Taxpayers are on the hook for a man's permanent total disability award after the California 2nd District Court of Appeals shot down the state's attempt to force a property owner to pay the benefits.

In 2003, handyman Ramiro Zapata was hit by a car driven by his coworker, Jose Mejia, while working on a Long Beach apartment complex owned by Marco Bolanos.

Zapata and Mejia both worked for Luis Aragon, whose workers' comp policy had lapsed in 2002.

Roughly two months after his injury, Zapata filed a workers' compensation claim and notified Bolanos of the injury. He added the Uninsured Employers Benefits Trust Fund (UEBTF) to the claim the next year after he learned that Aragon was uninsured. He named Aragon as his employer.

In 2009, the UEBTF moved to add Bolanos to the claim as Zapata's statutory employer under Labor Code Section 2750.5. A workers' compensation judge approved the motion. Bolanos appealed.

The court said that under Section 2750.5, "for workers' compensation purposes ... the hirer of a contractor for a job requiring a license is the statutory employer of the unlicensed contractor."

Aragon thought he had a license when Zapata was hurt in May 2003, but it had been suspended when his workers' compensation coverage lapsed on April 9, 2002. Aragon had never been notified of the suspension.

He should have been notified that year, because the Business and Professions Code included a provision in 2002 requiring the registrar of contractors to notify contractors of license suspensions. The provision was removed in 2003, however, so as of Jan. 1, 2003, any legal gray area surrounding the validity of Aragon's license suspension was removed, the workers' compensation judge decided.

Therefore, Aragon was an unlicensed employer on May 19, 2003, making Bolanos, the man who hired him, the statutory employer of Aragon's workers, the judge decided.

But that determination in itself was not enough to make Aragon the responsible party in the workers' compensation claim. The UEBTF also had to prove that the statute of limitations to add Bolanos to the claim had been tolled, or delayed, due to Zapata's lack of knowledge that Bolanos was his statutory employer.

If the UEBTF could not prove that the statute of limitations had been tolled, Bolanos would be dismissed from the claim. Workers' compensation claims in California must be filed within one year of the date of injury, and new defendants cannot be added past that date.

The Workers' Compensation Appeals Board decided that the statute of limitations had been tolled. But the 2nd DCA found otherwise.

"The statute of limitations is tolled if the employee is unaware of his right to file a workers' compensation claim," the 2nd DCA wrote. "Zapata was not ignorant of his right to apply for benefits under the workers' compensation laws for this injury, as demonstrated by his filing a workers' compensation claim on Aug. 1, 2003."

The DCA wrote that Zapata's lawyer had known that Bolanos had potential liability because he had notified Bolanos of the injury on Aug. 26, 2003.

"This knowledge was obtained well before the statute of limitations expired," the 2nd DCA wrote.

The UEBTF said that just because Zapata's lawyer knew, that didn't mean Zapata knew. The WCAB had used that argument as the basis of its majority decision in the UEBTF's favor.

But the 2nd DCA didn't find credence to the argument. To the UEBTF's contention that Bolanos should have told Zapata directly that Bolanos was his statutory employer, the 2nd DCA wrote that Bolanos "had no legal duty" to do so.

"(Section 5401) is only relevant where the employee does not know of his right to file a claim: If the employer does not comply with section 5401, and the employee remains ignorant of his or her rights, the statute of limitations is tolled," the 2nd DCA wrote. "Here .. the record demonstrates no grounds for tolling the statute of limitations."

The 2nd DCA thus annulled the WCAB's decision and remanded the case, with instructions to dismiss Bolanos from the proceedings.

Long Beach attorney Mark Simpkins represented Bolanos.

"It's been a frustrating case, because in my mind it was very clearly a statute-of-limitations case," Simpkins said. "To have a workers' compensation judge tell me that the statute of limitations doesn't apply in workers' comp matters, and then to actually be threatened with sanctions if I continued to assert the statute-of-limitations defense when at the end of the day it was a statute-of-limitations case ..."

Simpkins trailed off, then resumed with, "You can only take the concept of workers' compensation being a benefits-delivery system too far, and it was taken too far."

The case has been nightmarish for all involved, perhaps none more so than Zapata, who is still waiting on benefits after 14 years, Simpkins said. The accident left him permanently and totally disabled after a coworker ran over him with a car.

Zapata's attorney, Richard Torres, could have filed a civil suit, as Bolanos had a roughly $2 million insurance policy taken out on his apartment complex. But he didn't until 2011, at which point the suit was dismissed because the statute of limitations had passed.

Torres also could have joined Bolanos as a party to the case in 2003, but he opted not to.

Torres did not respond to a call and email requesting comment on Wednesday afternoon. His assistant said he was out of the office.

The Department of Industrial Relations was also unable to comment Wednesday afternoon on behalf of the UEBTF. The UEBTF had been represented by DIR staff attorneys Christopher G. Jagard, Steven A. McGinty, Dora M. Linzan and Christopher Conte.

San Diego applicants' attorney John Don said he thinks the appellate court made the right call in this "brutal" case.

"The moral of the story is that the worker must name both the contractor and the homeowner as employers and let the litigation determine who is the proper employer," Don said. "This is especially true in UEBTF cases."

View the decision here.