Plaintiff employer fired an injured employee in violation of Cal. Lab. Code § 132a. A jury in the Superior Court of Fresno County (California) found defendant workers' compensation insurance carrier liable for insurance bad faith because it mishandled a "courtesy defense" and refused to indemnify plaintiff. Defendant appealed.

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Overview

Employee was injured while working for plaintiff. Defendant disputed and denied plaintiff's claim. Later, employee filed a petition with the Workers' Compensation Appeals Board, alleging plaintiff fired him in violation of Cal. Lab. Code §132a because he intended to file a workers' compensation claim. On appeal, the court held that §132a liability was within the policy's general coverage for "compensation and other benefits" required under the law. Because plaintiff's discriminatory act was intentional, it was not precluded by the "accident" limitation nor by public policy. Further, defendant did not disclaim responsibility for § 132a liability for any reason. Rather, it provided plaintiff with a defense without explicitly reserving its rights to disclaim coverage. Defendant never raised the expiration of the policy period as an argument. As a result, plaintiff was denied the opportunity to tender his defense of the § 132a claim to his subsequent carrier in a timely manner. Thus, defendant was estopped to argue plaintiff's § 132a liability was not covered due to the policy's expiration.

Outcome

Judgment of liability was affirmed; plaintiff's retaliatory discharge liability was within defendant's coverage, and it was not precluded by an "accident" limitation or public policy. Because defendant did not disclaim coverage, it was estopped from arguing that plaintiff's liability was not covered under its policy.