United States: Truck Insurance Exchange v. Workers' Compensation Appeals Board

In Truck Insurance Exchange v. Workers' Compensation Appeals Board, 2 Cal. App. 5th 394 (2016), the Court of Appeal affirmed the order excluding laches as an affirmative defense – finding Truck Insurance Exchange of Farmers Insurance Group ("Farmers") was deemed to know about a workplace injury when the employer had knowledge of the injury, despite that nearly seven years elapsed before a claim was filed – and remanded to the Workers' Compensation Appeals Board.

The parties did not dispute that Kwok, the injured worker, was employed as a manager and waiter by the restaurant owned by Mr. Cheung, Kwok's brother in law. In 2005, Kwok went to inspect a leak into the dining room, and was found a few minutes later lying unconscious on the ground with a ladder next to him. Kwok was severely injured, sustaining a brain hemorrhage as well as paralysis from the shoulders down, and receives 24 hour medical care.

Ms. Cheung, Kwok's wife, notified Mr. Cheung, who was then in Hong Kong, of the accident the following day. The workers' compensation administrative law judge ("WCJ") rejected Farmers' contention that Mr. Cheung did not know of the injury, finding Ms. Cheung's testimony about the call "far more believable." The appeals board supported this credibility determination. No evidence was presented to contradict Ms. Cheung's testimony, and Mr. Cheung neither testified nor was deposed. The Court noted California Labor Code section 5401(a) requires an employer, "[w]ithin one working day of receiving notice or knowledge of injury, [ . . . ] to provide to the employee a claim form and a notice of potential eligibility for workers' compensation benefits" and found this "was apparently never done." Breach of this duty tolls the limitations period "for the period of time that the employee remains unaware of his rights."

Ms. Cheung filed a workers' compensation claim in 2012, more than seven years later, after hearing about workers' compensation cases on the radio. Although she had procured workers' compensation insurance for the restaurant after the accident, she did not understand what that meant, and bought the insurance based on what the insurance agent had told her. According to the Court of Appeal, "Given Ms. Cheung's lack of familiarity with the workers' compensation system, this was exactly the kind of case where notice of workers' compensation rights under section 5401 was particularly important."

The parties stipulated Farmers provided workers' compensation insurance for the restaurant. A claims handler for Farmers, Wojcik, testified in favor of the laches defense. Wojcik testified about the difficulty in confirming information about the coverage and the claim: due to the passage of time, "it was difficult to verify the dates of coverage" although "[c]overage was ultimately confirmed through the Workers' Compensation Insurance Rating Bureau;" there was only limited information available about the ownership of the business from Mr. Cheung and the building owner; there was some indication that Kwok, Ms. Cheung, or an older brother may own the restaurant, but, after interviewing workers at the restaurant and subpoenaing records from various state agencies, she could not come to a conclusion as to whether Kwok owned the restaurant; and the cause of the fall was unknown – it would have been difficult to fall off the flat roof, the ladder was not available for inspection of defects, and she could not determine if the fall was intentional, involved horseplay, involved criminal activity, or involved intoxication, especially as she could not locate the witness referenced in the police report. Wojcik confirmed she did not sign a notice regarding the denial of benefits within the 90 day period required by section 5402, which "triggered the rebuttable presumption that the claim was compensable" although Farmers did not treat it as such.

The WCJ "concluded that Kwok sustained injury arising out of and occurring in the course of employment [and] also concluded that the statute of limitations did not bar Kwok's claim," but did not address the issue of laches. Farmers petitioned for reconsideration, asserting laches, the statue of limitations, "that employment had not been shown, and that the injury did not arise and was not sustained in the course and scope of employment." The WCJ recommended denial of the petition, noting "the undisputed and credible testimony at trial was that Mr. Cheung was notified of the injury the day after the accident [but] failed to provide Kwok a claim form or to process the injury claim." The WJC also rejected the laches and statute of limitations defenses. "The appeals board adopted and incorporated the WCJ's report and denied reconsideration. Other than noting that it gave great weight to the WCJ's credibility determination and that there was no evidence to contradict that determination, the appeals board did not issue an opinion of its own."

Farmers then filed a petition for writ of review in the Court of Appeal, solely contending laches applied to preclude liability. Farmers claimed Ms. Cheung must have had general knowledge as to workers' compensation, and specific knowledge of Kwok's rights as she had purchased the insurance for the restaurant.

The Court of Appeal issued a writ of review, limited to the laches defense, determining the appeals board's order was a reviewable order. The Court also "requested briefing on whether the defense of laches should be remanded to arbitration pursuant to Labor Code section 5275, subdivision (a), as a question of insurance coverage." Both parties responded "arbitration was no longer appropriate," and Kwok and the appeals board noted there was no coverage dispute raised, and Farmers had stipulated to coverage. The Court then "directed Farmers to explain the impact of the stipulation regarding coverage, if any, on its defense of laches," providing Kwok and the appeals board an opportunity to reply.

Farmers' position is that the stipulation is irrelevant to the defense of laches because laches has nothing to do with the merits of the cause against which it is asserted. [ . . . ] The appeals board noted Farmers' concession of its stipulations regarding insurance coverage and employment status. [ . . . ] Kwok underscored Farmers' failure to challenge the WCJ's findings of employment status, timely notice of the injury to the employer, and the employer's failure to provide statutory notice of workers' compensation rights.

The Court began its legal analysis by noting the appeals board's "broad equitable powers," and that equitable defenses such as laches apply in workers' compensation litigation. The Court determined the applicable standard of review is "supported by substantial evidence."

The Court noted Ms. Cheung's testimony regarding notification the day after the injury "is the only evidence on the question of notification," the WJC and appeals board found her to be credible, and her testimony was uncontradicted. With respect to the law regarding notification:

"Except as provided by sections 5402 and 5403, [footnote] no claim to recover compensation under this division shall be maintained unless within thirty days after the occurrence of the injury which is claimed to have caused the disability or death, there is served upon the employer notice in writing, signed by the person injured or someone in his behalf ... ." (§ 5400.) "Knowledge of an injury, obtained from any source, on the part of an employer, his or her managing agent, superintendent, foreman, or other person in authority, or knowledge of the assertion of a claim of injury sufficient to afford opportunity to the employer to make an investigation into the facts, is equivalent to service under Section 5400." (§ 5402, subd. (a).) Notice to or knowledge of the employer is deemed to be notice to or knowledge of the insurer. (Ins. Code, § 11652.)

Under the foregoing statutes, Farmers was on notice about the accident and the claim of injury, or had knowledge thereof, as of January 11, 2005, the day after Kwok's accident. Not only is this substantial evidence, the statutes do not allow for any other conclusion. [ . . . ]

The Court determined that absent delay, "the doctrine of laches simply has no application" and Farmers was in error in contending the doctrine of laches was misapplied. "The WCJ did not analyze the issue of prejudice because laches could not be applicable, given that there was no delay."

The Court also rejected Farmers' argument of collusion:

In Farmers' most recent filing, Farmers asserts that Mr. Cheung had no interest in limiting his brother-in-law's time to obtain workers' compensation benefits, thus extending the time to file indefinitely. According to Farmers, laches should be applied to prevent this type of open-ended time limitation. Even though there is no evidence that there was collusion among the family members, that is exactly what Farmers is contending. However, the basis for the laches defense in Farmers' petition for reconsideration was that the "carrier was greatly prejudiced by the lengthy delay in filing an Application for Adjudication." No claim was raised with respect to collusion between the employer and employee to leave the workers' compensation claim open. The argument therefore is deemed waived pursuant to section 5904.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.