As we discussed in a recent blog post, Governor Gavin Newsom signed an executive order creating a rebuttable presumption that a California employee who contracts COVID-19, contracted it in the course of their employment and will be entitled to workers’ compensation benefits.
The question left unanswered is how the rebuttable presumption will be applied in anticipated third-party claims against the employer alleging that the third-party contracted COVID-19 through contact with an infected employee. There is little doubt that third-parties will attempt to use the presumption to impute further liability on the employer.
An infected employee has a high probability of infecting a spouse and other dependents living with him or her. When it comes to the claims of a spouse or other dependents of an employee who is presumed to have contracted COVID-19 in the course of their employment, with certain exceptions, the right to recover compensation under the Workers’ Compensation Act may be “the sole and exclusive remedy” against the employer. This possibly triggers coverage “B” under your workers’ compensation policy.
Whether or not the third-party claims are covered by workers ’ compensation insurance is largely going to depend on the language and exclusions contained in the policy. Third-party claims, whether from dependents of an employee, or unrelated third-parties, such as customers or vendors, also may trigger coverage “B” of a commercial general liability policy. Certain exclusions for “pollution” or “communicable disease” may be included in your policy and should be considered. Employers must have their brokers or attorneys closely examine their policy language to determine whether there is a potential gap in coverage. And, employers must be careful when settling COVID-19 related workers’ compensation claims. Employers who have High Deductible Loss Sensitive Plans should ask their brokers to request Special Account Instructions whereby the insured has consent or control over the settlement of any COVID-19 claims. Employers need to take a proactive role in managing the COVID-19 claims because those claims potentially impact liability to third-parties.
Whether or not the Governor’s presumption will directly apply in these circumstances remains uncertain. However, what is certain is that Plaintiffs’ will argue that a finding in a workers’ compensation case that the employee was infected with COVID-19 in the course of their employment supports third party liability because it was foreseeable that if your employees contracts COVID-19 at work, he or she could infect anyone and everyone they come in contact with.
Please contact Nicholas Roxborough at (818) 992-9999, ext. 222, or Trevor Witt, at ext. 224, for analysis of existing policy language and to help mitigate the potential liability of third-party actions that are sure to be filed.