Home > Uncategorized > Laches and Res Judiciata Bar CIGA’s Claim

Laches and Res Judiciata Bar CIGA’s Claim

July 26th, 2013

Happy Friday!

CIGA, the California Insurance Guarantee Association, is sometimes regarded (at least by this humble blogger) as the Angel of Death for various insurers.  Once CIGA gets involved, it’s easy to have an insurance company with 1% of the liability for a case quickly be stuck with the entire amount.

In a recent case, State Farm General Insurance Company v. Workers’ Compensation Appeals Board, the Court of Appeal held that CIGA’s efforts to shift liability to another entity were barred by res judicata.

Here’s the skinny: Applicant sustained two injuries while working as a personal assistant to the president of a company.  The two workers’ compensation insurers involved brought in the homeowners insurance of the president, arguing that some of the work was performed at the president’s home, making her a domestic employee with two employers (the company and the president).

After a whole lot of arguing over whether the injured worker was an assistant employed by the company or a domestic worker for the president, the parties settled the issue with State Farm agreeing to pay out 25% of all benefits in the future.

The WCJ approved the settlement agreement, and no one complained… until the two workers’ compensation insurers went belly up and CIGA came strolling in.

CIGA repeatedly tried to shift the cost of the entire case onto State Farm, arguing that State Farm constituted “other insurance” and that CIGA should be off the hook.

Ultimately, the Workers’ Compensation Appeals Board ruled that CIGA was not a party to the initial 2002 award, and that CIGA wasn’t attempting to change the award so much as seek its right of contribution from other insurers.

Well, State Farm appealed and found sympathy among the Appellate bench: the Court of Appeal, in reversing the WCAB, reasoned that the issues of State Farm’s liability in excess of 25% (as per the original agreement) was decided previously and not appealed by CIGA, so the doctrines of Res Judiciata and Laches bar CIGA’s recovery.  (“Right or wrong, the WCJ’s decision in 2008, and the WCABs 2009 and 2011 decisions are final, and CIGA may not invoke the jurisdiction of the WCAB or this court to review the lawfulness o those decisions.”)

Here’s the scary thing – the Court of Appeal did not reverse the WCAB’s determination that since CIGA was not a party to the stipulations entered into by the then-solvent insurers, it was not bound by it.  However, the original stipulations were entered-into in 2002… CIGA became a party in 2003.  Should CIGA have some limit on the amount of time it has to seek reconsideration?

Perhaps in the next case, State Farm’s counsel will caution its employer against admitting any facts in exchange for an agreed portion of liability, as those facts will remain even though the agreement can be washed away in the other insurer’s insolvency.

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