Manuel Manzano vs. Flavurence Corporation; Fremont Compensation Insurance -and - Sarojini Singh vs. American Shower Door; Republic Indemnity Company
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1 WORKERS' COMPENSATION APPEALS BOARD 2 STATE OF CALIFORNIA 3 4 Case No. LAO 778749 MANUEL MANZANO, 5 Applicant, 6 vs. 7 8 OPINION AND DECISION AFTER RECONSIDERATION FLAVURENCE CORPORATION; FREMONT COMPENSATION INSURANCE, 9 Defendants. 10 11 12 Case No. AHM 075204 SAROJINI SINGH, Applicant, 13 vs. 14 15 16 OPINION AND DECISION AFTER RECONSIDERATION AMERICAN SHOWER DOOR; REPUBLIC INDEMNITY COMPANY, Defendants. 17 18 These two cases are combined into a single Decision After Reconsideration because each 19 case raises the same issue of law, namely, whether the workers' compensation administrative law 20 judge (WCJ) correctly dismissed the California Insurance Guarantee Association (CIGA) as a party 21 defendant before a determination of underlying issues related to CIGA's liability. We will rescind 22 the orders dismissing CIGA in both cases and return the matters to the trial level for further 23 proceedings and decision. 24 We hold that generally CIGA should not be dismissed from a case until a determination is 25 made on the issue of the date of injury, or period of injurious exposure, or other underlying issue 26 which if adversely decided against CIGA would result in its liability. 27 1 On February 19, 2002 and on February 22, 2002, we granted reconsideration in AHM 2 075204 and LAO 778749, respectively, in order to allow sufficient opportunity to further study the 3 factual and legal issues in each case. Having completed our deliberations, we issue our decision 4 after reconsideration in both cases jointly. 5 In AHM 075204 (SINGH), defendant Republic Indemnity Company (Republic) challenges 6 the WCJ's Order Dismissing Party Defendant served December 3, 2001, in which the WCJ ordered 7 CIGA/Kemper Insurance Company dismissed as a party defendant. Republic contends that the 8 dismissal was in error because the WCJ failed to receive its objection to the Notice of Intention to 9 dismiss CIGA and further that before any party may be dismissed, the date of injury must first be 10 determined. Republic asserts that CIGA is a necessary party in this matter until there has been a 11 determination as to the actual date of injury. 12 In LAO 778749 (MANZANO), defendant Fremont Compensation Insurance Company 13 (Fremont) challenges the correctness of the December 3, 2001 Order of Dismissal of CIGA, 14 wherein the WCJ ordered CIGA for Superior National Insurance Company (Superior), in 15 16 17 18 19 20 21 22 23 24 25 26 27 liquidation, dismissed. Fremont contends that after it was joined as party defendant, it was denied due process by dismissal of CIGA because it did not have an opportunity to investigate potential liability within ninety days as provided by Labor Code section 5402(b). Fremont further argues that CIGA had not proven special employment under the provisions of Insurance Code section 11663 and that the doctrine of laches applied because CIGA waited over one year to file a petition for joinder of Fremont after CIGA assumed the claims of Superior, in liquidation. I. BACKGROUND 1. WCAB Case No. AHM 075204 (SINGH). By initial Application for Adjudication dated July 1, 1999, identified as WCAB Case No. AHM 075204, applicant Sarojini Singh alleged cumulative injury during the period from June 1998 through February 7, 1999 bilaterally to his hands, arms, shoulders, wrists, bilaterally to his lower extremities and back, while employed by American Shower Door, whose insurance carrier was unknown. An amended claim was filed by applicant on December 26, 2000, identifying an MANZANO, Manuel/SINGH, Sarojini 2 1 earlier commencement date for cumulative injury from February 7, 1998 to February 7, 1999, with 2 the same body parts shown as injured while employed by American Shower Door, and named 3 California Compensation Insurance Company as the insurance carrier. 4 According to the Workers' Compensation Insurance Rating Bureau print-out, Republic was 5 on the risk from March 1, 1997 through March 1, 1998, with California Compensation Insurance 6 Company on the risk from March 1, 1998 through March 1, 1999. California Compensation 7 Insurance Company became insolvent in September 2000, with CIGA assuming administration of 8 claims, adjusted by Kemper Employers Insurance Company, for the insolvent carrier. On October 17, 2001, the WCJ issued an Order joining Republic as party defendant in 9 10 response to CIGA's petition for joinder filed on September 27, 2001. 