Workers' Compensation
Court Says “Exclusive Remedy Rule” May Not Apply to COVID Claims
by Tom Richard, RTGR Law LLP, Oakland, CA
Californiaâs Second District Court of Appeal has rejected employer Seeâs Candies workersâ compensation âexclusive remedy ruleâ defense in a COVID wrongful death lawsuit. The suit claims that the disease was contracted from a Seeâs employee who was negligently exposed to the virus in the workplace.
The appellate opinion in Matilde Ek et al. v. Seeâs Candies Inc. et al. undermines the âexclusive remedy ruleâ defense which has long precluded employees and others from pursuing separate civil court remedies against employers in addition to or in lieu of workersâ compensation benefits.
The facts & the âexclusive remedy ruleâ
Plaintiffs alleged that employee Mrs. Ek contracted COVID at work because of defendant Seeâs failure to implement adequate safety measures. While convalescing at home, Mrs. Ek is alleged to have passed COVID to her husband (who was not an employee of Seeâs) who died from the disease a month later.
Defendant Seeâs filed a motion to dismiss the lawsuit, asserting that plaintiffsâ claims were barred by the âderivative injury doctrineâ. The derivative injury doctrine establishes workersâ compensation as the exclusive remedy for all claims that are derivative of an employeeâs workplace injury. This means that if Seeâs were to prevail, the estate of Mr. Ek, as a third party, would not be allowed to proceed with a separate wrongful death suit. Instead, his remedy would be limited to the benefits awarded to Mrs. Ek in the workersâ comp system.
At issue was whether Mr. Ekâs third-party COVID lawsuit was derivative of his wifeâs work injury
Seeâs argued that any third party-claim is derivative if it is âcausally linkedâ to an employee injury. Specifically, they argued that because Mrs. Ekâs COVID workplace injury was the biological cause of her husbandâs COVID injury, the derivative injury doctrine should apply.
The court, however, rejected this common understanding of what of qualifies as a derivative injury. The courtâs analysis emphasized the Snyder case holding that âcausation is not the sole requirementâ for application of the derivative injury doctrine, finding that derivative injuries refer to something much more specific and limiting than what Seeâs argued.
The court noted: âDerivative injuries are the âeconomicâ and âintangibleâ losses suffered by an employeeâs loved ones as a result of the employeeâs disability or death.â Derivative injuries are âbased on losses arising simultaneously from the employeeâs work injuryâthe directly injured party is disabled or killed, which in turn deprives close relatives of the injured partyâs support and companionship.â
This definition adopted by the court does not extend to separate physical injuries suffered by non-employees, even when an employeeâs injury was part of the causal chain leading to those injuries.
The Holding: COVID suffered by non-employee third parties as a result of contact with COVID-infected employees is a âseparate physical injuryâ and therefore the âderivative injury doctrineâ does not apply to bar a third-partyâs tort claims against an employer
The court states that Mr. Ekâs lawsuit was therefore not derivative of, or based on, losses arising from his wifeâs COVID injury and found that instead, he suffered his own separate COVID injury caused by conditions at the Seeâs facility, even though he did not set foot in the facility.
As the court noted, âPlaintiffs do not seek damages for losses arising from a disabling or lethal injury to Mrs. Ek, such as loss of her support or companionship, or emotional trauma caused by observing Mrs. Ekâs suffering. Nor do they sue for âinjuries that arose during the treatment of [an employeeâs] industrial injuryâ or âin the course of the workersâ compensation claims process.â Instead, they sue for damages arising from Mr. Ekâs death, an event allegedly causally related to Mrs. Ekâs alleged infection by the virus in the workplace, but under Snyder, not derivative of that infection.â
This holding changes the derivative injury doctrine by finding that it does not apply to separate physical injuries suffered by third parties. In other words, while an employee that has contracted COVID in the workplace will be limited to workers comp as their exclusive remedy, non-employees that later claim to have contracted the virus from that employee are not subject to this same exclusive remedy rule, and can sue for economic and punitive damages.
Implications for California Employers
The decision exposes California employers to an untold number of lawsuits from individuals and estates alleging that their COVID infections were contracted indirectly from workplaces that those people never once visited. Not only family members and housemates, but neighbors, acquaintances, or anyone who can claim to trace their COVID infection back to a California employer may be able to sue that employer for damages.
California employers may want to carefully review their workersâ compensation âCoverage Bâ policies as well as business liability insurance for coverage of such claims. Absent insurance coverage, the businesses could be directly liable.
The court plainly opined that the âderivative injuries doctrineâ does not extend to separate physical injuries suffered by third parties (e.g., COVID), even if these injuries were transmitted by an employee. In response to some of the public policy concerns raised that might favor an extension of the current doctrine to encompass such third-party injuries, the court expressly commented that this was an issue âmore properly addressed to the Legislature than to this court. We cannot distort the derivative injury doctrine as articulated in Snyder to address these policy concerns.â
Also, note that this decision merely allows Mr. Ekâs negligence case to proceed. The court expressed no opinion on the question of whether employers owe a duty of care to non-employees infected with COVID because of an employee contracting the disease at work.