The Impact of CIGA vs. American Motorists

Sunday, May 8, 2005 | 0

The 2nd District Court of Appeal has issued a decision involving CIGA which will have unfortunate far reaching consequences on many existing and future cases. In CIGA v WCAB and American Motorists Ins. Co (B172056, 4/07/05) the court has disapproved the principles established by the WCAB in Gomez v Sandoval & CIGA an en banc decision which issued in May of 2003, from the WCAB.

In the CIGA v WCAB & American Motorists case the injured worker filed for 3 separate injuries. The first involved American Motorists and benefits were provided and an award issued. Later the injured worker filed a Petition to Reopen and two separate new applications for which CIGA ultimately had liability. During the pendency of the claims, American Motorist (Am Motorist) provided all benefits and filed a lien claim for $133,000 representing a share of the costs for TTD and Medical care attributable to the injuries during CIGAs insolvent insurers period of coverage.

At trial the WCJ issued a joint and several award against Am. Motorist and CIGA and allowed Am. Motorists a lien on the basis that CIGA was not insulated from reimbursement to their co-defendant where the liability was for a specific injury. CIGA appealed the granting of the lien claim against them. The WCAB, relying on their decision in Gomez, denied the Petition for Reconsideration. The defendants Petition for Writ of Review was initially denied by the 2nd District but the Supreme Court ordered the 2nd District to hear the case.

In its decision the Court determined that there is no difference between CIGAs liability to provide benefits in a specific injury than there is in a cumulative or occupational disease claim and the obligation to reimburse a co-defendant who has provided benefits which are in part due to a specific injury that CIGA ultimately accepts liability for is governed under the principles of Industrial Indemnity v WCAB (Garcia) not the Gomez case. The court noted that there was an exiting body of law that addressed similar issues in non-Workers Comp situations and the rules did not appear to be different for compensation claims:

The plain language of section 1063.1, subdivisions (c)(5) and (c)(9)(ii) bars AMIC's reimbursement claim because the claim is an "obligation to an insurer," AMIC is not the "original claimant under the insurance policy," and the two subsections expressly exclude "claims for contribution, indemnity, or subrogation, equitable or otherwise" and "one claiming by right of subrogation." We have been presented with no persuasive authority and know of no reason for treating reimbursement claims for workers' compensation benefits differently than claims made in other civil cases. Where, as here, the statutory language is clear and unambiguous, its plain meaning must prevail. (Honeywell v. Workers' Comp. Appeals Bd. (2005) 35 Cal.4th 24, 34.)

In rejecting the WCABs interpretation in Gomez as authoritative, the court reasoned:

In Gomez, the WCAB relied on Labor Code sections 3208.2 [1] and 5303, [2] prohibiting merger of multiple injuries and requiring separate findings of fact and awards for each separate injury.
&We conclude, however, that Gomez was incorrectly decided on this point.
& Because Labor Code section 4600 imposes joint and several liability on employers in successive injury cases, there is "other insurance" available within the meaning of section 1063.1, subdivision (c)(9)(i), notwithstanding Labor Code sections 3208.2 and 5303.

This is at least the third stab at reversing Gomez that CIGA has attempted. The same district had denied the petition for hearing in the original Gomez case and in a subsequent case, CIGA v WCAB (Sommai (Bob) Sripramong) also.

This decision may very well have horrible consequences down the line. The solvent insurer in this case paid benefits following 2 injuries during CIGAs insolvent insurers period of coverage, undoubtedly anticipating, in reliance on Gomez, that they would be reimbursed. If the state of the law at that time had been as set out in this case, it is very unlikely that the solvent carrier would have been as willing to provide extensive benefits and very likely would have sought to have liability imposed onto CIGA for the effects of their injuries and required CIGA to seek contribution from them. I fully anticipate that this will be the response of most carriers in similar situations.

The impact of the decision is going to create havoc for injured workers trying to get benefits in cases where CIGA is involved with other defendants who will now be required to try and minimize their payments for injuries that are outside their period of coverage and that fall into CIGAs period of exposure. There is nothing in this decision that indicates that CIGA does not have any liability for their insolvent carriers specific or cumulative injuries, only that if someone else pays CIGAs share they will not get it back.

The focus in the future will clearly be to get CIGA to pay up front by insisting that awards specifically identify CIGAs liability and requiring that entity to pay as the claim goes forward. It would certainly seem patently unfair to order a solvent carrier to provide benefits subject to a non-existent right of contribution. In Gomez, the WCAB held that CIGA should not be order to act as the administrator of a claim, but the Board in the same decision outlined the ability of CIGA to be ordered to pay reimbursement. That prohibition on CIGA acting as the administrator on a claim is certainly much weaker without the ability to obtain reimbursement from that entity.

We can also hope that the defendant in this case seeks further review. Given CIGAs 3 shots at reversing the WCAB decision in Gomez, perhaps trying different appellate districts to see if a different result can be obtained will compel the Supreme Court to look at the issue and potential for disaster for injured workers that it portends.

By attorney Richard "Jake" Jacobsmeyer, managing partner of the Concorde office of Adelson, Testan, Brundo & Popolardo. Jake can be reached at richardjacobsmeyer@atblaw.net. The opinions expressed by Richard M. Jacobsmeyer are his alone and do not represent the opinions of Adelson, Testan, Brundo and Popalardo or their individual attorneys and clients.

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