State Farm Gen. Ins. v. WCAB ( 2013 )

Filed 8/13/13 following 7/25/13 pub. order
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
STATE FARM GENERAL INSURANCE 2d Civil No. B240742
COMPANY,
(W.C.A.B. Nos. ADJ4684775,
Petitioner, ADJ4381820, ADJ7684775)
v.
WORKERS' COMPENSATION ORDER MODIFYING OPINION
APPEALS BOARD, CALIFORNIA [NO CHANGE IN JUDGMENT]
INSURANCE GUARANTEE
ASSOCIATION et al.,
Respondents.
THE COURT:
The opinion filed herein on July 1, 2013, shall be modified as follows:
On page 12, footnote 5 shall be deleted in its entirety, which will require
renumbering of all subsequent footnotes.
[There is no change in the judgment.]
Filed 7/1/13 (unmodified version; pub order 7/25/13 attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
STATE FARM GENERAL INSURANCE 2d Civil No. B240742
COMPANY,
(W.C.A.B. Nos. ADJ4684775,
Petitioner, ADJ4381820, ADJ7684775)
v.
WORKERS' COMPENSATION
APPEALS BOARD, CALIFORNIA
INSURANCE GUARANTEE
ASSOCIATION et al.,
Respondents.
Proceeding to review a decision of the Workers' Compensation Appeals
Board. Annulled and remanded with directions.
Finnegan, Marks, Theofel & Desmond, Ellen Sims Langille, for petitioner
State Farm General Insurance Company.
Guilford Steiner Sarvas & Carbonara, Richard E. Guilford; Floyd, Skeren &
Kelly, James K. Lowery, for respondent California Insurance Guarantee Association.
No appearance for respondent Workers' Compensation Appeals Board.
Labor Code section 5950 provides that any person aggrieved by a final order,
decision, or award of the Workers' Compensation Appeals Board (WCAB) may, within the
prescribed time limit, apply to the Court of Appeal for a writ of review. Appellate review is
limited to final orders that affect a substantial right or liability of a party. (Duncan v.
Workers' Comp. Appeals Bd. (2008) 166 Cal. App. 4th 294, 299.) The failure of an aggrieved
party to seek judicial review of a final order of the WCAB bars later challenge to the
propriety of the order or decision before either the WCAB or the court. (Maranian v.
Workers' Comp. Appeals Bd. (2000) 81 Cal. App. 4th 1068, 1075-1076 (Maranian); see also
Safeway Stores, Inc. v. Workers' Comp. Appeals Bd. (1980) 104 Cal. App. 3d 528, 532-535.)
This petition for writ of review challenges the WCAB's decision allowing
California Insurance Guarantee Association (CIGA) to pursue a claim for reimbursement
against State Farm General Insurance Company (State Farm), after the WCAB had
previously rejected the claim and CIGA had failed to timely seek judicial review. We
conclude that CIGA's claim is barred by principles of res judicata. We annul the WCAB's
decision and remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
On June 8, 1999, and January 20, 2000, Joanne Lutz (applicant) was injured
while working as a personal assistant to Linda McDonald, President of Roto Rooter (aka
Russell Warner, Inc.). The applicant was on Roto Rooter's payroll at the time. During
1999 and 2000, Roto Rooter was insured for workers' compensation by Fremont
Compensation Insurance Company and Paula Insurance Company, respectively. Linda
McDonald and her homeowner's insurance carrier, State Farm, were joined as additional
parties to the applicant's claim.
In February of 2002, at a mandatory settlement conference, the parties
disputed the issues of employment and which insurance carrier should be responsible for
coverage of the applicant's claim, i.e., whether the applicant was working as a domestic
employee of McDonald at the time of her injuries such that State Farm should provide
coverage for her claim, or whether she was employed by Roto Rooter.
