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TIG Insurance v. Culpepper (2018)

May 8, 2018

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Horvitz & Levy’s successful briefing on a first impression statutory construction issue resulted in reversal of a ruling striking a qui tam action filed by a workers compensation carrier to vindicate public rights in deterring insurance fraud.

Brad Culpepper played professional football. Ten years after he retired, he filed a worker’s compensation claim asserting that he was permanently disabled. He told the worker’s compensation medical examiners that he had difficulty getting out of bed in the morning, walking a mile or lifting heavy objects. In fact, unknown to the insurer (our client), he was running half marathons, sparring with professional kickboxers and auditioning for the reality show Survivor. Culpepper claimed $180,000 for his disability claim, and the insurer settled the claim for $175,000. When the insurer learned of Culpepper’s physical exploits, it filed a qui tam lawsuit in the name of the State of California under the Insurance Fraud Practice Act. In such a qui tam action, the insurer prosecutes the case on behalf of the State and splits the recovery. Culpepper persuaded the trial court to dismiss the case under Labor Code section 5901, which states that no cause of action arising out of an order of the Worker’s Compensation Appeals Board can accrue unless a rehearing petition is first filed in the WCAB (the purpose of this rule is to require rehearing before seeking a petition for writ of review). The district court agreed that the WCAB had exclusive jurisdiction over the matter. The Ninth Circuit Court of Appeals reversed, holding that (1) because the qui tam lawsuit is founded on the a fraudulent claim and therefore could have been brought even had there been no settlement at all, the lawsuit did not arise out of any order of the WCAB and (2) the WCAB does not have exclusive jurisdiction of qui tam lawsuit brought under the IFPA.

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