage” endorsement.

The Limited Fungi, Bacteria or Virus Coverage endorsemdent generally excludes coverage for any virus-related loss or damage that the policy would otherwise provide, but it extends coverage for virus-related loss or damage if the virus was the result of certain specified causes of loss, including windstorms, water damage, vandalism, and explosion. The validity of this specified cause of loss limitation is the focus of the parties’ dispute.

John’s Grill acknowledged it cannot meet this limitation, but it contends the limitation is unenforceable because it renders the policy’s promise of virus-related coverage illusory. John’s Grill alleged in is lawsuit that when “physical droplets containing COVID-19 land on or otherwise attach to surfaces, [the virus] renders those surfaces and the immediate surrounding area unusable because there is substantial risk of people getting sick, transmitting infection to others, and possibly dying as a result of touching those surfaces.”

In the trial court, Sentinel successfully demurred to John’s Grill’s operative complaint for damages and other relief.

The Court of Appeal agreed with John’s Grill. It held that the promise of coverage was illusory because John’s Grill had no realistic prospect of benefiting from the virus-related coverage as written. (John’s Grill, Inc. v. The Hartford Financial Services Group, Inc. (2022) 86 Cal.App.5th 1195, 1224.) It therefore invalidated the specified cause of loss limitation and allowed John’s Grill’s claims for virus-related losses or damage to proceed. (Id. at p. 1212.)

The California Supreme Court reversed in it’s John’s Grill, Inc. v. The Hartford Financial Services Group , Inc., Opinion -S278481 (August 2024).

It concluded the Court of Appeal erred by declining to enforce the specified cause of loss limitation under the circumstances here. “The terms of the Limited Fungi, Bacteria or Virus Coverage endorsement are clear and unambiguous. It provides virus-related coverage, but only if the virus results from certain specified causes of loss. In accordance with long-settled principles of contract interpretation, the plain meaning of the policy governs. Because John’s Grill admits that it cannot satisfy the specified cause of loss limitation, it has no claim for coverage under the policy.”

“John’s Grill cannot escape this conclusion by citing the so-called illusory coverage doctrine. This court has never recognized an illusory coverage doctrine as such. The doctrine as articulated by John’s Grill does not appear in our precedents. But even assuming some version of the doctrine may exist under California law, we conclude that an insured must make a foundational showing that it had a reasonable expectation that the policy would cover the insured’s claimed loss or damage. Such a reasonable expectation of coverage is necessary under any assumed version of the doctrine.”

“Here, however, John’s Grill has not shown it had a reasonable expectation of coverage under the policy for its pandemic-related losses. It has therefore failed to establish that the policy created the illusion of coverage that rendered any contrary policy language unenforceable. Moreover, even setting aside this hurdle, and accepting John’s Grill’s articulation of the doctrine, it still cannot demonstrate that the policy’s promised coverage was illusory.”

“Even with the specified cause of loss limitation, the policy offered John’s Grill a realistic prospect for virus-related coverage. Because the Court of Appeal held otherwise, we reverse and remand for further proceedings.”

The First Set of Cases:

After issuing a notice of intent on April 10, 2024, and having received and reviewed the responses of Susan Garrett and Lance Garrett, on May 16, 2024, the Appeals Board issued an en banc order imposing sanctions and costs in eight cases collectively of $20,000.00 against attorney Susan Garrett (CA BAR #195580) in eight (8) instances where she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

The Appeals Board issued a second order imposing costs and sanctions collectively of $20,000.00 against hearing representative Lance Garrett in eight (8) instances where he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

Prior to these orders the Garretts were provided with a Notice of Intent and were given an opportunity to present their defense to the charges.

The WCAB characterized the response by writing “Susan Garrett and Lance Garrett’s responses trivialize the act of filing multiple frivolous petitions for reconsideration as an ‘inconvenience.’ However, their conduct here goes far beyond inconvenience. The filing of frivolous petitions for reconsideration significantly hampers the work of the Appeals Board. Each petition costs significant time and resources and delays the issuance of other decisions pending at the Appeals Board. More significantly, it delays a determination of applicant’s benefits in each of the cases at bar.”

And that response may have precipitated in the WCAB to seeking even more than the $40,000 total sanction imposed on May 16. The WCAB then announced two new groups of cases where it intends to impose even more sanctions, and has issued it’s Notice of Intent, En Banc, accordingly.

TheSecond (New) Set of Cases:

On August 7, 2024, the Appeals Board issued an en banc decision after removal, Abel Hidalgo, et al vs. Roman Catholic Archbishop, permissibly self-insured, Case Nos. ADJ13332737, ADJ15218980, ADJ12640295, which imposed costs and sanctions of $7,500.00 collectively against attorney Susan Garrett (CA BAR #195580) in three (3) instances where she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where such actions were indisputably without merit.

The notice of intent issued on June 17, 2024 and Susan Garrett did not respond.

The Appeals Board issued a second order imposing costs and sanctions of $7,500.00 against hearing representative Lance Garrett in three (3) instances where he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where such actions were indisputably without merit.

The notice of intent issued on June 17, 2024 and Lance Garrett did not respond.

The Appeals Board found that Susan Garrett and Lance Garrett engaged in sanctionable conduct by filing petitions for reconsideration on or near the day of trial where the petition for reconsideration was from a non-final order setting the matter for trial. The amount of costs was deferred to the parties to adjust with jurisdiction reserved at the trial level in the event of a dispute.

And also on August 7, in a second new case, Guillermo Gonzalez, et al vs. The Bicycle Casino; Arch Indemnity Ins. Co., administered by Gallagher Bassett, et al.Case No. ADJ12226694, ADJ12414651, ADJ12414992, ADJ12414993, two nearly identical Notices of Intent for two instances of alleged sanctionable conduct, and each are subject to an additional $5000.

Similarly, both Susan and Lance Garrett did not respond to the Notice.

In this second case, the Appeals Board also found that Susan Garrett and Lance Garrett engaged in sanctionable conduct by filing petitions for reconsideration on the day of trial where every issue raised on reconsideration was an issue to be decided at trial. The amount of costs was deferred to the parties to adjust with jurisdiction reserved at the trial level in the event of a dispute.