The Oregon Court of Appeals recently overturned a trial court decision awarding $10 million for loss of consortium to the widow of a worker whose death was linked to exposure to asbestos in his job.

The trial court rejected the employer’s argument that the exclusive remedy for the worker’s injuries was workers’ compensation insurance, after upholding the widow’s argument that the company did not have workers’ comp coverage, so it was not applicable. The appeals court, applying California laws, ruled that the lower court erred in placing the burden on the defendant to prove it had workers comp coverage.

The case at the center of this legal battle involves Brenda Ann Ibarra, who filed suit individually and on behalf of the estate of her late husband, Reberiano Gonzalez Ibarra, Sr. Ibarra alleges that her husband suffered from exposure to asbestos while on the job in the 1970s.

The defendant in the case is CH Murphy/Clark Ullman Inc, which was Reberiano Ibarra’s employer at the time of the alleged asbestos exposure that led to his injuries.

In response to Ibarra’s allegations, the employer mounted a defense based on California’s “exclusive remedy rule,” which generally holds that when an employee sustains an injury at their workplace, workers’ compensation is the exclusive legal remedy available against the employer, who is then immune from a civil lawsuit seeking damages. The defendant contends that since the company had workers’ compensation insurance at the time of Reberiano Ibarra’s injury, the exclusive remedy rule should apply and bar the civil claims brought by his wife.

The trial court had originally ruled that the defendant employer had the burden to prove it had workers’ compensation coverage at the time of the injury. However, the appeals court found that given the complaint’s allegations of work-related injuries, the plaintiff actually had the burden to prove the workers’ compensation exclusive remedy did not apply.

The Oregon Court of Appeals’ decision aligns with relevant California case law on pleading burdens, according to the decision. An exception to this general rule exists only when the complaint does not indicate an employment relationship, the ruling stated.

The plaintiff argued that the defendant employer failed to comply with requirements for formerly self-insured employers under California Labor Code Section 3702.8. Specifically, the plaintiff asserted the defendant did not file annual reports with the state or maintain a security deposit for accrued workers’ compensation liability after switching from being self-insured to purchasing insurance in 2015.

However, the Oregon Court of Appeals found the plaintiff’s evidence of the defendant’s non-compliance was insufficient to meet their burden of proof

Furthermore, the defendant provided some evidence that it had maintained the security deposit required by Section 3702.8 in June 2020 and June 2021, although there was no direct evidence the deposit was in place at the time of the injury. The appeals court took this into consideration in determining the plaintiff failed to establish the defendant had not “secured the payment of compensation” under California’s workers’ compensation statutes.

Key Takeaways

The appeals court decision provided important reminders about the application of the workers’ compensation exclusivity defense for employers facing lawsuits over alleged work-related injuries.

First and foremost, if the complaint alleges the employee suffered work-related injuries, workers’ compensation insurance coverage is presumed to exist. The burden then falls on the plaintiff to prove the exclusivity rule does not apply in that case.

Another key takeaway for employers is the importance of maintaining documentation of compliance with all workers’ compensation insurance and reporting requirements — even after switching from self-insurance to purchasing coverage.

View the decision in Ibarra v. C.H. Murphy/Clark-Ullman, Inc.

The post Oregon Appeals Overturns $10M Award, Upholds Exclusive Remedy appeared first on Risk & Insurance.