11 Prior to the framing of issues or any trial in this matter, CIGA filed on October 22, 2001 a 12 petition to be dismissed on the basis that there was "other insurance" within the meaning of the 13 Insurance Code section 1063.1(c)(9)1 during the period of the amended claim from February 7, 14 1998 through February 7, 1999. The WCJ issued a Notice of Intention (NIT) to dismiss CIGA. An 15 16 17 18 19 20 21 22 23 24 25 26 27 order dismissing CIGA issued on December 3, 2001. However, Republic had filed on November 29, 2001 an objection to the NIT which was not brought to the WCJ's attention prior to the issuance of the dismissal order. In the objection, Republic referred to the initial Application for Adjudication for a period that was outside of its coverage and raised a statute of limitation defense 1 Insurance Code section 1063.1 provides, in pertinent part, "As used in this article: ". . . (c) (1) 'Covered Claims' means the obligation of an insolvent insurer, including the obligation for unearned premiums, (i) imposed by law and within the coverage of an insurance policy of the insolvent insurer; (ii) which were unpaid by the insolvent insurer; (iii) which are presented as a claim to the liquidator in this state or to the association on or before the last date fixed for the filing of claims in the domiciliary liquidating proceedings; (iv) which were incurred prior to the date of coverage under the policy terminated and prior to, on, or within 30 days after the date the liquidator was appointed; (v) for which the assets of the insolvent insurer are insufficient to discharge in full; (vi) in the case of a policy of workers' compensation insurance, to provide workers' compensation amendments thereto, not inconsistent with the provisions of this article necessary to assure the fair, reasonable, and equitable manner of administering the association, and to provide for such other matters as are necessary or advisable to implement the provisions of this article. . . . "(9) 'covered claims' does not include (i) any claim to the extent it is covered by any other insurance of a class covered by this article available to the claimant or insured." MANZANO, Manuel/SINGH, Sarojini 3 1 to applicant's amended Application for Adjudication filed on December 26, 2000. Republic also 2 indicated that it had not received all medical records. The dismissal Order triggered Republic's instant petition to vacate the order, or in the 3 4 alternative petition for reconsideration of the WCJ's Order dismissing CIGA. 5 In her Report and Recommendation on Republic's petition pursuant to WCAB Rule 10860, 6 the WCJ recommended that Republic's petition be denied since dismissal was justified based upon 7 Insurance Code section 1063.1(c)(9). The WCJ acknowledges that Republic's timely objection to 8 her NIT did not come to her attention before the Order issued. 9 2. WCAB Case No. LAO 778749 (MANZANO). 10 By Application for Adjudication filed on April 24, 2000 in LAO 778749, applicant Manuel 11 Manzano alleged that he sustained on July 21, 1998, industrial injury to his neck, left shoulder and 12 head (hearing), while employed by Parker Personnel, Inc., insured by Superior National Insurance 13 Company. In September 2000, Superior went into liquidation and CIGA assumed administration of 14 15 16 17 18 19 20 21 Superior's claims. On November 9, 2001, CIGA filed a petition to join Flavurence Corporation as the employer at the time of injury and its insurance carrier Fremont. CIGA also requested to be dismissed as a party defendant based on Insurance Code section 1063.1(c)(9). We note in this petition for joinder that CIGA indicated that applicant alleged two specific injuries occurring on June 21, 1998 and September 11, 1998. But, only a single case number is listed (LAO 778749). In his Report and Recommendation on Fremont's Petition for Reconsideration, the WCJ without explanation also refers to these two specific injury dates. It appears that at the time of the alleged injury dates in 1998, applicant was working as a 22 23 24 25 26 27 packer. However, there is a potential general and special employment issue existing under Insurance Code section 116632 as well as the issue of Insurance Code section 1063.1(c)(9). 2 Insurance Code section 11663 provides, in pertinent part: "As between insurers of general and special employers, one which insures the liability of the general employer is liable for the entire cost of compensation payable on account of injury occurring in the course of and arising out of general and special employments unless the special employer had the employee on his or her payroll at the time of injury, in which case the insurer of the special employer is solely liable." MANZANO, Manuel/SINGH, Sarojini 4 1 Fremont alleges that at the time of the injury, Parker Personnel, Inc., as a temporary employment 2 agency, had placed applicant for a temporary assignment at Flavurence Corporation. It appears that 3 Superior, now in liquidation, was the workers' compensation insurance carrier for Parker Personnel 4 Inc. and that Fremont was the carrier for Flavurence Corporation. Fremont alleges a general and 5 special employment issue exists under Insurance Code section 11663, whereas CIGA asserts that at 6 the time of the injury that applicant was jointly employed by Parker Personnel, Inc. and Flavurence 7 Corporation, which would relieve it of any liability under Insurance Code section 1063.1(c)(9). 8 At the Mandatory Settlement Conference held on December 3, 2001 pursuant to Labor 9 Code section 5502(d), the WCJ joined Fremont as a party defendant and, over Fremont's objection, 10 dismissed as party defendant CIGA for Superior National Insurance Company in liquidation, and 11 its administrator Integrated Claims Administrators. 