California Ins. Guarantee Ass'n v. Workers' Comp. Appeals Bd.

• Decision Date: 06 February 2012
• Docket Number: No. B231491.,B231491.
• Citation: 77 Cal. Comp. Cases 143,2012 Daily Journal D.A.R. 2712,12 Cal. Daily Op. Serv. 2457,203 Cal.App.4th 1328,138 Cal.Rptr.3d 24
• Court: California Court of Appeals Court of Appeals
• Parties: CALIFORNIA INSURANCE GUARANTEE ASSOCIATION, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Next Enterprises, Respondents;Oracle Imaging et al., Real Parties in Interest.

12 Cal. Daily Op. Serv. 2457

138 Cal.Rptr.3d 24

2012 Daily Journal D.A.R. 2712

203 Cal.App.4th 1328

77 Cal. Comp. Cases 143

CALIFORNIA INSURANCE GUARANTEE ASSOCIATION, Petitioner,

v.WORKERS' COMPENSATION APPEALS BOARD and Next Enterprises, Respondents;Oracle Imaging et al., Real Parties in Interest.

No. B231491.

Court of Appeal, Second District, Division 2, California.

Feb. 6, 2012.

Guilford Steiner Sarvas & Carbonara, Anaheim, and Richard E. Guilford, for Petitioner.

Jeffrey M. Trombacco, for Real Parties in Interest.

Charles Edward Clark, Pasadena, as Amici Curiae on behalf of Express Pharmacy and Express Care Management.No appearance for Respondents Workers' Compensation Appeals Board and Next Enterprises.ASHMANN–GERST, J.

Petitioner California Insurance Guarantee Association (CIGA) seeks review of a ruling by the Workers' Compensation Appeals Board (WCAB) that recognized claims asserted by real parties in interest Oracle Imaging, N–Care and Nations Surgery Center (collectively medical providers) as “covered” claims under Insurance Code section 1063.1.¹ The claims were asserted by real party in interest Pinnacle Lien Services (Pinnacle) on behalf of the medical providers. CIGA contends that it has no obligation to pay because Pinnacle was an assignee of the claims and assigned claims are excluded under section 1063.1, subdivision (c)(9).

We granted CIGA's petition for writ of review. We affirm the ruling that Pinnacle is not excluded from pursuing the claims against CIGA for two reasons. First, the facts do not establish that the medical providers assigned their claims to Pinnacle. Second, section 1063.1, subdivision (c)(9) does not exclude the claims from being “covered” because the medical providers are original claimants and Pinnacle is their administrator or personal representative.

BACKGROUND

Anastasia Jenkins filed a workers' compensation claim against her employer, whose workers' compensation insurance carriers became insolvent during the pendency of the proceedings. Medical services were rendered to Jenkins by real parties in interest the medical providers.

Each of the medical providers had separately entered into a “ Collection Agreement” with Pinnacle, pursuant to which Pinnacle was to provide “exclusive collection services” for accounts “assigned” to Pinnacle by the “client” medical provider. The three agreements were essentially identical, and provided that Pinnacle was an independent contractor and would receive a certain percentage of the amount collected as compensation for its services. Under the agreements, Pinnacle had the discretion to negotiate the amount and terms of payment, subject to approval of the medical provider if the negotiated amount fell below specified percentages. It was not disputed that any insurance payments were to be made by checks payable directly to the medical provider, under its tax identification number.

When the workers' compensation insurers became insolvent, CIGA was obliged to assume their obligations. “CIGA was created by legislation in 1969 ( [Ins.Code,] § 1063 et seq.) to establish a fund from which insureds could obtain financial and legal assistance in the event their insurers become insolvent, i.e. ‘to provide insurance against “loss arising from the failure of an insolvent insurer to discharge its obligations under its insurance policies.” (Ins.Code, § 119.5.)’ ” ( Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 784, 244 Cal.Rptr. 655, 750 P.2d 297.)

CIGA took the position that the claims of the medical providers submitted by Pinnacle were specifically excluded from coverage by section 1063.1, subdivision (c)(9), which provides that covered claims do not include “(B) a claim by a person other than the original claimant under the insurance policy in his or her own name ... and does not include a claim asserted by an assignee or one claiming by right of subrogation, ...”

CIGA and real parties in interest submitted the question of whether the claims were barred to the workers' compensation administrative law judge (WCJ), who concluded that they were not barred. CIGA sought reconsideration, again contending that a claim asserted by an assignee is not a covered claim. The WCJ recommended denial of the petition for reconsideration, noting that Pinnacle only represented the medical providers and transmitted the amounts collected to them, while retaining a percentage of the collected sums as payment for its services.

