By Hon. Susan V. Hamilton, Former Assistant Secretary and Deputy Commissioner, California Staff’ Compensation Appeals Board
It’s effectively understood that the California Insurance coverage Assure Affiliation (CIGA) shouldn’t be an insurer that points insurance policies of insurance coverage or assumes the contractual obligations underneath an insurance coverage coverage, nor does it accumulate premiums from insureds. Reasonably, it’s a statutorily created affiliation of insurance coverage firms that serves as an insolvency insurer of final resort to supply restricted monetary safety for insureds and the general public when an insurer turns into bancrupt. (Ins. Code § 1063 et seq.). When a staff’ compensation declare can be lined by a solvent insurer, CIGA has no duty to pay and discharge the declare (Ins. Code § 1063.1(c)(9)(A)). That stated, it isn’t all the time clear when CIGA is likely to be certain by the actions of an bancrupt insurer or, for that matter, when CIGA is likely to be entitled to reimbursement from “different insurance coverage.” A current Appeals Board panel choice sheds new mild on these points. The choice is much more notable as a result of it expresses disagreement with the Appeals Board’s en banc choice in Gomez v. Casa Sandoval; Nokes v. Placer Financial savings Financial institution (Gomez/Nokes) (2003) 68 Cal. Comp. Cases 753. The case is Dykstra v. Gilton Solid Waste Management, Incv. (ADJ1004210 et seq., June 7, 2024) 2024 Cal. Wrk. Comp. P.D. LEXIS __.
The Details
Billy Dykstra (applicant) sustained 5 industrial accidents. Two insurance coverage carriers, State Compensation Insurance coverage Fund (SCIF) and Superior Nationwide Insurance coverage (Superior), had issued staff’ compensation insurance coverage insurance policies that offered protection for the assorted damage claims. Applicant, SCIF, and Superior agreed to a settlement by Stipulations with Request for Award that encompassed all 5 dates of damage. The events agreed that the accidents precipitated 70.25% everlasting incapacity to the proper knee, low again, and psyche. In addition they agreed that SCIF was answerable for 20% of the general legal responsibility and Superior was answerable for 80% of the general legal responsibility. An Award pursuant to the stipulations of the events issued on December 16, 1996.
On September 26, 2000, Superior went into liquidation as a consequence of insolvency, and CIGA assumed the liabilities on its behalf.
On January 6, 2020, practically 20 years after Superior went into liquidation, CIGA filed a petition in search of reimbursement from SCIF for post-liquidation advantages that it paid for medical remedy and life pension advantages. CIGA argued that legal responsibility for the Award was joint and a number of other as between SCIF and Superior and that SCIF was “different insurance coverage,” and as such, SCIF, not CIGA, is obligated to pay and discharge the Award.
SCIF objected, contending that the Award didn’t set up joint and a number of other legal responsibility between it and Superior, however as an alternative was a last allocation of legal responsibility between it (20%) and Superior (80%), and shouldn’t be disturbed. SCIF additionally argued that CIGA’s petition for reimbursement was barred by laches and/or estoppel.
The dispute couldn’t be amicably resolved, and a trial was held. The one proof offered at trial was the Stipulations with Request for Award and the medical reviews which fashioned the idea for the settlement. Following the trial, the WCJ issued a Findings and Order (F&O) through which it was discovered that SCIF was answerable for administration of the longer term medical award, for fee of future medical advantages, and for reimbursement of any post-liquidation medical bills paid by CIGA on behalf of Superior. The WCJ deferred the problems of the life pension and the quantity of reimbursement.
SCIF sought reconsideration, contending that the Award issued in 2000 didn’t set up joint and a number of other legal responsibility between it and Superior, however as an alternative was a last dedication of legal responsibility as between SCIF (20%) and Superior (80%), and shouldn’t be disturbed. SCIF additional argued that CIGA’s declare of entitlement to reimbursement also needs to be denied as barred by laches and/or estoppel.
The Panel’s Evaluation
The panel begins it dialogue of the dispute by addressing the distinctive statutory function that CIGA performs in staff’ compensation issues. It acknowledges that Insurance coverage Code part 1063.2(a) mandates CIGA to pay and discharge the lined claims of bancrupt staff’ compensation insurers, which incorporates the supply of staff’ compensation advantages underneath California’s staff’ compensation legal guidelines. It emphasizes, that each statutory and case legislation clarify that CIGA shouldn’t be an insurer or an insurance coverage firm as these phrases are generally understood, nor does it stand within the sneakers of an bancrupt insurer, and that CIGA’S duties are distinct and never co-extensive with these of the bancrupt insurer, as regards to Isaacson v. California Ins. Assure Assn. (1988) 44 Cal. 3d 775, et seq.