2
On March 15, 2002, in lieu of trial, the parties entered into "Joint Stipulations
With Request for Award." The parties stipulated that the applicant was employed by Roto
Rooter and Linda McDonald, and "sustained injury arising out of and in the course of
employment." Paula Insurance Company agreed to administer all benefits under the award,
and under any future award. State Farm agreed to "indemnify and/or contribute 25% of all
incurred benefits paid to or on behalf of applicant (including, but not limited to TD
[temporary disability], PD [permanent disability], medical treatment, and vocational
rehabilitation), as to injuries of 6/8/99 and 1/20/00. [¶] Paula Ins. reserves its right to seek
contribution from Fremont Compensation Ins. Co." That same day, Workers' Compensation
Judge (WCJ) William Carero approved the award allocating liability between the parties.
No party sought reconsideration of the award and, consequently, it became final between
these parties.
In June of 2002 and July of 2003, Paula Insurance Company and Fremont
Insurance Company, respectively, were liquidated. CIGA assumed administration of the
claim. Since then, State Farm has been reimbursing CIGA for 25 percent of all benefits paid
to the applicant.
In September of 2003, CIGA filed a petition for dismissal, arguing it should
be dismissed because Paula Insurance Company had not provided workers' compensation
coverage for residential or domestic employees. State Farm opposed the petition,
contending the evidence supported a finding of employment by Roto Rooter and coverage,
and that the March 15, 2002, stipulated award was final and binding on CIGA. The record
before us discloses no action on this petition.
In February of 2008, five years later, CIGA sought to be relieved as
administrator of the applicant's claim. CIGA filed a declaration of readiness with the
WCAB, stating that the parties were unable to "resolve the dispute concerning employment
as a domestic employee versus employment with Roto Rooter." CIGA requested resolution
of the questions (1) "whether State Farm homeowner's insurance qualifies as 'other
insurance' to make the claim against CIGA a non-covered claim per Insurance Code section
3
1063.1"; and (2) whether the applicant qualifies as a domestic employee under Labor Code
section 3351, subdivision (d).
On April 4, 2008, the WCJ ruled that the WCAB was without jurisdiction to
rescind or alter the March 15, 2002, stipulated award, and that CIGA was bound by the
stipulation. The WCJ reasoned: "Labor Code section 5804 confers limited power upon the
Board to rescind, alter or amend its Awards. That power is limited by the statutory language
as to time and as to content. Specifically, that Section states 'that after an award has been
made finding that there was employment and the time to petition for a rehearing or
reconsideration or review has expired . . . , the appeals board upon a petition to reopen shall
not have the power to find that there was no employment.' This includes determination of
the identity of the employer previously determined by the Award. [¶] Neither does the
subsequent liquidation of the Paula Insurance Company and Fremont Indemnity . . . permit
CIGA to upset the final legal determination as to employment. . . . [¶] In essence, CIGA
avers that it is not bound by the Award entered against the then-solvent carriers for which
CIGA is now responsible to the extent the Insurance Code requires. [¶] No determination is
made as to the extent of CIGA's ultimate liability under the March 15, 2002 Award. It is
found nevertheless that the Award binds CIGA." CIGA did not seek reconsideration of the
WCJ's order before the WCAB. (Lab. Code, § 5900.)
Two months later, on June 9, 2008, CIGA filed a petition for reimbursement
and for a change of administrator, renewing its claim that it should be relieved of
responsibility to pay benefits because of the presence of other insurance. (Ins. Code,
1
§ 1063.1, subd. (c)(9).) CIGA argued that State Farm was jointly and severally liable for
the benefits paid by CIGA, and as solvent "other insurance" must reimburse CIGA in full
for all temporary disability benefits, medical treatment, and medical-related expenses.
CIGA requested that State Farm reimburse it $382,833, less credit for payments made by
State Farm.
1
Insurance Code section 1063.2, subdivision (a) limits CIGA's liability to
paying for "covered claims." Insurance Code section 1063.1, subdivision (c)(9) provides
that "covered claims" do not include "a claim to the extent it is covered by any other
insurance of a class covered by this article available to the claimant or insured."
4
State Farm opposed the petition, arguing that (1) CIGA's failure to seek
reconsideration of the WCJ's decision on April 4, 2008, precluded it from relitigating its
reimbursement claim (Lab. Code, § 5804); (2) State Farm's homeowner's insurance policy
does not constitute "other insurance" as defined by the Insurance Code because its policy
was not "available to the claimant or insured" (Ins. Code, § 1063.1, subd. (c)(9)); and (3)
CIGA's claims were barred by the equitable doctrine of laches.
