California Insurance Guarantee Association v. Workers' Compensation Appeals Board, 2d Civil No. B172056 (CA 4/7/2005)

• Decision Date: 07 April 2005
• Docket Number: 2d Civil No. B172056
• Parties: CALIFORNIA INSURANCE GUARANTEE ASSOCIATION, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD, Respondent; AMERICAN MOTORISTS INSURANCE COMPANY, Real Party in Interest.
• Court: California Supreme Court

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CALIFORNIA INSURANCE GUARANTEE ASSOCIATION, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD, Respondent AMERICAN MOTORISTS INSURANCE COMPANY, Real Party in Interest.

2d Civil No. B172056

Court of Appeals of California, Second District, Division Six

Filed April 7, 2005

Proceeding to review a decision of the Workers' Compensation Appeals Board, Nos. GRO 19283; GRO 26020; GRO 26021, We annul and remand.

Guilford Steiner Sarvas & Carbonara, Richard E. Guilford; Stockwell, Harris, Widom & Woolverton, Jeffrey T. Landres for Petitioner California Insurance Guarantee Association.

No appearance for Respondent Workers' Compensation Appeals Board.

Gray & Prouty, Kathleen L. Wilson for Real Party in Interest American Motorists Insurance Company.

PERREN, J.

A workers' compensation insurer that pays a claim for which other insurers are partially responsible generally can seek contribution from those insurers. The issue we decide is whether the rule applies when one of the insurers becomes insolvent and the California Insurance Guarantee Association (CIGA) steps in.

CIGA seeks review of an order of the Workers' Compensation Appeals Board (WCAB), ordering it to reimburse a solvent insurer for a portion of temporary disability and medical benefits paid to an injured employee. We annul and remand.

FACTS

Timothy Weitzman sustained a specific low back injury on February 12, 1997, while employed by Capstar Hotels, insured by real party in interest American Motorists Insurance Company (AMIC). On January 30, 1998, he resolved his workers' compensation claim by entering into a stipulation with Capstar/AMIC. The stipulation provided temporary disability, 14.75 percent permanent disability and payment of medical liens.

On September 26, 2001, Weitzman filed a petition to reopen the award, alleging that his disability had increased and that he was entitled to additional benefits. At the same time, Weitzman filed two new workers' compensation claims for low back injuries. He alleged a specific injury sustained on February 10, 1998, while employed by Cal Poly Foundation, which was insured by California Compensation Insurance (Cal Comp), and a cumulative trauma injury over the period September 7, 1999, to March 30, 2001, while employed by Cal Poly Foundation, then insured by Legion Insurance.

In 2000, Cal Comp became insolvent, and, on April 25, 2003, Legion became insolvent. CIGA assumed liability for both insurers' "covered claims" pursuant to Insurance Code section 1063.1.¹ On July 1, 2003, AMIC filed a request for allowance of lien against CIGA in the amount of $133, 800 for medical expenses, temporary disability and permanent disability it had paid as a result of the two later injuries.

The three cases were consolidated for hearing. On October 3, 2003, the workers' compensation judge (WCJ) issued findings and award and order granting the petition to reopen, increasing Weitzman's permanent disability rating to 55 percent and awarding future medical treatment. The WCJ also issued joint findings and award and order for the two injuries Weitzman sustained while working for Cal Poly. The WCJ awarded permanent disability of 55 percent and future medical treatment for these injuries. The WCJ also ordered that AMIC administer Weitzman's future medical benefits. The order allowed the AMIC lien, in effect giving AMIC a right of reimbursement against CIGA for past and future medical care attributable to the injuries occurring during the periods of coverage by the insolvent insurers.

In his opinion on decision, the WCJ explained that he gave identical awards for all three injuries because the "former injury, in part, contributed to his subsequent need of medical treatment and temporary disability" and "the subsequent injuries . . . contributed, in part, to applicant's need for medical treatment and temporary disability."

CIGA's petition for reconsideration was denied by the WCAB, which adopted the WCJ's report on reconsideration as its own without further comment. The WCJ's report on reconsideration states in part: "With all due respect to petitioner, the undersigned does not believe this is a case under Insurance Code Section 1063.1, that there is 'other insurance.' Applicant has sustained several industrial injuries. Each of which contributed to applicant's past need of medical care and will contribute to his future need of medical care. Petitioner has not contended that applicant is not in need of future medical care as a result of [his] injury. This is simply a case of administration of multiple awards and the allowance of care for treatment that was partially caused by defendant's injuries. It is not other insurance. Simply put, there is no other insurance for these injuries. [¶] . . . [¶] In the undersigned's opinion, petitioner is liable for that portion of the applicant's past medical care and future medical care that is appropriately allocated to its liabilities in the case." In other words, CIGA was liable to AMIC for the obligations of the defunct carriers.

