CIGA v. WCAB/Argonaut (Hooten)

By
Robert L. Cassio

For those of us involved on the defense side in the California workers compensation system, a substantial amount of time is spent working on cases with applicants that have multiple claims to various body parts with multiple employers and carriers. Often, due to the past state of the workers compensation system, the California Insurance Guarantee Association (CIGA) is involved for carriers who have gone into liquidation.

CIGA is only responsible for covered claims. (See Ins. Code 1063.1) Where there is a solvent carrier, which in part faces exposure for a worker’s compensation claim, CIGA is prohibited from providing benefits for the same injury. Even if part of the applicant’s injury was related to periods of employment during the insolvent carrier’s coverage, it is not a covered claim for which CIGA would be responsible to provide benefits. Thus, if there is joint and several liability, it is not a covered claim for which CIGA would be responsible for providing benefits. Often determining what is or is not a covered claim is a complex analysis that is not always black and white.

The Hooten case, which was recently issued by the Second Appellate District, dealt with the issue of whether CIGA is responsible for indemnity and medical benefits paid by a subsequent carrier for injuries which were separate and discrete.

In Hooten, the applicant had four separate injuries. The first injury was under the coverage of Superior Pacific Casualty Company, which later went in to liquidation with CIGA taking over. This was a specific 1994 left shoulder injury. The second claim was a specific 1997 neck and shoulder claim covered by Argonaut. The third claim was also under the coverage of Argonaut and alleged a claim for the period of 1967 to 1997 for the neck, shoulders, back and arms. The fourth was under the coverage of Wausau and also for the neck, shoulders, back and arms for the period of 1998 through 1999. Ultimately the claim was settled by Compromise and Release with Argonaut reserving all rights of contribution and or reimbursement.

Argonaut later filed a petition for reimbursement seeking $92,903.97 from CIGA for indemnity and medical benefits paid based upon a medical report which apportioned 90% of the disability to CIGA’s injury and 10% to Argonaut’s injury periods. CIGA argued it had no liability for reimbursement based on Ins. Code 1063.1 (C)(5) and (C )(9). The WCJ issued a joint finding and order granting the petition, ruling this was not a case of joint and several liability and was a covered claim for which CIGA would be responsible for reimbursement. CIGA filed a timely petition for reconsideration which was ultimately denied. CIGA then filed a petition for a writ of review on the ground that reimbursement was precluded under Ins. Code 1063.1.

The Second Court of Appeal ruled CIGA was not responsible for reimbursement to Argonaut based on Ins. Code 1063.1 ( C ) (5) and ( C ) (9)(ii).

Section 1063.1 ( C ) (5) provides that “covered claims do not include any obligations to insurers, insurance pools, or underwriting associations, nor their claims for contribution, indemnity, or subrogation, equitable or otherwise, except as otherwise provided in this chapter.”

Section 1063.1 ( C ) ( 9 ) (ii) provides: “ covered claims’ does not include…any claim by any person other than the original claimant under the insurance policy in his or her own name… and does not include any claim asserted by an assignee or one claiming by right of subrogation, except as otherwise provided in this chapter.”

Based upon the above sections, the court agreed with CIGA that the legislature’s intent was clear in that CIGA was not responsible for reimbursing solvent insurers where the solvent carrier paid worker’s compensation benefits due to injuries sustained during periods of coverage by the insolvent carriers. The court specifically indicated they were not persuaded by Argonaut’s contention that section 1063.1 does not apply where there is no joint and several liability and where there are separate, successive injuries covered by different insurers.

In short, it cannot be assumed that if you are dealing with separate injury dates, for separate injuries, that there is not joint and several liability. Based upon the Hooten case, CIGA will not be subject to reimbursement and/or contribution for costs and/or benefits provided by a solvent carrier, even if part of the injury was caused during CIGA’s, separate “coverage period.” Thus, if you are handling a case with multiple injuries with multiple carriers, caution and careful analysis should be made when considering settlement, reimbursement issues and potential exposure. It is more than likely that the solvent carrier will be responsible for administering benefits and it is even more likely that CIGA will not be responsible for reimbursement and/or contribution-even for separate injuries and cumulative traumas.