In May of 2009, CIGA filed a declaration of readiness (presumably for its
June 2008 petition), seeking dismissal as a party-defendant on the ground that "'other
solvent insurance' is available" pursuant to Insurance Code section 1063.1, subdivision
(c)(9). According to the pretrial conference statement, the parties proceeded to trial on
issues including: (1) whether CIGA should be dismissed pursuant to Insurance Code
section 1063.1, subdivision (c)(9), because "other solvent insurance" is available; (2) joint
and several liability/reimbursement from State Farm; (3) Insurance Code section 11590
provides that domestic workers are covered under homeowner's insurance policy for
workers' compensation; and (4) petition to change administrator.
On June 25, 2009, the WCJ conducted a hearing on CIGA's petition. The
minutes of the hearing specify that the issue of whether there was "good cause to dismiss
CIGA due to the presence of other insurance" was "raised and accepted to be heard" as part
of the trial. With respect to this issue, the WCJ ruled: "The presence of other insurance in
this case does not support good cause to dismiss CIGA. [CIGA] has already been
determined [to be] bound by the [Stipulated Award of March 15, 2002]; and that
determination having been made on April 8th, 2008, without any appellate response,
remains the law of this case, and the motion of CIGA to be dismissed is therefore denied."
CIGA then sought reconsideration by the WCAB, contending that CIGA is
statutorily prohibited from making payments to the applicant and must be dismissed
pursuant to Insurance Code section 1063.1, subdivision (c)(9) because other solvent
5
insurance is available. CIGA argued that our decisions in Weitzman and Hooten entitle it
2
"to shift the entire amount of joint and several liability onto the still-solvent carrier."
On July 28, 2009, the WCJ recommended the WCAB deny reconsideration,
reasoning that "[r]ight or wrong, the 2008 decision on jurisdiction to rescind, alter or amend
the 2002 stipulated award is the law of this case. [¶] [CIGA] seeks to distinguish the issue
here presented from that presented in 2008. However, both efforts boil down to an effort to
impose the liability in this case solely on State Farm." The WCJ explained that CIGA
"remains liable because the 2002 stipulation and award was a finding of employment which
was not the subject of a petition for reconsideration and was followed by a decision six
years later that jurisdiction to change the terms of the 25%/75% deal was lacking. The 2008
decision in turn became final." The WCJ also observed that CIGA was barred by laches
from attempting to avoid the stipulated award "where five to six years elapse with the
injured worker and the homeowner carrier relying upon the deal they struck." On October
15, 2009, the WCAB adopted WCJ Carero's recommendation and denied CIGA's petition
for reconsideration. CIGA did not file a petition for writ of review in the Court of Appeal.
In January of 2010, CIGA proceeded to trial on the applicant's claim of
permanent disability, future medical treatment, a lien claim by the Employment
Development Department (EDD), and other related issues. On April 27, 2010, the WCJ
issued his decision granting the applicant permanent disability of 39 percent and awarding
benefits against CIGA for future medical treatment. The WCJ ordered CIGA to reimburse
the EDD for disability benefits provided to the applicant.
In May of 2010, CIGA sought reconsideration of the WCJ's decision,
contending that the WCJ should have found that the applicant was jointly employed by Roto
Rooter and Linda McDonald on the date of injury, and the award should have identified
State Farm as jointly liable for all benefits due the applicant.
2
See California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd. (2005)
128 Cal. App. 4th 307, 320 (Weitzman) ["covered claims" under Ins. Code section 1063.1,
subdivision (c)(9), do not include claims covered by other solvent insurers in situations of
joint and several liability]; CIGA v. Workers' Comp. Appeals Bd. (2005) 128 Cal. App. 4th
569, 573 (Hooten) [even in absence of joint and several liability, "covered claims" under
section 1063.1, subdivision (c)(5) do not include claims by other insurers].)