Subsequent, the panel factors out that CIGA’s statutory responsibility to pay and discharge an bancrupt service’s obligations is proscribed to “lined claims.” It additional observes that Insurance coverage Code part 1063.1(c)(9)(A) defines the time period, “lined claims,” and clearly states {that a} “lined declare” doesn’t embody any declare to the extent that such declare is roofed by another insurance coverage of a category lined by the article that’s accessible to the claimant or insured. Thus, in a staff’ compensation declare, if there may be additionally protection by a solvent staff’ compensation insurer, CIGA has no responsibility to pay or discharge the declare.
The panel then turns to SCIF’s contentions relating to the impact of the 1996 Stipulations with Request for Award. First, SCIF argues that per the Appeals Board’s en banc choice in Gomez/Nokes, supra, the 1996 Award was an allocation of legal responsibility as between SCIF and Superior and never a discovering of joint and a number of other legal responsibility. Second, that for the reason that 1996 Stipulations with Request for Award is last and can’t be altered, CIGA should step into the sneakers of Superior and assume legal responsibility for 80% of the continuing medical remedy and life pension funds.
It’s not a shock that in response to those arguments, the panel once more emphasizes that CIGA shouldn’t be an insurer, that it doesn’t stand within the sneakers of an bancrupt insurer, and the place different insurance coverage is offered, CIGA has not one of the duties it will in any other case should pay and discharge lined claims. Furthermore, CIGA is entitled to hunt reimbursement from the opposite insurer for any advantages it paid after insolvency. What’s a little bit of a shock, nonetheless, is the panel’s acknowledgement that Gomez/Nokes, supra, is now not an correct reflection of the present state of the legislation.
On this regard, the panel confirms that opposite to the holding in Gomez/Nokes, the WCAB can’t apportion legal responsibility for medical remedy and short-term incapacity indemnity advantages between CIGA and insurers, citing California Ins. Assure Assn. v. Staff’ Comp. Appeals Bd. (Weitzman) (2005) 128 Cal. App. 4th 307 [70 Cal. Comp. Cases 556] and California Ins. Assure Assn. v. Staff’ Comp. Appeals Bd. (Hooten) (2005) 128 Cal. App. 4th 569 [70 Cal. Comp. Cases 551]. Moreover, the panel discusses a more moderen appellate choice that gives additional help for his or her conclusion that Gomez/Nokes is out of sync with present controlling authority. The case is California Ins. Assure Assn. v. Staff’ Comp. Appeals Bd. (Lopez) (2016) 245 Cal. App. 4th 1021 [81 Cal. Comp. Cases 317].
In Lopez, supra, applicant Rosa Lopez and two insurers, Care West and Ullico, entered a Compromise and Launch settlement to resolve Ms. Lopez’ damage declare. The settlement additionally offered an allocation of legal responsibility as between Care West and Ullico. Someday after the Compromise and Launch settlement had been accredited and was last, Ullico turned bancrupt and CIGA was joined within the case. CIGA petitioned for dismissal, arguing that since Care West was different insurance coverage protection, Care West was collectively and severally responsible for all excellent funds. Care West disagreed, contending that it was solely responsible for 50% of medical-legal bills and 52% of medical remedy advantages, and that CIGA was responsible for 50% of medical-legal bills and 48% of medical remedy advantages, primarily based on the allocation of legal responsibility set forth within the Compromise and Launch. A WCJ denied CIGA’s petition, and the denial was affirmed by the Appeals Board, according to Gomez/Nokes. The appellate courtroom summarily denied evaluation, however the Supreme Courtroom granted evaluation and remanded the matter to the appellate courtroom for additional proceedings.
In these proceedings the Appeals Board argued that when the Compromise and Launch settlement was accredited by the WCJ, legal responsibility as between Care West and Ullico was now not joint and a number of other. The appellate courtroom disagreed, holding that Care West and Ullico have been collectively and severally responsible for Rosa Lopez’ staff’ compensation advantages, and that when Ullico turned bancrupt, Care West was correctly characterised as different insurance coverage, and CIGA was relieved of its statutory responsibility to pay and discharge advantages within the matter. The appellate courtroom’s opinion explains that the character of “a number of legal responsibility” shouldn’t be a rule of legal responsibility in any respect, however a rule of joinder. That’s, a number of legal responsibility is a procedural rule that’s meant to facilitate a claimant’s restoration from a number of obligers (Lopez, supra, 81 CCC at p. 321). Within the staff’ compensation context, a number of legal responsibility serves the essential public coverage that favors the expeditious and cheap decision of labor damage claims by enabling an injured employee to acquire staff compensation advantages with out having to affix a number of co-obligers in a case. The appellate courtroom then concludes that though the accredited Compromise and Launch settlement is a last judgment, it merely apportioned legal responsibility however didn’t change the joint and a number of other character of that now apportioned legal responsibility. It ordered the Appeals Board to dismiss CIGA from the proceedings.
