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The Power of CIGA again on Display
In the case of Mary Baker, Applicant v. Sweetheart Cups, CIGA by Sedgwick CMS for Fremont Insurance in liquidation and Porteous Fasteners/Pacific Indemnity Company, Chubb Insurance, Defendants, 2018 Cal. Wrk. Comp. P.D. LEXIS 473, (hereafter identified as “Sweetheart Cups”,) the power of CIGA to transfer liability to a solvent carrier was once again on display.
Applicant was employed by Porteous Fastener Company as a credit analyst, when she sustained a February 13, 1979, specific injury to her left ankle and back. Porteous was insured by Pacific Indemnity.
“On or about September of 1979,” while working as a credit analyst for Sweetheart Cups, applicant suffered injury to the back, neck, and psyche. Sweetheart Cups was insured by Fremont Indemnity.
On May 31, 1983, pursuant to the then-applicable Wilkinson doctrine, the WCJ issued a Findings and Award, rating the permanent disability caused by the separate issues jointly, and finding that the injuries combined to cause permanent total (100%) disability. The Award was joint and severally payable to the applicant by the co-defendants, with Fremont held responsible for 75% of the liability, designated claims administrator, and entitled to a right of contribution from Pacific Indemnity for 25% of the liability.
On July 2, 2003, Fremont went into liquidation, and the California Insurance Guarantee Association (CIGA) subsequently assumed administration of the Award against Fremont, subject to CIGA’s statutory defenses under the Guarantee Act (Ins. Code 1063 et seq.)
In a July 16, 2018, Findings and Order, the WCJ found CIGA was still liable for 75% of applicant’s permanent total disability indemnity. CIGA timely sought reconsideration.
On reconsideration, the WCAB amended the WCJ’s Findings and Order, to find that Pacific Indemnity was liable for 100% of the applicant’s permanent total disability indemnity, to assume medical treatment costs by both injuries, (from the date of Fremont’s liquidation date), and to order that Pacific Indemnity assume administration of both claims, and to adjust CIGA’s claim for reimbursement.
To support the Findings and Order, the WCAB relied on the Appellate Court’s decision in CIGA v. WCAB (Lopez) (2016) 245 Cal.App.4th 1021. In Lopez, supra, the Court of Appeal held that an apportionment of liability between co-defendant insurers does not alter the joint and several liability of the co-insurers with regard to the injured worker or lien claimants.
Although the “Sweetheart Cups” WCJ’s Report and Recommendation argued that Lopez, supra, applied only to multiple insurers insuring the same cumulative trauma, the WCAB was unpersuaded that successive injuries should be treated differently than a CT injury under Labor Code 5500.5. Noting that the Lopez Court had cited successive injury cases such as Weitzman and Hernandez in its decision, the WCAB concluded as follows: “Since there appears to be nothing that distinguishes Labor Code section 5500.5 joint and several liability to other forms of joint and several liability with regard to a finding of apportionment severing joint liability, we find Lopez applicable here.”
The Lopez case had involved a C&R settlement where a solvent insurer stipulated to 52% of liability, and another insurer stipulated to 48% liability before going insolvent, based on their respective share of coverage during a CT injury. Following liquidation, CIGA assumed administration of the insolvent carrier’s obligations and requested to be relieved of all liability on the grounds that the still solvent carrier co-defendant was “other insurance” under the CIGA statute. After the WCJ denied CIGA’s request, the WCAB denied CIGA’s petition for reconsideration, and argued that the insurers’ apportionment of liability between themselves effectively terminated the joint and several nature of the award and converted each insurer’s obligation to an individual one. Rejecting that argument, the Lopez court noted that the C&R settlement “merely apportioned liability; it did not change the joint and several nature of the now-apportioned liability.” Because there was joint and several liability, the WCAB’s order denying CIGA’s petition for reconsideration was annulled and the matter was remanded with directions to enter a new order dismissing CIGA from the proceedings.
Following the Lopez precedent, the WCAB in the “Sweetheart Cups” case found that the joint and several nature of the underlying award compelled the conclusion that CIGA must be relieved of liability. Joint and several liability has nothing to do with, and cannot be changed by, apportionment of an obligation between co-obligors under a settlement, or co-defendants under a joint award.
For purposes of CIGA’s “other insurance” defense, when it comes to joint and several award, whether they involve a single CT or a series of successive injuries, is a distinction without a difference.
By Michael S. Braun Los Angeles Office April 2019