12 This led to the instant petition for reconsideration filed by Fremont. Fremont, on behalf of 13 the alleged special employer, alleges that Superior, and subsequently CIGA, had accepted the 14 injury (presumably injury of July 21, 1998) and was paying benefits. It is not clear if benefits 15 16 17 18 19 20 21 continue to be "administered" in light of the aforementioned dismissal. In his January 3, 2002 Report and Recommendation on the petition, the WCJ recommends that Fremont's petition be denied based upon his interpretation and application of Insurance Code section 11663 where Insurance Code section 1063.1(c)(9) applies. The WCJ interprets and applies Insurance Code section 11663 as only applying between "insurers" and not between employers. CIGA is not an insurer. The WCJ also concludes that a year in delaying the joinder of Fremont is insufficient to support laches as asserted by Fremont. II. DISCUSSION 22 23 24 25 26 27 CIGA asserts in both of the above entitled cases that it should be dismissed since there is "other insurance" and thus it has no liability pursuant to Insurance Code section 1063.1(c)(9). CIGA cites Industrial Indemnity Co. v. Workers' Compensation Appeals Board, California Insurance Guarantee Association (Garcia) (1997) 60 Cal.App.4th 548 [62 Cal.Comp.Cases 1661] in support of its position. MANZANO, Manuel/SINGH, Sarojini 5 1 It is true that under certain circumstances dismissal of CIGA is an appropriate disposition. 2 Insurance Code section 1063.1(c)(9)(i) provides that "'[c]overed claims' [do] not include any claim 3 to the extent it is covered by any other insurance of a class covered by this article [14.2] available 4 to the claimant or insured [.]" This section was applied in Garcia, supra, where the employee filed 5 a worker's compensation claim for cumulative injury from November 6, 1990 through November 6 6, 1991, during which time the employer had three successive workers' compensation carriers. 7 Before trial, one carrier became insolvent and CIGA sought dismissal from the employee Garcia's 8 case, asserting that the claim was not a "covered claim" under Insurance Code section 1063.1(c)(9) 9 because "other" workers' compensation insurance was available through the other two jointly and 10 severally liable carriers. The WCJ denied CIGA's request for dismissal and issued awards 11 proportionate to the time of coverage of the three carriers. The Board reversed and substituted a 12 joint and several award against the remaining two carriers, concluding that the employee's claim 13 was covered by other insurance because all carriers during the period of exposure were jointly and 14 severally liable for benefits and hence the employee's claim was not a "covered claim" under 15 16 17 18 19 20 section 1063.1(c)(9). The Court of Appeal affirmed, holding, in pertinent part: "Garcia had the substantive right to collect his entire benefit award from Industrial and SCIF since each was jointly and severally liable. Since Garcia's benefits claim was fully protected by solvent insurers Industrial and SCIF, both Garcia and his employer had 'other insurance' available within the meaning of Insurance Code section 1063.1, subdivision (c). Hence, the award favoring Garcia against Industrial and SCIF did not constitute a statutorily-defined 'covered claim.' (id. At subd. (c)(9).) Accordingly, the Board properly determined CIGA had no statutory liability for any portion of Garcia's award [Footnote omitted.]" (62 Cal.Comp.Cases 1661 at 1669) 21 CIGA's reliance upon Garcia, supra, is not helpful. Unlike the instant cases, in Garcia 22 there was no dispute regarding the date of injury versus the date of last injurious exposure, or other 23 threshold issue which if determined adversely against CIGA would result in liability of CIGA. In 24 Garcia there were three carriers in the period of liability under Labor Code section 5500.5 with one 25 becoming insolvent after a joint and several award; therefore CIGA was properly dismissed as a 26 party defendant since it was undisputed that there were two other carriers jointly liable during the 27 MANZANO, Manuel/SINGH, Sarojini 6 1 period also covered by the insolvent carrier. It was clearly not a "covered claim" under Insurance 2 Code section 1063.1(c)(9) as far as CIGA's liability. 3 4 In both of the cases before us, unlike the situation in Garcia, supra, there are underlying issues which if decided adversely against CIGA would establish its liability. 5 WCAB Case No. AHM 075204 (SINGH) involves alleged cumulative trauma injury claim 6 under Labor Code section 5500.5. There has been no determination of the date of injury or period 7 of injurious exposure based on submission of evidence; therefore, the date of injury under section 8 5500.5 has yet to be determined. It is well settled that for the purposes of liability under Labor 9 section 5500.5, the relevant date is either the date of injury as defined by Labor Code section 5412, 10 or the year immediately preceding the date of last injurious exposure, whichever occurs first. (See, 11 Western Growers Insurance Co. v. Workers' Comp. Appeals Bd. (Austin) (1993) 16 Cal.App.4th 12 227 [58 Cal.Comp.Cases 323, 331]; Aetna Cas. & Surety Co. v. Workmen's Comp. Appeals Bd. 13 (Coltharp) (1973) 35 Cal. App.3d 329 [38 Cal. Comp. Cases 720].) 