On this case, the panel follows Weitzman, Hooten, and Lopez. Since a number of of the accidents throughout SCIF’s legal responsibility interval contributed to applicant’s want for medical remedy, the panel finds SCIF collectively and severally responsible for such remedy, and additional acknowledges that SCIF is responsible for reimbursement of any affordable and needed medical remedy bills paid by CIGA after Superior turned bancrupt.
Turning subsequent to the problem of CIGA’s entitlement to reimbursement for everlasting incapacity indemnity and life pension advantages, each previous and ongoing, the panel quotes from the choice in Baker v. Staff’ Comp. Appeals Bd. (2011) 52 Cal. 4th 434 [76 Cal. Comp, Cases 701] whereby the Supreme Courtroom defined the character and objective of these advantages. The Supreme Courtroom defined that everlasting incapacity indemnity and life pension advantages are meant to compensate the injured employee for the long-term residual penalties of an industrial damage. It characterizes the life pension profit as a type of supplemental partial everlasting incapacity that’s paid to a category of severely injured staff. In keeping with the reason offered in Baker, supra, the panel concludes that in circumstances involving CIGA, life pension advantages must be handled in the identical method as everlasting incapacity indemnity. It then affirms the WCJ’s order deferring the problem of CIGA’s entitlement to reimbursement for all times pension funds beforehand made and the problem of future duty for ongoing life pension funds in recognition that the file might require additional improvement on this problem.
Lastly, the panel addressed SCIF’s rivalry that CIGA’s claims must be barred by laches and/or estoppel. The panel finds the doctrine of estoppel inapplicable as a result of CIGA was not a celebration to the settlement made by SCIF and Superior to resolve applicant’s damage declare. Relating to the problem of laches, the panel notes that laches is an affirmative protection (Lab. Code § 5705), which signifies that SCIF had the burden of demonstrating that CIGA unreasonably delayed in submitting its petition for reimbursement and that SCIF was prejudiced by the submitting practically 20 years after Superior turned bancrupt and CIGA started to manage and make funds on the declare. Whereas SCIF argued that this 20-year delay was unreasonable, the panel discovered that it didn’t current any proof aside from the 20-year delay to reveal the way it was prejudiced. The panel then affirms the WCJ’s discovering that SCIF failed to hold its burden of proof on this problem.
Why This Opinion Is Vital
Admittedly Dykstra is just a panel choice with none particular designation as a “vital panel” or “en banc opinion.” As such, its precedential authority is proscribed. Nonetheless, the choice shines a brilliant highlight on the panel’s understanding of the present state of the legislation vis-à-vis the binding impact on CIGA of pre-liquidation stipulations allocating legal responsibility for an damage declare(s) as between co-defendant insurers. Opposite to the holding in Gomez/Nokes, supra, if CIGA and an insurer are collectively and severally responsible for non-permanent incapacity advantages, the Appeals Board can’t apportion legal responsibility between CIGA and an insurer as agreed to by the events as a result of CIGA shouldn’t be certain by a pre-liquidation settlement apportioning legal responsibility. Furthermore, medical remedy bills usually are not apportionable. (Granado v. Workmen’s Comp. Appeals Bd. (1968) 69 Cal. 2d 399 [33 Cal. Comp. Cases 647].
Nevertheless, since life pension advantages are a type of supplemental partial everlasting incapacity, the panel choice strongly means that CIGA can’t switch legal responsibility to a co-defendant. That’s, the place CIGA has legal responsibility for everlasting incapacity indemnity advantages, it is going to even have legal responsibility for all times pension advantages. It is very important observe that the panel didn’t present any particular authority for this conclusion, but it surely does make logical sense in view of CIGA’s distinctive function. For the reason that problem of CIGA’s legal responsibility for all times pension advantages was deferred pending additional improvement of the file, it’s uncertain that Dykstra is the final phrase on the matter. Keep tuned.
Lastly, the panel’s opinion makes clear that the social gathering elevating the affirmative protection of laches should current proof substantiating the way it was prejudiced by the unreasonable delay, and that prejudice is not going to be presumed from the mere passage of time.
Reminder: Board panel choices usually are not binding precedent.
© Copyright 2024 LexisNexis. All rights reserved.