6
The WCJ recommended that reconsideration be granted in part to correct
certain miscalculations he had made in the amount of permanent disability and to eliminate
CIGA's obligation to reimburse the EDD. The WCJ also clarified that CIGA is the party
liable for the benefits due the applicant, and that "State Farm remains obligated to its co-
defendant(s), but not to the applicant." The WCJ recommended denial of CIGA's
reconsideration petition in all other respects.
On January 18, 2011, the WCAB adopted the WCJ's recommendations in all
respects and modified the WCJ's award accordingly. The WCAB amended the award to
conform to the 2002 stipulation by identifying Linda McDonald as an additional employer
on the date of injury. The WCAB rejected CIGA's contention that the award should be
amended to reallocate liability for the applicant's claim to State Farm by finding it jointly
and severally liable. The WCAB reasoned that CIGA's contentions were rejected by the
WCJ in his decisions of April 4, 2008, and July 13, 2009, and by the WCAB when it denied
reconsideration on September 1, 2009. Because CIGA did not appeal those decisions, the
WCAB concluded they "are now final and the law of the case."
The WCAB stated: "We recognize that several appellate cases describe limits
of CIGA's liabilities in cases where solvent insurers are 'available' to provide an injured
worker with benefits within the meaning of Insurance Code section 1063.1(c)(9),
notwithstanding that the insolvent insurer would be liable for those benefits but for the
insolvency. [Fn. and citations omitted.] However, those cases did not involve a request by
CIGA to amend an award made more than five years earlier by stipulation of all the solvent
insurers. In this situation, Labor Code section 5804 precludes CIGA's request to re-allocate
3
liability by amending the 2002 stipulated award." Once again, CIGA elected not to petition
for a writ of review in the Court of Appeal.
On April 18, 2011, CIGA filed another declaration of readiness, renewing the
issue of reimbursement. CIGA stated that "[t]he parties require the intervention of the
WCAB to resolve the dispute between CIGA and State Farm concerning
3
Labor Code section 5804 provides in part: "No award of compensation shall be
rescinded, altered, or amended after five years from the date of the injury except upon a
petition by a party in interest filed within such five years . . . ."
7
contribution/reimbursement." On June 2, 2011, the WCJ conducted a hearing on: (1)
whether res judicata bars further proceedings on reimbursement; and (2) whether good cause
exists to refer the matter to arbitration. On July 29, 2011, the WCJ denied CIGA's request
for trial of its claim for reimbursement and/or contribution. He found that the respective
liabilities of the parties had previously been finally determined and could not be "relitigated
by way of seeking contribution or reimbursement."
CIGA then petitioned the WCAB for reconsideration, contending that it may
proceed with its reimbursement claim against State Farm because (1) CIGA and State Farm
are jointly and severally liable under the 2002 stipulated award; and (2) it is not precluded
from seeking reimbursement by either res judicata or Labor Code section 5804. CIGA
pointed to the wording of the WCJ's April 2008 decision, stating that "[n]o determination is
made as to the extent of CIGA's ultimate liability under the March 15, 2002 Award."
CIGA argued that it relied on this language in not appealing or seeking reconsideration
earlier, believing that it meant that Insurance Code section 1063.1 might still shift all
liability to State Farm. CIGA argued that the issue of CIGA's right to reimbursement
against State Farm was raised for the first time in CIGA's declaration of readiness filed on
April 18, 2011, and the issue was not "identical" to the issues previously decided.
On August 25, 2011, the WCJ disagreed with CIGA, concluding its
reimbursement claim was not made in good faith and was not supported by the cases cited.
The WCJ stated that no determination as to the ultimate liability of any party was possible in
2008 because the extent of the applicant's permanent disability was still being evaluated.
The WCJ noted this did not prevent CIGA from appealing or seeking reconsideration of the
2008 determination that it was bound by the 2002 stipulated agreement. The WCJ
concluded that "[r]egardless of the semantics employed," CIGA's renewed effort to "re-
allocate liability by amending the 2002 stipulated award" was barred by "the component of
res judicata known as issue preclusion."