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Applicant SINGH initially alleged cumulative trauma injury during a period that the now insolvent carrier was the only carrier on the risk, but later alleged injury during a period that both Republic and the insolvent carrier were on the risk. Against the latter claim, Republic has raised a statute of limitation defense that has not been determined. It has not been determined on evidence whether the date of injury is outside of Republic's coverage and only within the insolvent carrier's coverage or whether the statute of limitation defense will prevail. These are threshold issues which if decided adversely to CIGA, would establish CIGA's liability. Accordingly, it is premature to dismiss CIGA under these circumstances. We recognize that in a situation where the parties stipulate to the elements of date of injury for purposes of Labor Code section 5412, thereby identifying the potential entities that may be liable in the event that injury is found, then CIGA may be dismissed. However, this would likely be the exception, rather than the rule, an issue not presently before us. Therefore, the WCJ's order dismissing CIGA in WCAB Case No. AHM 075204 (SINGH) will be rescinded and the matter returned to the trial level. MANZANO, Manuel/SINGH, Sarojini 7 1 Likewise, in WCAB Case No. LAO 778749 (MANZANO) there are issues which if 2 decided adversely to CIGA, would result in CIGA's liability, unlike the situation in Garcia, supra. 3 It is disputed whether a general/special employment relationship exists under Insurance Code 4 section 11663, whether section 11663 is applicable to CIGA, or whether at the time of the alleged 5 injury applicant was jointly employed by Parker Personnel, Inc. and Flavurence Corporation for 6 purposes of the application of Insurance Code section 1063.1(c)(9). These underlying disputes need 7 to be determined on evidence before entertaining a motion to dismiss CIGA as a party defendant. 8 In addition, and as noted above, CIGA was previously paying benefits on this accepted injury and 9 should continue to pay, subject to a determination of party liability, and CIGA may seek 10 reimbursement depending on the ultimate disposition in this case. 11 In passing we note that with respect to CIGA's potential liability pertaining to the issue of 12 general/special employment and Insurance Code section 1063.1, parties may wish to delay 13 litigation pending a disposition by WCJ Robert T. Hjelle of the Van Nuys District Office relating 14 to Remedy Temp, Inc. and CIGA. We are informed that the narrow issue presented is CIGA's 15 16 17 18 19 20 21 22 23 24 25 26 27 liability where a general/special employment relationship exists. We note that some two hundred cases have been consolidated and that it appears that two have been selected as representative cases for trial and decision. These matters are presently in the discovery stage with an MSC set for August 9, 2002, 10:00 a.m., and a trial date of September 13, 2002, 10:00 a.m. Finally, we observe that generally there should be a hearing and determination of the injured workers' entitlement to benefits and liability for same, before allowing potential defendants to be dismissed. This approach will avoid the necessity for joining and/or rejoining parties depending on the facts that develop in the record. For reasons given above, we conclude that the orders dismissing CIGA in WCAB Case No. AHM 075204 (SINGH) and in WCAB Case No. LAO 778749 (MANZANO) should be rescinded and the matters returned to the trial level for further proceedings and decision consistent with the opinions express herein. For the foregoing reasons, MANZANO, Manuel/SINGH, Sarojini 8 1 IT IS ORDERED that as the Decision After Reconsideration of the Workers’ 2 Compensation Appeals Board in WCAB Case No. AHM 075204 (SINGH, Sarojini), the Order 3 Dismissing Party Defendant CIGA of December 3, 2001 be, and hereby is, RESCINDED, and this 4 matter is RETURNED to the trial level for further proceedings and decision consistent with the 5 opinions expressed herein. 6 IT IS FURTHER ORDERED that as the Decision After Reconsideration of the Workers' 7 Compensation Appeals Board in WCAB Case No. LAO 778749 (MANZANO, Manuel), the Order 8 of Dismissal of CIGA served December 3, 2001 be, and hereby is, RESCINDED, and this matter 9 is RETURNED to the trial level for further proceedings and decision consistent with the opinions 10 expressed herein. WORKERS' COMPENSATION APPEALS BOARD 11 12 _____________________________________________ 13 14 I CONCUR, 15 16 17 __________________________________ 18 19 20 __________________________________ 21 22 DATED AND FILED IN SAN FRANCISCO, CALIFORNIA 23 24 25 7/10/02 SERVICE BY MAIL ON SAID DATE TO ALL PARTIES LISTED ON THE OFFICIAL ADDRESS RECORD, EXCEPT LIEN CLAIMANTS. 26 27 ed MANZANO, Manuel/SINGH, Sarojini 9
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