California EAMS: Coldiron Has Been Codified

California EAMS: Coldiron Has Been Codified

Using a paperless adjudication system mandates, more than ever, the need to identify all parties and their clients in any given action. The WCAB issued en banc decisions on this issue back in 2002 named, Coldiron v. Compuware Corp (2002) 67 CCC 289 (Coldiron I) and 67 CCC 1466 (Coldiron II).

On November 17, 2008, the Coldiron case was codified in a new regulation, 8 CCR §10550.

The Coldiron case started back on January 13, 1995, when Cheryl Coldiron injured her back while working at Compuware Corporation. The employer hired Gallagher Bassett, a Third Party Administrator (TPA), to resolve the claim. Gallagher Bassett, in turn, hired defense counsel.

The defense attorney was under the impression that Compuware, the employer, was permissibly self-insured and was therefore his “real” client for purposes of litigation. It wasn’t until six years after the date of injury and one month after Judge Karen Henzi issued her Findings and Award (finding Compuware solely liable) that the defense attorney was told that his “real” client was Reliance Insurance. Reliance Insurance had been the actual entity that held the workers comp policy for the time period covered for the date of Cheryl Coldiron’s injury on January 13, 1995. Oops!

How did this happen? No one knows why exactly, but the confusion may have resulted from the fact that Compuware had a “high self-insured retention” rate. This means that in some cases, they are permissibly self-insured, and in some cases they are covered by insurance companies, like Reliance. Also, Compuware hires a TPA to handle all the claims. So, by the time the defense attorney is hired by the TPA, he or she is often not sure who the real client is. Is it Compuware, permissibly self-insured? Or is this one of the cases where Compuware is covered by insurance? And if so, which insurance company is liable for the claim?

The Commissioners held that the TPA has a duty to furnish this information to everyone.

In the Coldiron case, supra, the WCAB commissioners wrote, “Fundamental to the establishment of workers' compensation liability and the prompt delivery of benefits awarded to eligible injured workers is the designation of the responsible and liable entity. The responsible entity must be divulged at the earliest opportunity, and certainly no later than the commencement of the litigation process and formal proceedings. More specifically a third-party administrator must inform the Board and its counsel, if any, no later than at least the commencement of any litigation in the case, who the third-party administrator's client is, whether a self-insured employer or an insurance carrier. In this manner, no confusion can result as to the liable entity, against whom an award for benefits will be made. It avoids unnecessary delays in the prompt delivery of benefits awarded.”

The WCAB also held that if the TPA fails to provide this information, they may be subject to sanctions, under LC §5813.

When drafting the rules to implement EAMS, the holding in the Coldiron case drafters was deemed important enough to codify as 8 CCR §10550, which mandates that all parties shall identify the “full legal name” of their client.  Failure to provide this information may result in sanctions pursuant to 8 CCR §10211 and LC §5813, as is true for all intentional violations of the rules of the court administrator.

For those interested, 8 CCR §10550 reads as follows:

§10550. Proper Identification of the Parties and Lien Claimants.

Whenever any party or lien claimant (or any attorney or other representative for a party or lien claimant) either (i) files any Application for Adjudication, Answer, stipulated Findings and Award, Compromise and Release, lien claim, petition or other pleading with the Workers' Compensation Appeals Board or (ii) states its appearance on the record at any hearing before the Workers' Compensation Appeals Board (including but not limited to stating its appearance on any pretrial conference statement, appearance sheet, or minutes of hearing), the party or lien claimant, or its attorney or other representative, shall comply with the following requirements:

(a) each party or lien claimant shall set forth its full legal name, and each attorney or other representative shall set forth the full legal name(s) of the party or parties he, she, or it is representing;

(b) if an adjusting agent or third-party claims administrator is appearing, it shall disclose: (1) whether it is appearing on behalf of an employer, an insurance carrier, or both; (2) the identity or identities of the party or parties it is representing; and (3) if it is representing an insurance carrier, whether the policy includes a high self-insured retention, a large deductible, or any other provision that affects the identity of the entity or entities actually liable for the payment of compensation;

(c) if an insurance carrier is appearing, it shall disclose: (1) whether it is appearing solely on its behalf, or also on behalf the insured employer; and (2) whether its policy includes a high self-insured retention, a large deductible, or any other provision that affects the identity of the entity actually liable for the payment of compensation; and

(d) if a lien claim is being filed or amended, or if a lien claimant is appearing, the lien claimant shall state whether it is the original owner of the alleged debt or whether it has purchased the alleged debt from the original owner or some subsequent purchaser.


This blog has been approved by the California Division of Workers' Compensation.

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