|
The Second Appellate District of California annulled a decision of the Workers' Compensation Appeals Board ("Board") requiring the State Compensation Insurance Fund ("SCIF") to reimburse the California Insurance Guarantee Association ("CIGA") only a portion of the temporary disability benefits CIGA paid to an injured employee. The Court held SCIF was jointly and severally liable for the injured worker's disability claims and therefore SCIF was obligated to fully reimburse CIGA for full amount of the worker's disability benefits.
The worker suffered an industrial injury to his left knee. He later sustained industrial continuous trauma to the same knee. The insurer on the risk when the worker sustained his first injury became insolvent while both claims were pending and was succeeded by CIGA. The SCIF was on the risk for part of the period when the continuous trauma occurred, and was responsible to pay benefits associated with this trauma. Nonetheless CIGA paid for all the non-permanent disability indemnity benefits for both injuries. These temporary benefits included temporary disability, medical expenses, and a vocational rehabilitation maintenance allowance for both injuries.
CIGA then sought full reimbursement of the disability benefits from SCIF. SCIF declined to pay more than twenty-five percent. It relied on a medical examiner's finding that seventy-five percent of the worker's disability was attributable to the earlier specific knee injury, and only twenty-five percent was attributable to the later trauma. SCIF contended it was therefore responsible to pay no more than twenty five percent of the worker's benefits.
CIGA and SCIF proceeded to arbitration. The arbitrator granted CIGA's petition, concluding CIGA was entitled to full reimbursement from SCIF. The arbitrator found SCIF to be a solvent "other insurer" that is jointly and severally liable for the full amount at issue for both claims (applying Cal. Insurance Code § § 1063.1 (c)(5) and (c)(9)(ii), and Cal Labor Code § 4600).
The Workers' Compensation Appeals Board granted reconsideration. It determined, based on the medical evidence, that CIGA was responsible for seventy-five percent of the workers temporary disability benefits. CIGA petitioned the Court of Appeal for review, contending the Board had erred because SCIF, as a solvent insurer bearing joint and several responsibility for the benefits, should be required to fully reimburse CIGA. The Court of Appeal summarily denied CIGA's petition but CIGA successfully sought review from the California Supreme Court. The Supreme Court granted the petition and transferred the matter back to the Court of Appeal with directions to vacate the summary denial and to grant review.
The Court of Appeal then considered CIGA's petition and concluded the Board had erred. The Court noted "'CIGA was created by the Legislature to establish a fund from which insureds could obtain financial and legal assistance if their insurers become insolvent' and do not discharge their obligations under their insurance policies." (Citing CIGA v. Workers' Comp. Appeal Board (Weitzman), (2005) 128 Cal.App.4th 307, 312 ("Weitzman").) Referencing various statutory provisions the Court held CIGA's role is limited to paying only the amount of "covered claims" of an insolvent insurer. See Ins. Code 1063.2(a). A "covered claim" is defined by statute to include workers compensation benefits. (Ins. Code § 1063.1(c)(1).) However, a "'[c]overed claim does not include (i) any claim to the extent it is covered by any other insurance . . ." (Ins. Code 1063.1(c)(9) (italics added).)
The Court concluded SCIF's coverage constituted solvent "other insurance." Moreover, CIGA was entitled to pursue reimbursement for any temporary benefits for which SCIF was responsible, because these benefits are not "covered claims." (Citing Ins. Code § § 1063(a) and 1063.1(c)(5); and Weitzman, supra, 128 Cal.App.4th at 317-20).
The Court then concluded SCIF was jointly and severally liable for all of the workers' temporary benefits because the worker's injuries acted in concert to cause his disability. (Citing Buhlert Trucking v. Workers' Compensation Appeals Board (1988) 199 Cal.App.3d 1530, 1536-37 [Labor Code section 4600 does not limit joint and several liability for full award of present and future medical treatment].) Although there is generally pro rata apportionment between workers' compensation carriers jointly and severally liable for temporary benefits, the Court held:
CIGA is not another workers' compensation insurer; it is a fund with responsibilities that are limited by statute in order to insure that the worker is protected. CIGA does not protect insurers.
Accordingly, the Court of Appeal annulled the Board's decision and directed the Board to enter a new order requiring SCIF to reimburse CIGA for all of the worker's temporary disability benefits.
This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.
Click here for opinion.
| 
