CIGA Not Liable To Special Employees

Under Insurance Code section 11663 the insurance company of the general employer is ordinarily liable when a special employee gets injured.  The confusion arises when the insurer of the general employer goes into liquidation and CIGA steps in.  Under Insurance Code section 1063.1 CIGA is statutorily restricted to only paying “covered claims.”  When “other insurance” exists, the claim is by definition not a “covered claim” and CIGA is absolved from liability.  There thus exists a conflict between the two Insurance Code sections.  The result has been much litigation with the injured worker often caught in the middle as both the solvent carrier and CIGA have properly asserted the other is liable.  This scenario is often referred to as a Remedy Temp or Miceli case.  This adjudication has brought a bright line rule to the situation.

In Nike, the trial judge determined that when the special employer has insurance there exists “other insurance.”  As such CIGA is no longer liable and the insurance company of the special employer becomes fully liable.  The allocation of liability ordinarily present in the general – special employment situation does not exist because CIGA is not an employer or insurer.

Lumberman’s Petitioned for Reconsideration.  It was denied.

Lumberman’s then filed a Petition for Writ of Review to the Fourth Appellate District..  The writ was denied.  However, the Court of Appeal provided comment.  In that comment the Court explained to items of importance for all special employers.  First, the Court stated unequivocally that no contract between the special and general employers could deprive the injured worker of his right to collect benefits from either employer under the doctrine of joint and several liability.  In other words it did not matter what Nike and Select Personnel intended.  Second, the Court agreed that if the insurance policy of the special employer excluded coverage for special employees CIGA would remain liable because there would not be “other insurance.”

Lumberman’s Petitioned for Review to the California Supreme Court.  The Petition was denied on April 9, 2008.