The WCAB agreed and denied reconsideration. The WCAB opined that CIGA had failed to prove that legal title to the medical providers' claims had been transferred to Pinnacle, and therefore there was no assignment but only a delegation of the task of collection to Pinnacle. CIGA has sought review of this determination.

DISCUSSION

I. No Assignment of Claims

“ ‘[I]t is a fundamental principle of law that one of the chief incidents of ownership in property is the right to transfer it.’ [Citation.]” ( Essex Ins. Co. v. Five Star Dye House, Inc. (2006) 38 Cal.4th 1252, 1259, 45 Cal.Rptr.3d 362, 137 P.3d 192.) “This ‘chief incident of ownership’ applies equally to tangible and intangible forms of property, including causes of action. Originally codified in 1872, [Civil Code] section 954 states: ‘A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner.’ An assignment is a commonly used method of transferring a cause of action.” ( Id. at p. 1259, 45 Cal.Rptr.3d 362, 137 P.3d 192.) “ ‘To “assign” ordinarily means to transfer title or ownership of property....’ ” ( Recorded Picture Company Productions Ltd. v. Nelson Entertainment, Inc. (1997) 53 Cal.App.4th 350, 368, 61 Cal.Rptr.2d 742.)

An assignment may be complete or partial. “An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.” ( National R. Co. v. Metropolitan T. Co. (1941) 17 Cal.2d 827, 832–833, 112 P.2d 598.) A complete assignment passes legal title to the assignee who is the real party in interest and may sue in his or her real name. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 732, p. 816.) “A partial assignment of a claim is unenforceable without the debtor's consent, and the assignee ordinarily has no legal standing to sue.” (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 733, p. 817.)

“An assignment for collection vests legal title in the assignee which is sufficient to enable him to maintain an action in his own name, but the assignor retains the equitable interest in the thing assigned.” ( Harrison v. Adams (1942) 20 Cal.2d 646, 650, 128 P.2d 9.) “Such an assignee has been referred to as the trustee or agent of the assignor ..., and a fiduciary relationship exists between them.” ( Ibid.) CIGA does not contend that Pinnacle was granted an unqualified assignment by which it obtained all rights and remedies, but rather a partial assignment with legal title to pursue the medical providers' lien claims.

In determining whether an assignment has been made, “the intention of the parties as manifested in the instrument is controlling.” ( National R. Co. v. Metropolitan T. Co., supra, 17 Cal.2d at p. 832, 112 P.2d 598.) “ ‘[A]n assignment, to be effective, must include manifestation to another person by the owner of his intention to transfer the right, without further action, to such other person or to a third person....’ ” ( Recorded Picture Company Productions Ltd. v. Nelson Entertainment, Inc., supra, 53 Cal.App.4th at p. 368, 61 Cal.Rptr.2d 742.) “The language of a contract governs its interpretation, if the language is clear. (Civ.Code, § 1638.) ‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ ( Id., § 1636; see 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 684, p. 617.)” ( County of San Joaquin v. Workers' Comp. Appeals Bd. (2004) 117 Cal.App.4th 1180, 1184, 12 Cal.Rptr.3d 406.) The entire contract must be considered, not just isolated parts, and the words of the contract are to be given their usual and customary meaning. (Civ.Code, §§ 1641, 1644; Sass v. Hank (1951) 108 Cal.App.2d 207, 215, 238 P.2d 652.)

Established rules of contract interpretation apply in workers' compensation proceedings. Here, the agreements provided that each medical provider “is the sole owner of accounts receivable for which CLIENT desires PINNACLE to provide collection services.” (Italics added.) The agreements also provided that after being in effect for six months, either party could terminate the agreement upon 30 days' notice. Two of the agreements provided that upon termination, the medical provider had the option of taking back previously assigned accounts for a fee, and the other agreement gave the client the right to demand “the reassignment” of specific individual accounts even without terminating the agreement. The agreements described Pinnacle's duties as “exclusive collection services for accounts assigned by CLIENT to PINNACLE.” While Pinnacle was given “full discretion to negotiate the amount and terms of payment of CLIENT's accounts,” it had to obtain approval from the medical providers to settle accounts for less than specified percentages of the original statement amount. Finally, the medical providers were to remain the custodians of all original records.

CIGA relies on the words “assign” and “reassign” in the agreements to support its position that Pinnacle became the assignee with legal title to the medical providers' claims. But use of the word “assign” is not conclusive. (9 Corbin on Contracts (2007 Rev. Ed.) § 47.4, p. 139.) CIGA's interpretation of the agreements does not take into account the full context of the agreements. Reading each agreement in...