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Court of Appeal, Third District, California.

Michael J. KELLEY, Plaintiff and Appellant, v. DEPARTMENT OF INDUSTRIAL RELATIONS etc., et al., Defendants and Respondents.

No. C020415.

Decided: April 24, 1996

Plaintiff Michael Kelley appeals from a judgment following the granting of demurrers, sustained without leave to amend, in an action for damages and injunctive relief for alleged wrongful acts and practices concerning a vocational rehabilitation plan (Lab. Code, § 4635, subd. (e)) under the workers' compensation law.

The complaint seeks: (1) damages from defendant State Compensation Insurance Fund (the Insurer) for alleged fraud in administering Kelley's vocational rehabilitation plan, (2) damages from the defendant Department of Industrial Relations (the Department) for failure to investigate the alleged fraud, and (3) injunctive relief for alleged failure of both defendants to inform Kelley in a timely manner of a right to help in the selection of a vocational rehabilitation counselor.

We discern no error in the sustaining of the demurrers and will affirm the judgment.


Kelley was injured on May 3, 1988. Vocational rehabilitation services (Lab. Code, § 4635, subd. (d)) commenced about a year later and a vocational rehabilitation plan for a self-employment venture as a cabinet maker was developed. In contemplation of the plan, Kelley had settled his underlying claim for workers' compensation in October 1989 to capitalize the venture.

Kelley represented that he would begin production on November 1, 1989. He did not do so, justifying the delay as caused by failure to receive necessary tools. However, the assigned vocational counselor, Margaret Black, learned from the tool vendor that all the tools that Kelley ordered had been delivered. When she confronted Kelley, in January 1990, he indicated that he wanted to withdraw from vocational rehabilitation. She issued a closing report on February 14, 1990.

In April 1990 Kelley disputed the termination and at a hearing on July 3, 1990, the dispute was settled by stipulations providing for a lump sum payment to Kelley and allowing him to elect within 120 days to receive 60 days of self-employment wage loss benefits or 60 days of job placement benefits and services.

Kelley elected self-employment wage loss benefits with the period to commence on August 1, 1990. Sue Smith was assigned vocational counselor to monitor this phase of the vocational rehabilitation plan and to coordinate setting up books and generating profit and loss statements for the wage loss period. Smith told Kelley he needed commercial liability insurance, a business license, a separate commercial bank account, and a set of commercial books and that she would suspend activity on his case until he complied.

Kelley sought enforcement of the prior award. A protracted spate of hearings, continuances, enforcement orders, reconsideration of such orders, and a petition by Kelley to reopen the vocational rehabilitation issue ensued. The resulting adjudication included resolution of contentions by Kelley that he had been provided inappropriate services and prevented from succeeding in implementing the rehabilitation plan by delay on the part of the Insurer. Ultimately, the Insurer paid the 60 days of self-employment wage loss benefits and Kelley's petition to reopen was denied by the Worker's Compensation Appeals Board (WCAB) on December 13, 1991. Kelley unsuccessfully sought writ review in the First District Court of Appeal.

In August 1992 Kelley filed another petition to reopen the vocational rehabilitation issue, seeking to have the matter heard by a different workers' compensation judge. He contended that the matter should be reopened because the Insurer had defrauded him. The nature of the fraud claim he alleged was that the Insurer had agreed to replace Black with an independent rehabilitation counselor when the 60 day self-employment wage loss phase of the vocational rehabilitation plan commenced under the stipulation, but he promptly learned that she was not independent because she had “past dealings” with the Insurer and Smith “acted on [the Insurer's] behalf.”

The worker's compensation judge who issued the earlier unfavorable decision issued a notice of intention to dismiss the petition to reopen. Kelley filed a petition for reconsideration of that ruling. On September 30, 1992, the petition for reconsideration was denied by the WCAB on the ground that Kelley had already had “his day in court.” Thereafter, on October 23, 1992, Kelley withdrew his petition to reopen. Nonetheless, Kelley unsuccessfully sought writ review in the First District Court of Appeal of the WCAB decision insofar as it denied his request to “change venue” of his now withdrawn claim to Redding to be heard before a different workers' compensation judge.

In January 1993 Kelley made yet another attempt to reopen the matter in the administrative forum. His appeal from the rejection of this attempt on the ground that he was attempting to obtain a rehearing of “issues previously and finally decided” was denied on June 2, 1993.

On January 20, 1994, Kelley filed the complaint in this action. The complaint has three counts. The first alleges in pertinent part that Kelley requested that the Department investigate his claim of fraud by the Insurer in September 1992 and that the Department failed to do so, transferring the matter to the administrative unit which denied it as related above. The second count of the complaint alleges the aforementioned fraud claim against the Insurer and two of its employees. The third count alleges that Kelley was entitled to be informed by the Department and the Insurer of a right to help in the selection of a rehabilitation counselor in 1989 but was not informed of this right until February 3, 1992.