On December 19, 2011, the WCAB granted reconsideration, notwithstanding
its contrary decision 11 months earlier (on January 18, 2011), ruling against CIGA on the
question of whether it could pursue a reimbursement claim under Insurance Code section
8
1063.1, subdivision (c)(9). The WCAB noted that CIGA was not a party to the 2002
stipulation and was not seeking to amend the earlier 2002 award. Instead, it reasoned,
CIGA was seeking to enforce its statutory right under Insurance Code section 1063.1 to
obtain reimbursement from a solvent insurer that is "available" to provide benefits to the
applicant within the meaning of the statute. The WCAB reasoned that the 2002 stipulated
award and the five-year limitations period of Labor Code section 5804 were not dispositive
of CIGA's petition for reimbursement. The applicant was jointly employed by Linda
McDonald and Roto Rooter when she was injured. "Because applicant had two employers
. . . each employer and their respective insurers on those dates of injury are as a matter of
law jointly and severally liable for workers' compensation benefits that are due."
The WCAB went on to reason that the 2002 stipulation did not change State
Farm's joint and several liability to the applicant. "This is because agreements between
employers and/or their insurers cannot diminish or eliminate an applicant's right to recover
benefits from the employers and insurers that are jointly and severally liable for the injury.
. . . When Freemont and Paula became insolvent, State Farm became 'available' to applicant
as 'other insurance' under Insurance Code section 1063.1(c)(9) because McDonald is jointly
and severally liable for applicant's injuries. [¶] Because State Farm appears to be 'other
insurance' that is 'available' . . . within the meaning of Insurance Code section 1063.1(c)(9),
it appears to be responsible for the provision of workers' compensation benefits that are due
because of her injuries."
The WCAB concluded "[t]here has been no earlier final decision on CIGA's
petition to obtain reimbursement from State Farm. Thus, there is no basis for denying the
petition for reimbursement on the grounds of res judicata or collateral estoppel as concluded
by the WCJ in his August 25, 2011 Report." Accordingly, the WCAB rescinded the WCJ's
decision and returned the case to the trial level for further proceedings on CIGA's petition
for reimbursement.
Thereafter, State Farm petitioned the WCAB for reconsideration. State Farm
argued that the question whether homeowner's insurance qualifies as "other insurance"
under Insurance Code section 1063.1 was expressly raised by CIGA and decided against it
9
by the WCJ in April of 2008, and by the WCAB in September of 2009. State Farm
contended these decisions were final and entitled to res judicata effect. Alternatively, State
Farm contended that CIGA's request for reimbursement was barred by the doctrine of
laches. State Farm pointed out that it will suffer irreparable harm and prejudice should
CIGA be allowed to re-litigate its request for reimbursement. State Farm pointed out that if
CIGA is allowed to seek reimbursement in an amount greater than 25 percent, it will have
been denied due process by being precluded from litigating the issue of employment. State
Farm abided by the terms of the stipulated award and detrimentally relied on it by
withdrawing its challenge to the employment issue in 2002.
On March 14, 2012, the WCAB denied State Farm's petition for
reconsideration. State Farm's petition for writ of review followed.
DISCUSSION
The dispositive question before us is whether CIGA's reimbursement claim is
4
barred by res judicata or laches. It is well settled that these doctrines apply in workers'
compensation litigation. (Azadigian v. Workers' Comp. Appeals Bd. (1992) 7 Cal. App. 4th
372, 379-380; United Dredging Co. v. Industrial Acc. Com. (1930) 208 Cal. 705, 713-714.)
Labor Code section 5950 provides that a party "affected by an order, decision,
or award" of the WCAB may, within the prescribed time period, apply to the Court of
Appeal for a writ of review "for the purpose of inquiring into and determining the
lawfulness" of the order, decision, or award. "[A]ppellate review . . . is limited to 'final'
orders that determine a substantial right or liability of a party." (Duncan v. Workers' Comp.
Appeals Bd., supra, 166 Cal.App.4th at p. 299.) An order of the WCAB is final for the
purpose of seeking judicial review when it "settles, for purposes of the compensation
proceeding, an issue critical to the claim for benefits, whether or not it resolves all the issues
in the proceeding or represents a decision on the right to benefits." (Maranian, supra, 81
Cal.App.4th at pp. 1075, 1078; Wal-Mart Stores, Inc. v. Workers' Comp. Appeals Bd. (2003)
4
We reject CIGA's contention that State Farm's petition for writ of review
should be dismissed as premature. We also reject CIGA's contention that our standard of
review is abuse of discretion. The application of the doctrine of res judicata is a question
of law we review de novo. There are no factual issues involved in this determination.
