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In This Alert: CIGA v. San Diego County Schools Risk Management Joint Powers Authority
On October 30, 2019, the Court of Appeal, Fourth Appellate District certified for publication a decision regarding excess insurance coverage and the California Superior Court’s right to characterize an applicant’s injury differently than the Workers’ Compensation of Appeals Board following an Award of benefits. California Ins. Guarantee Assn. v. San Diego County Schools Risk Management Joint Powers Authority 2019 Cal. App. LEXIS 1070.
FACTS:
The applicant, a School Bus Driver, filed multiple claims against her employer at the WCAB. One such claim was a specific injury dated May 6, 2003 regarding overuse of her right elbow, neck, and upper extremities. The defendant accepted the right elbow only, and in its Answer stated that the injury was in fact a cumulative trauma claim. In July 2011, the parties submitted Stipulations with Request for Award for a specific injury to the applicant’s shoulder, wrist, upper extremities, and neck. The Workers’ Compensation Judge approved the Stipulations and issued an Award in August 2011.
The District is permissibly self-insured, and a member of a Joint Powers Association that administers its claims. The District and the JPA had excess coverage on the date of the specific injury from Kemper Insurance, whose policy was from July 2002 – July 2003. An excess policy from July 2003 – June 2004 was purchased through Swiss Re Group.
As the specific date of injury falls within Kemper’s coverage, Kemper made payments until it became insolvent in 2013. Following Kemper’s insolvency, the District through the JPA sought reimbursement from CIGA. CIGA denied coverage, stating that the injury was not a “covered claim” because it was a cumulative trauma and not a specific injury. Their argument was that the cumulative trauma would have ended during Swiss Re’s coverage, and because there is other insurance available, CIGA is not liable to reimburse the defendants. In February 2016, CIGA filed an action in Superior Court seeking declaratory relief stating that the reimbursement request was invalid as it was not a covered claim.
The District and the JPA filed a cross-complaint against CIGA for reimbursement of benefits paid and moved for Summary Judgment. The trial judge found that the WCAB has exclusive jurisdiction per the Workers’ Compensation Act, and because the Award was for a specific injury, the trial judge determined the claim to be covered by Kemper and ordered CIGA to pay reimbursement. CIGA appealed, and the Fourth Appellate District disagreed with the trial judge, finding that the Superior Court has jurisdiction in claims of excess coverage to hear evidence and independently determine whether an injury was due to a specific injury or a cumulative trauma.
CIGA:
In order for CIGA to provide benefits on behalf of an insolvent carrier, there must be a covered claim, meaning that the insolvent carrier had coverage during the date of injury. CIGA is excluded from providing benefits if there is joint and several liability for the claim, meaning there is other insurance that could pay benefits.
DECISION:
This is a case of first impression for the California Court of Appeal. The appellate court noted that coverage disputes involving whether a self-insured employer is covered by an excess insurance policy is not a normal part of the workers’ compensation claims process, and that CIGA’s action has no legal effect on an injured workers’ recovery.
The Appellate Court noted that excess insurance works differently, stating that policy limits do not expose the injured worker to the risk of nonrecovery. Citing two Federal District Court cases in line with this issue, the Court found that although not optimal, the trial court has jurisdiction to decide a factual question, such as whether an injury is specific or cumulative in nature, in order to reach a finding even if the finding is contrary to the WCAB. It again notes the distinction between primary and excess insurance, stating that this is only applicable in cases of excess coverage.
As such, the Court found that the Superior Court has jurisdiction to determine factual issues and that the parties here may litigate whether there was a specific or cumulative trauma.
WHAT THIS MEANS FOR YOU:
Since this case involves CIGA, a similar case is not likely to come up in that context very often. However, because excess coverage can be involved in many cases it is imperative that the facts and medical evidence support the finding of either a specific injury or a cumulative trauma before Stipulating to either one, and it may be prudent in some situations to have the WCAB make a final determination of one or the other. This case leaves the door open for future litigation between excess carriers that could result in unfavorable decisions and an obvious increase in costs. Claims files should be well documented to support the injury and payments made.
Amanda Rocha, Esq.
Central Coast Office
Goldman, Magdalin & Krikes, LLP