State Farm Gen. Ins. Co. v. Workers' Comp. Appeals Bd.

• Decision Date: 13 August 2013
• Docket Number: 2d Civil No. B240742
• Citation: 218 Cal.App.4th 258,159 Cal.Rptr.3d 779
• Court: California Court of Appeals Court of Appeals
• Parties: STATE FARM GENERAL INSURANCE COMPANY, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD, California Insurance Guarantee Association et al., Respondents.

218 Cal.App.4th 258

159 Cal.Rptr.3d 779

STATE FARM GENERAL INSURANCE COMPANY, Petitioner,

v.WORKERS' COMPENSATION APPEALS BOARD, California Insurance Guarantee Association et al., Respondents.

2d Civil No. B240742

Court of Appeal, Second District, Division 6, California.

Filed July 1, 2013

As Modified Aug. 13, 2013

Proceeding to review a decision of the Workers' Compensation Appeals Board. Annulled and remanded with directions. (W.C.A.B. Nos. ADJ4684775, ADJ4381820, ADJ7684775)

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.

PERREN, J.

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, 82 Cal.Rptr.3d 664.) 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, 97 Cal.Rptr.2d 418 ( Marani an ); see also Safeway Stores, Inc. v. Workers' Comp. Appeals Bd. (1980) 104 Cal.App.3d 528, 532–535, 163 Cal.Rptr. 750.)

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.

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 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, § 1063.1, subd. (c)(9).) ¹ 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.

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 insurance is available. CIGA argued that our decisions in Weitzman and Hooten entitle it “to shift the entire amount of joint and several liability onto the still-solvent carrier.” ²

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...