10
112 Cal. App. 4th 1435, 1438, fn. 3; Safeway Stores, Inc. v. Workers' Comp. Appeals Bd.,
supra, 104 Cal.App.3d at pp. 534-535.) Such final orders include, for example, threshold
orders dismissing a party, rejecting an affirmative defense, terminating liability, or
determining whether the employer has provided compensation coverage. (Maranian, at pp.
1075, 1078.)
The characterization of an order or decision as final and susceptible to judicial
review has critical consequences. The failure of an aggrieved party to seek judicial review
of a final order of the WCAB bars later challenge to the propriety of the order or decision
before either the WCAB or the court. (Maranian, supra, 81 Cal.App.4th at p.1076; see also
Rymer v. Hagler (1989) 211 Cal. App. 3d 1171, 1182.) The purpose of this rule is to
facilitate early disposition of core questions, and promote the public policy favoring
expeditious and inexpensive resolution of workers' compensation claims. (Maranian, at p.
1078.)
CIGA contends that State Farm cannot point to any place in the record where
CIGA's right to reimbursement was consciously raised and litigated prior to the WCAB's
decision on December 19, 2011. CIGA denies that its right to reimbursement was litigated
in April of 2008, June of 2009, or January of 2011. We disagree.
In 2008, CIGA filed a formal "Petition for Reimbursement," requesting
resolution of the question whether the homeowner's insurance policy qualified as "other
insurance" to make the claim against CIGA a non-covered claim under Insurance Code
section 1063.1. The WCJ found the WCAB lacked jurisdiction to rescind or alter the 2002
stipulated settlement agreement and that CIGA was bound by it. In 2009, CIGA again
asked the WCJ to resolve the questions whether it should be dismissed pursuant to Insurance
Code section 1063.1 because "other solvent insurance" was available, whether joint and
several liability existed for State Farm, and whether administration of the claim should be
changed. On October 15, 2009, the WCAB adopted the WCJ's findings that CIGA was
bound by the 2002 stipulated settlement and barred by laches from attempting to avoid it.
Finally, on January 18, 2011, the WCAB rejected CIGA's contention that liability should be
re-allocated to State Farm because State Farm was jointly and severally liable for the
11
applicant's injuries. Contrary to CIGA's contention, its entitlement to reimbursement was
expressly raised in these proceedings in 2008, 2009, and 2011, and determined adversely to
it. CIGA did not seek judicial review of any of these decisions. Consequently, these
decisions have become final and conclusive. CIGA is barred by res judicata from
relitigating its right to reimbursement.
Next, CIGA contends that State Farm misapprehends the obligations created
by the 2002 stipulated settlement agreement. It argues that, in the agreement, both Roto
Rooter and Linda McDonald admitted concurrent employment. Dual employers are jointly
and severally liable for payment of all compensation due the injury of the shared employee.
(McFarland v. Voorheis-Trindle Co. (1959) 52 Cal. 2d 698 [where relationship of general
and special employment exists, injured worker can look to both employers for compensation
benefits].)
CIGA adds that its right to reimbursement is statutory and it has no statutory
liability for claims covered by other available solvent insurance. (Ins. Code, § 1063.1, subd.
(c)(9).) CIGA argues that State Farm's agreement to pay 25 percent of the applicant's
benefits does not "trump" CIGA's statutory obligations.
We need not address the ultimate question of whether State Farm is jointly
and severally liable for 100 percent of the applicant's claim, or whether its homeowner's
insurance policy is "other insurance" under Insurance Code section 1063.1, subdivision
5
(c)(9), because CIGA did not preserve its right to pursue these issues. Right or wrong, the
WCJ's decision in 2008, and the WCAB's 2009 and 2011 decisions are final, and CIGA may
not invoke the jurisdiction of the WCAB or this court to review the lawfulness of those
decisions.