The trial court sustained the general demurrers of the Insurer and the Department without leave to amend. Kelley appeals.


Kelley, in propria persona, does not identify discrete contentions of error and we will not engage or track the entirety of his sometimes rambling and bitterly passionate discourse. Instead we will discuss each count of his complaint and explain why the trial court did not err in granting the demurrers.


We begin with the fraud claim against the Insurer. The trial court found the count does not state a cause of action on the ground Kelley's exclusive remedy was in the WCAB forum.

Kelley argues that the trial court erred because his claim is outside the bar of exclusive remedy under the doctrine of Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616. Unruh says that an insurer loses the protection of the exclusive remedy doctrine when it commits an intentional tort outside its role as insurer. We conclude that the trial court did not err in granting the demurrer as to the claim of fraud.2

In Unruh agents of the insurance carrier befriended the injured worker, engaged her affections, and, after inveigling her into behavior beyond her normal physical capacity, secretly filmed her. When the film was shown at the WCAB hearing plaintiff suffered a physical and mental breakdown requiring hospitalization. The Supreme Court held that this sort of deceitful investigation, an intentional tort, goes beyond the normal role of the insurer in workers' compensation scheme, and deprives the carrier of the derivative protection of the statutory exclusive remedy provision. (Also c.f., Jablonski v. Royal Globe Ins. Co. (1988) 204 Cal.App.3d 379, 390-392, fraudulent misrepresentation that there was no policy actionable.)

In Jablonski we noted the following demarcation of the Unruh doctrine:

“[T]he mere coupling of an intentional tort to other causes of action centering on delayed or refused benefits has repeatedly been found insufficient to overcome the exclusive remedy provisions of the Act. The Courts of Appeal have consistently ‘held that when the gravamen of the complaint is the delay of or refusal to make payment of a compensation award, the exclusive jurisdiction is with the Appeals Board, and the remedy of Labor Code section 5814.’ (Santiago v. Employee Benefits Services, supra, 168 Cal.App.3d at p. 902.) Thus, the ‘assertion that Unruh holds a cause of action is stated by an injured employee for any intentional tort is incorrect. The Supreme Court held that when an insurer commits intentional acts that are so outrageous and extreme it no longer remains within its proper role, it becomes liable in an action at law as a “‘person other than the employer.”’ In order to fall within this exception to the Appeals Board's exclusive jurisdiction, allegations of reprehensible conduct are required.' (Id. at pp. 905-906, citation omitted.)” (Jablonski, supra, 204 Cal.App.3d at p. 390.)

In this case the gravamen of the complaint as to fraud is that the insurer contrived to refuse to pay or delay the payment of a compensation award by assigning a vocational rehabilitation counselor, with whom it had “past dealings,” to Kelley's case despite a promise that it would assign an independent counselor. Notwithstanding Kelley's heartfelt fulmination to the contrary, this is not the sort of reprehensible behavior sufficient to strip the carrier of the exclusive remedy protection.

Even if we perceived the behavior as sufficiently reprehensible, Kelley's fraud claim could not succeed. Fraud requires reliance upon the misrepresentation and consequential injury to be actionable. (See 5 Witkin, Cal. Procedure (3d ed. 1985) §§ 679-680, pp. 130-133.) Here Kelley was not misled to his detriment by deceit on the part of the carrier. When Smith announced that she was recommending that he not be paid, Kelley questioned her about prior association with the Insurer and she immediately disclosed that she had worked for the Insurer many times. His injury, if any, was not attributable to fraud, i.e., deceit, but to nonpayment.

As to that, Kelley litigated the issue of improper failure to pay in a timely manner and consequential injury to his vocational rehabilitation enterprise in his first petition to reopen the vocational rehabilitation issue before the WCAB. He lost. Regardless whether he tendered the theory that failure to pay was wrongful because Smith was not independent, the doctrine of issue preclusion applies to bar any claim, regardless of the label, that the Insurer wrongfully failed to pay those benefits. (See, e.g., Rest. Judgments, §§ 24-27.)

For all the foregoing reasons we conclude that the trial court did not err in sustaining the demurrer to the fraud count of Kelley's complaint.


That brings us to the count of Kelley's complaint which would found a cause of action against the Department on its failure to investigate the aforementioned fraud claim.

