Lance Camper Manufacturing Corp. v. Republic Indemnity Co. of America

In this appeal, we revisit two decisions in which we addressed an employer’s right to sue its workers’ compensation insurer. In the first decision, Security Officers Service, Inc. v. State Compensation Ins. Fund (1993) 17 Cal.App.4th 887 [ 21 Cal.Rptr.2d 653 ], we upheld an employer’s right to sue its workers’ compensation insurer for breach of contract and bad faith. This decision has been followed and cited with approval by other courts. In the second decision, P.W. Stephens, Inc. v. State Compensation Ins. Fund (1994) 21 Cal.App.4th 1833 [ 27 Cal.Rptr.2d 107 ], we concluded that an employer who challenged its insurer’s right to impose surcharges on its workers’ compensation insurance premium had to exhaust its administrative remedy to resolve the dispute over ratesetting.

The trial court in the present case failed to distinguish between the holdings in Security Officers and Stephens. It concluded that an employer must pursue administrative review before suing its insurer for breach of the express and implied terms of the insurance contract. This was legally incorrect. There is no statutory or regulatory basis for administrative review when a breach of contract or bad…