ADJ14628621 · January 3, 2025

The WCA found that Cosmic Concepts did not have insurance by a duly licensed and authorized workers' compensation carrier in California at the time of injury, and the Appeals Board agreed, rejecting defendants' argument that extraterritorial coverage applied to permanent employees.

From the decision · page 3The issue of whether Cosmic Concepts had coverage at the time of injury proceeded to arbitration and on October 4, 2024, the WCA issued a F&A determining that at the time of applicant's injury, "Cosmic Concepts was not legally insured in the State of California for workers' compensation coverage." (F&A, p. 3.) The WCA further explained that since applicant had been working for "90 days at the time of incident," he was to be considered a permanent employee and therefore did not qualify for extraterritorial coverage under the policy or based upon current case or statutory law as those exceptions applied only to temporary workers. (F&A and OOD, pp. 3, 7- 10; Report, p. 5.)

Selective Insurance was not licensed or authorized to write workers' compensation insurance in California at the time of injury.

Favours Applicant prevailed

This meant Cosmic Concepts did not have legally valid workers' compensation coverage at the time of injury.

From the decision · page 5In the instant case, Selective Insurance had apparently not met all of the necessary statutory and regulatory requirements. As such, Selective Insurance admitted that it was not licensed or authorized to write insurance for workers' compensation in the state of California. (F&A and OOD, p. 3.) The WCA therefore found that at the time of applicant's October 29, 2020 work injury, Cosmic Concepts "did not have insurance by a duly licensed and authorized workers' compensation carrier in California." (F&A and OOD, p. 10.)

Applicant had been working for 90 days at the time of injury, indicating permanent employee status.

Favours Applicant prevailed

Permanent employees do not qualify for extraterritorial coverage under the policy, which applies only to temporary workers.

From the decision · page 3The issue of whether Cosmic Concepts had coverage at the time of injury proceeded to arbitration and on October 4, 2024, the WCA issued a F&A determining that at the time of applicant's injury, "Cosmic Concepts was not legally insured in the State of California for workers' compensation coverage." (F&A, p. 3.) The WCA further explained that since applicant had been working for "90 days at the time of incident," he was to be considered a permanent employee and therefore did not qualify for extraterritorial coverage under the policy or based upon current case or statutory law as those exceptions applied only to temporary workers. (F&A and OOD, pp. 3, 7- 10; Report, p. 5.)

Labor Code section 3700

Employers must secure workers' compensation insurance from a duly licensed and authorized carrier in California.

Cosmic Concepts was not permissibly self-insured and required to have such insurance.

From the decision · page 4II. Turning now to the Petition, section 3700 provides guidance with respect to workers' compensation coverage requirements for employers in the state of California. It states, in relevant part, that: Every employer except the state shall secure the payment of compensation in one or more of the following ways:

Insurance Code sections 11651, 11657, 11658, 11691, 11751.4

Insurance carriers must meet statutory and regulatory requirements to be authorized to write workers' compensation insurance in California.

Selective Insurance was not licensed or authorized to write insurance in California.

From the decision · page 5The Insurance Code sets forth the requirements for insurers to become authorized to write policies in California. They include, among other requirements, certain deposits in "order to provide protection to the workers' of the state in the event the insurers issuing workers' compensation insurance to employers fail to pay compensable workers' compensation claims when due." (Ins. Code, § 11691.) In addition, insurers are expected to become members of rating organizations. (Ins. Code, § 11751.4.) Workers' compensation insurance policies in California are also subject to regulation by the Department of Insurance (Ins. Code, § 11651, 11657, 11658.) and all workers' compensation policies must "contain a clause to the effect that the insurer will be directly and primarily liable to any proper claimant for payment of...compensation." (Ins. Code, § 11651.)

Applicant had been working for 90 days at the time of injury, indicating permanent employee status rather than temporary.

From the decision · page 3The issue of whether Cosmic Concepts had coverage at the time of injury proceeded to arbitration and on October 4, 2024, the WCA issued a F&A determining that at the time of applicant's injury, "Cosmic Concepts was not legally insured in the State of California for workers' compensation coverage." (F&A, p. 3.) The WCA further explained that since applicant had been working for "90 days at the time of incident," he was to be considered a permanent employee and therefore did not qualify for extraterritorial coverage under the policy or based upon current case or statutory law as those exceptions applied only to temporary workers. (F&A and OOD, pp. 3, 7- 10; Report, p. 5.)