Kelley identifies no law compelling a specified administrative action by the Department in response to a claim of fraud.3 In the absence of such a law the Department has discretion over the manner of response to the claim, e.g., whether to investigate. Such an exercise of discretion is ordinarily beyond the reach of judicial remedy. (See, e.g., Cal. Civil Writ Practice (Cont.Ed.Bar 1987) § 5.2; Cal. Government Tort Liability Practice (Cont.Ed.Bar 1992 §§ 2.114-2.122.) Judicial intervention is sometimes permitted to correct an abuse of discretion. That is not the case here for the reasons given above in section I of the Discussion, ante, concerning the lack of viability of Kelley's underlying fraud claim.


The remaining count of Kelley's complaint seeks an injunction compelling the Department to give notice of a right of injured workers to help in the selection of a rehabilitation counselor.

Kelley does not identify the source of the underlying right to which he would append an ancillary right to notice; he asks that we do so.

The only source we discern of a legal right of this nature is a regulation of the Department, Title 8, California Code of Regulations, section 10009, which provides in pertinent part as follows:

“(a) The employer is responsible for the selection of the qualified rehabilitation representative in consultation with the employee. Within 10 days of knowledge that an employee may be medically eligible for vocational rehabilitation services, the employer shall provide the employee with the notice required by subsection (a) of Section 10006. Immediately thereafter, unless the employee's medical condition precludes participation or the employee refuses the provision of vocational rehabilitation services, the employer shall, in consultation with the employee, assign a qualified rehabilitation representative to evaluate the employee's vocational eligibility.

“(b) If agreement cannot be reached, either the employer or employee shall request the bureau to assign a qualified rehabilitation representative. [The bureau shall then appoint an independent vocational evaluator on a rotational basis off its list.]”

Under the regulation the insurance carrier is required to “consult with” the employee about the selection of a vocational rehabilitation representative. The phrase “consult with” is ambiguous. The insurance carrier cannot simply select the representative, the employee must “agree” to the selection. However, this might be satisfied by telling the employee that the carrier intends to select X and asking casually if that is “Okay?” The only “right to help” in the selection is derived from the consideration that if the employee will not agree to the selection the bureau will appoint an independent evaluator. Presumably, this is the right to which Kelley would append the notice requirement.

The problem is that there is no generic requirement that persons be given notice of some right or advantage provided by a statute or regulation. Absent another statute or regulation4 or constitutional provision requiring such notice, those affected by the law are left to discover their rights and advantages on their own. The further question whether to impose a legal obligation upon government or some other participant in the pertinent transaction to give notice of one or more such rights or advantages is within the purview of the lawgivers in the political branches of the government.

A citizen who believes that some such obligation should be imposed may petition the appropriate agency (see Gov. Code, § 11340.6) or elected official and, if dissatisfied with the response, may seek further recourse in the political process. There is no cause of action in the judicial forum for injunctive relief.


The judgment is affirmed.


1.  We derive the facts from the complaint and from the numerous documents engendered in the course of the earlier pertinent proceedings in the workers' compensation forum which were before the trial court on the defendants' requests for judicial notice.

2.  Kelley also submits that his claim must be actionable because in one of the rulings in the workers' compensation proceedings a workers' compensation judge said; “damage for fraud ․ is not within [the WCAB's] jurisdiction.” Kelley's implicit argument that the exclusive remedy provision cannot apply because the WCAB has no jurisdiction to award damages for fraud has no persuasive force.We will assume that the WCAB remedy for acts that might otherwise provide a cause of action for fraud (or violation of Ins. Code, § 790.03) in the judicial forum is less extensive. However, where the exclusive remedy provision applies the loss of a damages remedy that would otherwise be available in the judicial forum is an intended consequence.Similarly unpersuasive is Kelley's suggestion that his claims cannot be barred by “‘Exclusionary’ Laws” because such tactics are overcome by 42 United States Code section 1983. Section 1983 is a procedural vehicle for the enforcement of federal constitutional and statutory rights. Since Kelley does not identify and his complaint does not indicate violation any such federal right, section 1983 is inapplicable.

3.  Kelley argues that the Department violated Insurance Code section 1872.83, subdivision (a). That statute exhorts the Bureau of Fraudulent Claims, a bureau within the Department of Insurance (Ins. Code, §§ 21, 1872), to aggressively pursue all reported incidents of probable workers' compensation fraud and to forward to the Director of the Department of Industrial Relations the evidence supporting a suspicion that a workers' compensation insurer is fraudulently denying claims. Whatever duty may be derived from that statute pertains to the Department of Insurance; it prescribes no duty for the Department of Industrial Relations.

4.  The Department's regulations do prescribe certain items of notice to the employee concerning vocational rehabilitation services in Title 8, California Code of Regulations, section 10006. Notice concerning the effect of disagreement concerning the selection of a rehabilitation representative is not included.

BLEASE, Acting Presiding Justice.

DAVIS and ROGERS-BROWN, JJ., concur.