CIGA petitioned this court for a writ of review on the ground that the reimbursement ordered by the WCAB is precluded by section 1063.1, subdivisions (c)(5) and (c)(9). We originally denied the petition by a two-to-one vote on July 7, 2004. The Supreme Court granted CIGA's ensuing petition for review and transferred the matter to us with directions to vacate our order and issue a writ of review.

DISCUSSION

Where, as here, the facts are undisputed, final responsibility for interpreting a statute rests with the court. (Moulton v. Workers' Comp. Appeals Bd. (2000) 84 Cal.App.4th 837, 842.) We apply the usual rules of statutory interpretation. The fundamental rule is to ascertain the intent of the Legislature in order to effectuate the purpose of the law. In doing so, we first look to the words of the statute and try to give effect to the usual, ordinary import of the language. (California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd. (2004) 117 Cal.App.4th 350, 355.) It is a settled principle in California law that when statutory language is clear and unambiguous there is no need for construction, and courts should not indulge in it. (Ibid.)

CIGA was created by the Legislature to establish a fund from which insureds could obtain financial and legal assistance if their insurers become insolvent. (Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 784.) CIGA "' was created to provide a limited form of protection for insureds and the public, not to provide a fund to protect insurance carriers.'. . . CIGA's role in guaranteeing workers' compensation claims is therefore limited: [¶] '"CIGA is not, and was not created to act as, an ordinary insurance company. . . . It is a statutory entity that depends on the Guarantee Act for its existence and for a definition of the scope of its powers, duties, and protections.". . . "CIGA issues no policies, collects no premiums, makes no profits, and assumes no contractual obligations to the insureds.". . . "CIGA's duties are not co-extensive with the duties owed by the insolvent insurer under its policy."'" (Denny's Inc. v. Workers' Comp. Appeals Bd. (2003) 104 Cal.App.4th 1433, 1438, citations omitted.)

CIGA's authority and liability are limited to paying "covered claims." (Isaacson v. California Ins. Guarantee Assn., supra, 44 Cal.3d at p. 786; California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd. (2003) 112 Cal.App.4th 358, 363-364.) Section 1063.1, subdivision (c)(1) defines "covered claims" as "the obligations of an insolvent insurer," including the obligation "to provide workers' compensation benefits under the workers' compensation law of this state." (Id., subd. (c)(1)(vi).) The statute enumerates in subdivisions (c)(2) through (c)(12) specific types of claims that are not "covered claims."

Section 1063.1, subdivisions (c)(5) and (c)(9)(ii)

CIGA argues that in section 1063.1, subdivisions (c)(5) and (c)(9)(i) and (ii), the Legislature made clear that CIGA is not responsible for reimbursing solvent insurers where, as here, the solvent insurer paid workers' compensation benefits due to injuries sustained during periods of coverage by the insolvent insurers. We agree.

Section 1063.1, subdivision (c)(5) provides: "'Covered claims' does 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, subdivision (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."

Numerous cases hold that CIGA has no liability for claims made by other insurers in contexts other than those involving workers' compensation benefits. In California Union Ins. Co. v. Central National Ins. Co. (1981) 117 Cal.App.3d 729, the court construed the provisions at issue here against insurance companies seeking recovery from CIGA for a portion of a legal malpractice judgment. In concluding that the language of the statute is clear and unambiguous, the court stated: "Appellants are insurers and the claims they seek are 'obligations to insurers.' (§ 1063.1, subd. (c)(4) [now subd. (c)(5)].) Appellants are not 'the original claimant under the insurance policy in his own name.' (§ 1063.1, subd. (c)(7) [now subd. (c)(9)].) Appellants claim an equitable right of subrogation and the statute is clear that covered claims 'shall not include any claim asserted by an assignee or one claiming by right of subrogation, except as otherwise provided in this chapter.' (§ 1063.1, subd. (c)(7) [now subd. (c)(9)].)" (Id. at p. 733.)

In E.L. White, Inc. v. City of Huntington Beach (1982) 138 Cal.App.3d 366,...