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Fireman's Fund Insurance Co. v. Workers' Compensation Appeals Board

January 29, 2010

FIREMAN'S FUND INSURANCE COMPANY, PETITIONER,
v.
WORKERS' COMPENSATION APPEALS BOARD, CALIFORNIA INSURANCE GUARANTEE ASSOCIATION ET AL., RESPONDENTS.



ORIGINAL PROCEEDINGS: Petition for Writ of Review. Annulled and remanded. (WCAB Nos. ADJ41997, ADJ1597820 & ADJ218932).

The opinion of the court was delivered by: Cantil-sakauye, J.

CERTIFIED FOR PUBLICATION

Can a stipulation, entered into in 2001, that resolved an unsettled legal issue between the two entities be set aside seven years later after the legal issue has been addressed by the appellate courts?

In 2001, the California Insurance Guarantee Association (CIGA) entered into a stipulation with Fireman's Fund Insurance Company (FFIC) in which it agreed to be liable for 50 percent of an injured employee's workers' compensation medical treatment award and to administer the medical award, subject to claims of contribution from FFIC. The stipulation was entered as an order by the Workers' Compensation Appeals Board (WCAB). In 2008, CIGA petitioned for a change of administrator and dismissal after several appellate court cases decided years after its settlement with FFIC indicated CIGA should not be responsible for the medical award. The workers' compensation judge (WCJ) granted CIGA's petition concluding the 2001 stipulation and order were illegal and contrary to public policy. The WCAB denied reconsideration. FFIC sought a writ of review. We granted review and now conclude the WCAB erred in denying reconsideration. The order and stipulation should not have been set aside.*fn1 We shall annul the WCAB's order denying reconsideration and remand the matter to the WCAB for further proceedings consistent with this opinion.

BACKGROUND

Darla Allen was injured during the course of her employment with the Dry Creek Elementary School District when the school bus she was driving hit a pothole. She filed a number of workers' compensation claims, claiming specific and cumulative injuries. In 1999, the WCJ found a specific injury in one case, an aggravating injury in a second case, and a continuing cumulative injury in a third case resulting in Allen's permanent disability and the need for further medical treatment. The WCJ found one half of the total permanent disability indemnity was due to the initial specific injury and one half was due to the cumulative injury. The WCJ awarded Allen compensation in her two specific injury cases against California Compensation Insurance Company (CCIC), the District's insurer at the time of the specific injuries. The WCJ awarded Allen compensation in the cumulative injury case against CCIC and FFIC, the latter having become the District's insurer for a portion of the liability period of the cumulative injury. FFIC and CCIC were both held liable for Allen's further medical treatment for her injuries.

CCIC subsequently became insolvent in 2000. CIGA assumed liability for CCIC's "covered claims" pursuant to Insurance Code section 1063.1.*fn2 CIGA petitioned the WCAB for an order dismissing it from Allen's cumulative injury case and sought to have FFIC designated the primarily liable carrier to pay and administer the award.

At the time of CIGA's petition, case law held CIGA was not liable for benefits to an employee for a single cumulative trauma where a joint and several award had been entered against several workers' compensation insurers, including the subsequently insolvent insurance company. (Industrial Indemnity Co. v. Workers' Comp. Appeals Bd. (1997) 60 Cal.App.4th 548, 558-559 (Industrial Indemnity (Garcia).) There was, however, no appellate decision or WCAB decision considering CIGA's liability in a successive injuries case such as this.

In 2001, CIGA and FFIC stipulated to the following: "(1) Fireman's Fund is solely liable for the cumulative trauma claim (SAC 0261608) and CIGA is soley [sic] liable for the specific injuries (SAC 0255539/40/41/42). [¶] (2) Each defendant is liable for 50% of the applicant's joint medical award. CIGA will continue to administer the medical award, subject to claims of contribution from Fireman's Fund. [¶] (3) These Stipulations resolve all issues set for trial in the Minutes of Hearing of 01/09/2001." The stipulations were entered as an order of the WCAB by the WCJ.

Thereafter, over the next several years the law on successive injuries, as it related to CIGA, was addressed in several legal decisions. In 2003, the WCAB held that "[i]n successive injury cases, an apportionment of liability must be made by the WCJ or [WCAB], setting the specific percentage of liability of all carriers, which will likewise set CIGA's liability for any now-insolvent carrier." (Gomez v. Casa Sandoval (2003) 68 Cal.Comp.Cases 753, 755 (Gomez).) The stipulations between CIGA and FFIC were generally consistent with Gomez.