The cases cited by CIGA regarding its statutory right to reimbursement are
distinguishable. In each of the cases CIGA cites, unlike the facts of this case, CIGA's
request for reimbursement due to the presence of other solvent insurance was timely brought
5
We question whether homeowner's insurance qualifies as "other insurance" under
section 1063.1, subdivision (c)(9), because it is not "available to the claimant." The parties
have not briefed whether CIGA is relieved from liability under Insurance Code section
1063.1, subdivision (c)(5) [covered claims do not include obligations to insurers nor their
claims for contribution or indemnity].
12
before the WCAB or the Court of Appeal. (E.g., Sherman Loehr Custom Tile Works v.
Workers' Compensation Appeals Board (2003) 68 Cal.Comp.Cases 1262 [two carriers
stipulated to percentage of liability before one carrier liquidated; WCAB granted CIGA's
timely petition for a change of administrators because other solvent insurance available].)
We recognize that the Legislature has limited CIGA's liability to "covered
claims." (Ins. Code, § 1063.1.) CIGA's "powers, duties and responsibilities are strictly
defined and circumscribed by statute; they are not co-extensive with the duties owed by the
insolvent insurer." (California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd. (2007)
153 Cal. App. 4th 524, 532.) Nevertheless, this statutory policy limiting CIGA's liability to
covered claims must be weighed against the strong "public policy interests in an expeditious
and inexpensive system of workers' compensation, the encouragement of settlements of
workers' compensation proceedings to further that system, the justified expectations of
parties dealing with CIGA, the importance of there being an end to litigation, the resulting
finality of judgments, and CIGA's role in obtaining the order at issue." (Fireman's Fund
Ins. Co. v. Workers' Compensation Appeals Bd. (2010) 181 Cal. App. 4th 752, 770.)
Here, the applicant was 61 years old on the date of her first injury in 1999.
She is now 75 years old and the issue of liability for her claim continues to be litigated
despite CIGA's failure to seek judicial review of adverse decisions in 2008, 2009, and 2011,
and the stipulated settlement over a decade ago. In these circumstances, the strong public
policy in favor of CIGA's paying only covered claims does not outweigh the policy interests
enumerated above. (See Fireman's Fund Ins. Co. v. Workers' Compensation Appeals Bd.,
supra, 181 Cal.App.4th at p. 770.)
In light of our determination that CIGA's reimbursement claim is barred by
principles of res judicata, we need not address State Farm's alternative contentions that it
would be deprived of due process if CIGA is allowed to pursue its reimbursement claim, or
13
that CIGA's claim is barred by laches. Contrary to CIGA's contention, these issues were
6
preserved for review and raise substantial concerns.
We annul the WCAB's order of March 14, 2012, denying State Farm's petition
for reconsideration. We remand the matter to the WCAB for further proceedings consistent
with this opinion. Costs are awarded to State Farm.
PERREN, J.
We concur:
GILBERT, P. J.
YEGAN, J.
6
State Farm argues that CIGA has not diligently pursued its reimbursement claim
since it took over administrating the claim in 2003 and that it will suffer prejudice from
CIGA's delay, including loss of control over supervision of the medical treatment,
deterioration of evidence, diminishment of witness memory, and its withdrawal of a defense
to the issue of employment. (See, e.g., ICW Group v. Workers' Compensation Appeals
Board (Fieldhouse) (2003) 68 Cal.Comp.Cases 1217 [writ denied; president of company has
wide discretion to place domestic employees on corporate payroll; liability for employee's
injury rests solely with corporation's carrier].)
14
Filed 7/25/13
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
STATE FARM GENERAL INSURANCE 2d Civil No. B240742
COMPANY,
(W.C.A.B. Nos. ADJ4684775,
Petitioner, ADJ4381820, ADJ7684775)
v. ORDER CERTIFYING OPINION
FOR PUBLICATION
WORKERS' COMPENSATION
APPEALS BOARD, CALIFORNIA
INSURANCE GUARANTEE
ASSOCIATION et al.,
Respondents.
THE COURT:
The opinion in the above-entitled matter filed on July 1, 2013, was not
certified for publication in the Official Reports. For good cause it now appears that the
opinion should be published in the Official Reports and it is so ordered.