The Workers’ Compensation Appeals Board’s recent en banc decision in DiFusco v. Hands On Spa significantly broadens disclosure requirements for defendants in California workers’ compensation cases. All defendants must now disclose detailed insurance information and potentially liable entities, regardless of whether a third-party administrator is involved—not just the insurance carrier’s name as previously interpreted.
The DiFusco Decision: A Game Changer
On October 13, 2025, the WCAB issued a unanimous en banc decision that clarifies and expands disclosure obligations under the landmark Coldiron cases. This ruling reverses the WCJ’s narrow interpretation of WCAB Rule 10390 and reinforces that comprehensive disclosure requirements remain in full effect.
What the Court Held
The WCAB established three critical holdings that will impact every workers’ compensation case:
1. Coldiron Disclosure Requirements Remain Binding
The en banc decisions in Coldiron I and Coldiron II continue to require disclosure of any entities liable for payment and any insurance policies that impact liability for payment. These precedents cannot be “superseded” by regulatory changes—only by explicit WCAB action or legislative amendment.
2. Full Party Identification is Mandatory
WCAB Rules 10390, 10400, and 10401 require that all parties, their representatives, and their insurance companies be fully identified. This goes beyond simply naming the primary carrier.
3. Rule 10390 Does Not Override Coldiron
The newer WCAB Rule 10390 was intended to work alongside the Coldiron decisions, not replace them. Defendants must comply with both the rule’s identification requirements and Coldiron’s comprehensive disclosure mandates.
What Must Be Disclosed
Under the expanded interpretation, defendants must now disclose:
- Primary insurance carrier information
- High self-insured retentions or large deductibles
- Any provision affecting the identity of the entity actually liable for compensation
- Primary and secondary excess carriers and their policy limits
- Any other actual or potential payors on the claim
- Stakeholders with actual or potential financial responsibility
- Contact information for excess carriers and stakeholders
Practical Impact for Adjusters
Immediate Action Required
Review Current Practices: Ensure your disclosure procedures capture all required information, not just the primary carrier’s name.
Update File Documentation: Verify that all potentially liable entities and policy details are properly documented in claim files.
Coordinate with Counsel: Work with defense attorneys to ensure comprehensive disclosures are made early in litigation.
Timeline Considerations
The WCAB emphasized that disclosure must occur “at the earliest opportunity, and certainly no later than the commencement of the litigation process and formal proceedings”. Waiting until specifically requested may expose defendants to sanctions.
Implications for Self-Insured Employers
Enhanced Scrutiny
Self-insured employers face particular attention under this decision. The court noted that proper identification of liable entities is “fundamental to the establishment of workers’ compensation liability and the prompt delivery of benefits”.
Risk Management Strategies
- Proactive Disclosure: Do not wait for discovery requests—disclose all relevant information upfront
- Policy Review: Examine insurance arrangements for high deductibles, retentions, or complex liability structures
- Documentation Protocols: Establish clear procedures for identifying and disclosing all potentially liable parties
Sanctions Risk
The WCAB explicitly warned that failure to comply with these disclosure requirements may result in sanctions under Labor Code Section 5813. The court noted that defendants who refuse to comply with binding en banc opinions lack statutory authority for such refusal.
Strategic Considerations
Benefits of Compliance
Faster Resolution: Proper disclosure facilitates more expeditious proceedings and smoother settlement negotiations.
Reduced Liability Exposure: Accurate identification of liable parties prevents defendants from being held responsible for payments that aren’t their obligation.
Avoiding Sanctions: Proactive compliance eliminates the risk of costly penalties and attorney fees.
Enforcement by WCJs
Workers’ compensation judges now have explicit direction to ensure compliance with these requirements. WCJs must “inquire and ensure that the record reflects the correct identity of all parties” and verify that defendants have disclosed all liable entities before issuing awards.
Looking Forward
This decision represents a significant shift toward transparency in workers’ compensation proceedings. The WCAB has made clear that the days of minimal disclosure are over. For adjusters and self-insured employers, this means:
- Immediate review of current disclosure practices
- Enhanced documentation of insurance arrangements and potentially liable parties
- Proactive communication with applicant attorneys to avoid discovery disputes
- Regular training for staff on the expanded requirements
The court’s emphasis on “substantial justice” and liberal discovery principles suggests this trend toward comprehensive disclosure will continue. Organizations that adapt quickly will find themselves better positioned to navigate the evolving landscape of California workers’ compensation law.
About Our Firm
Navigating the complex requirements established by the DiFusco decision requires experienced legal counsel who understands both the technical aspects of workers’ compensation law and the practical challenges facing adjusters and self-insured employers. Yrulegui & Roberts has been defending California workers’ compensation cases for over four decades, helping clients develop compliant disclosure practices while minimizing exposure and controlling costs. We work closely with adjusters and risk managers to implement proactive strategies that satisfy legal requirements while protecting our clients’ interests. Contact us to discuss how these new requirements may affect your claims handling practices and defense strategies.
Legal Disclaimer
This blog post is provided for informational purposes only and does not constitute legal advice. The information contained herein is based on California law as it exists at the time of publication and may be subject to change. Every workers’ compensation case is unique, and the application of legal principles may vary depending on specific facts and circumstances. This content should not be relied upon as a substitute for consultation with qualified legal counsel. Readers should consult with an attorney licensed to practice in California for advice regarding specific legal matters. No attorney-client relationship is created by reading this blog post or contacting our firm through this website.