However, in California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd. (2005) 128 Cal.App.4th 307 (CIGA v. WCAB (Weitzman)), a case involving three successive injuries, the Court of Appeal concluded CIGA could not be required to reimburse a solvent insurer for the portion of workers' compensation benefits for which insolvent insurers had been found responsible. (Id. at pp. 313, 320.) The appellate court specifically disagreed with the reasoning in Gomez, supra, 68 Cal.Comp.Cases 753. (CIGA v. WCAB (Weitzman), at pp. 317-320.)

Then, in California Ins. Guarantee Assn. v. Workers' Comp. Appeals Bd. (2007) 153 Cal.App.4th 524 (CIGA v. WCAB (Hernandez)), another case involving successive injuries, the court determined the solvent insurer had to reimburse CIGA for all of the temporary workers' compensation benefits CIGA paid. (Id. at pp. 528-529, 537-538.) The court stated: "Between workers' compensation insurers who are jointly and severally liable for various nonpermanent disability benefits, there is generally pro rata apportionment for the shared liability. (See generally Lab. Code, §§ 3208.2, 5303, 5500.5.) But, CIGA is not another workers' compensation insurer; it is a fund with responsibilities that are limited by statute in order to insure that the worker is protected. CIGA does not protect insurers." (CIGA v. WCAB (Hernandez), supra, at p. 537.)

Thus, in 2008, in this case CIGA petitioned the WCAB for a change of administrators and a dismissal of CIGA citing CIGA v. WCAB (Hernandez), supra, 153 Cal.App.4th 524, and a number of decisions of the WCAB authorizing a change of administrator on the petition of CIGA. CIGA took the position it was not liable for Allen's further medical treatment benefits or administration of those benefits because FFIC was jointly and severally liable for those benefits and thus, there was "other insurance" within the meaning of section 1063.1, subdivision (c)(9), i.e., the benefits were not a "covered claim" for which CIGA was responsible. (§§ 1063.1, 1063.2, subd. (a).)

CIGA's petition was granted in a joint findings and order. The WCJ concluded this case fell squarely within CIGA v. WCAB (Hernandez), supra, 153 Cal.App.4th 524, and rejected FFIC's claim that CIGA was bound by its stipulations. The WCJ stated stipulations that are "illegal or contrary to public policy" must be disregarded. Since "CIGA is a creation of statute and is bound by statute to pay only on covered claims[,]" the WCJ reasoned CIGA could "not stipulate beyond that authority, nor [could] the [Division of Workers' Compensation] enforce such a stipulation."

FFIC petitioned the WCAB for reconsideration. (Lab. Code, §§ 5900, 5903.) In his report and recommendation on the petition for reconsideration, the WCJ emphasized that CIGA is not a private insurer and is statutorily limited under section 1063.2, subdivision (a), to paying only covered claims, which the medical treatment benefit in this case was not. The WCJ rejected FFIC's argument that CIGA was not entitled to be relieved from the stipulations and that the order entered on those stipulations must be given res judicata effect. The WCJ repeated the stipulations were illegal and contrary to public policy and that rejection of the stipulations resulted in a correct application of the law. The WCAB adopted the reasoning of the WCJ's report and denied reconsideration.

DISCUSSION

FFIC contends the 2001 stipulations should not have been set aside as they were voluntarily entered, public policy supports enforcement of the stipulations, CIGA failed to show good cause to set them aside, it was not illegal for CIGA to enter the stipulations, the order entered on the stipulations was entitled to res judicata effect, and there was no "change in law" that permitted CIGA to avoid its responsibility to pay pursuant to the stipulations.

Relying on the present state of the law regarding its liability for an award of medical treatment benefits when there is a solvent insurer who is jointly and severally liable for such benefits, CIGA contends its 2001 stipulations were a nullity and void, as well as unenforceable for lack of consideration. CIGA claims the order entered on the stipulations was likewise void and unenforceable.

Labor Code section 5803 (section 5803) provides the WCAB with "continuing jurisdiction over all its orders, decisions, and awards" and authorizes the WCAB to "rescind, alter, or amend any order, decision, or award, good cause appearing therefor." Labor Code section 5804 (section 5804), however, provides "[n]o award of compensation shall be rescinded, altered, or amended after five years from the date of injury except upon a petition by a party in interest filed within such five years . . ...


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