ADJ9485144 · May 19, 2021

CIGA was never dismissed as a party defendant and has standing to seek reimbursement; Zenith conceded CIGA's right to sue for reimbursement and did not object to standing at hearing.

From the decision · page 3DISCUSSION At the outset, we observe that Zenith concedes, "CIGA may sue to obtain reimbursement for amounts it has paid for non-covered claims," citing Insurance Code section 1063.2 and Majestic Ins. Co. v. Workers' Compensation Appeals Bd. (2005) 70 Cal.Comp.Cases 1519 (writ den.). (See Petition for Reconsideration, p. 3:1-4.) However, the instant case involves exactly the circumstance that CIGA, by filing a petition for reimbursement, sued Zenith to obtain reimbursement for amounts CIGA paid to defend a non-covered claim. Since Zenith concedes that CIGA has the right to do so, it appears that Zenith is effectively waiving the point. (Lab. Code, § 5904.) For this reason, and for the additional reasons set forth below, we reject Zenith's contention that CIGA does not have "standing" to pursue reimbursement. Zenith also concedes that CIGA is a party in interest under WCAB Rule 10364,1 but Zenith claims that CIGA failed to "perfect" its interest by filing a lien. (Petition for Reconsideration, 4:25-27.) However, Zenith cites no legal authority that CIGA was obligated to file a lien in order to "perfect" its interest or to "perfect" its standing in this case. Further, in making this argument Zenith relies upon the factually incorrect premise that CIGA was dismissed as a party defendant in this matter.

The WCJ correctly applied equitable principles allowing reimbursement to CIGA by Zenith; Zenith benefited from CIGA's discovery and payments and should not be unjustly enriched.

From the decision · page 4Even so, Zenith contends that CIGA's reimbursement "should be limited to the costs for applicant's medical-legal liens alone." Again we disagree, noting that Zenith offers no legal authority in support of this contention. Concerning the amount of reimbursement, the WCJ correctly relied upon precedent issued by the WCAB's predecessor, the Industrial Accident Commission. In Beal v. Belcher (1940) 5 Cal.Comp.Cases 275, the digest of the Commission's opinion states that the Commission held, "the insurance company which had mistakenly paid compensation benefits for several months was entitled not only to deny coverage, but also to a lien for the expenditures thus made by it against any benefits thereafter due from the proper carrier." Although CIGA did not file a lien in the instant case, we explained above that it does not matter because CIGA has always remained a party defendant. Otherwise, there is no reason to disregard the principle for which Beal, supra, stands, i.e., a defendant who mistakenly incurs expenses adjusting a claim may later deny coverage and seek reimbursement from the proper carrier. Such is CIGA's position in the instant case.

CIGA was never dismissed as a party defendant and remained a party in the case throughout the proceedings.

Favours Applicant prevailed

This fact established CIGA's standing to seek reimbursement from Zenith.

From the decision · page 2CIGA was never dismissed as a party defendant. The matter settled by way of Compromise and Release as between applicant and Zenith on August 2, 2018. Counsel for CIGA was served by Zenith with the Declaration of Readiness to Proceed with the hearing scheduled for August 2, 2018 and attended the hearing.

Zenith requested and utilized discovery and medical-legal reports obtained by CIGA but did not obtain its own medical reports or depose the applicant.

Favours Applicant prevailed

This fact supported the application of the equitable doctrine of unjust enrichment to require Zenith to reimburse CIGA.

From the decision · page 8The Court is well aware that there is no joint and several liability as between CIGA and Zenith. Zenith however absolutely benefited from the discovery and medical legal obtained by CIGA. In fact, Zenith requested this discovery and CIGA provided it.

Insurance Code section 1063.2

CIGA may sue to obtain reimbursement for amounts it has paid for non-covered claims.

Applied to reject Zenith's standing argument and affirm CIGA's right to reimbursement.

From the decision · page 3DISCUSSION At the outset, we observe that Zenith concedes, "CIGA may sue to obtain reimbursement for amounts it has paid for non-covered claims," citing Insurance Code section 1063.2 and Majestic Ins. Co. v. Workers' Compensation Appeals Bd. (2005) 70 Cal.Comp.Cases 1519 (writ den.). (See Petition for Reconsideration, p. 3:1-4.) However, the instant case involves exactly the circumstance that CIGA, by filing a petition for reimbursement, sued Zenith to obtain reimbursement for amounts CIGA paid to defend a non-covered claim. Since Zenith concedes that CIGA has the right to do so, it appears that Zenith is effectively waiving the point. (Lab. Code, § 5904.) For this reason, and for the additional reasons set forth below, we reject Zenith's contention that CIGA does not have "standing" to pursue reimbursement. Zenith also concedes that CIGA is a party in interest under WCAB Rule 10364,1 but Zenith claims that CIGA failed to "perfect" its interest by filing a lien. (Petition for Reconsideration, 4:25-27.) However, Zenith cites no legal authority that CIGA was obligated to file a lien in order to "perfect" its interest or to "perfect" its standing in this case. Further, in making this argument Zenith relies upon the factually incorrect premise that CIGA was dismissed as a party defendant in this matter.

Truck Ins. Exchange v. Workers' Comp. Appeals Bd. (Kwok) (2016) 2 Cal.App.5th 394

The Appeals Board has broad equitable powers with respect to matters within its jurisdiction.

Applied to uphold equitable reimbursement to CIGA by Zenith.

From the decision · page 5Exchange v. Workers' Comp. Appeals Bd. (Kwok) (2016) 2 Cal.App.5th 394, 401 [81 Cal.Comp.Cases 685], "[t]he appeals board has broad equitable powers with respect to matters within its jurisdiction." (Citing Dyer v. Workers' Comp. Appeals Bd. (1994) 22 Cal.App.4th 1376, 1382 [59 Cal.Comp.Cases 96].)

Zenith requested and utilized discovery and medical-legal reports obtained by CIGA; Zenith did not obtain its own medical reports or depose the applicant.

From the decision · page 8The Court is well aware that there is no joint and several liability as between CIGA and Zenith. Zenith however absolutely benefited from the discovery and medical legal obtained by CIGA. In fact, Zenith requested this discovery and CIGA provided it.