2nd District Court of Appeal Affirms Ruling on Temp-Agencies and CIGA

October 21, 2004

In an opinion filed yesterday and certified for publication, the Second District Court of Appeal has ruled in the case of General Casualty Ins. v. WCAB (No. B167017, WCAB No. POM 0248928) that CIGA is off the hook if a temp agency's carrier goes under but the actual employer has its own WC policy. The case may have major future impact on the huge temp. agency industry in California.

The applicant was a temp employee farmed out by ReadyTemp to Jacuzzi Corp. and was injured while working at Jacuzzi. ReadyTemp's agreement was to provide Jacuzzi with the employee and also provide workers' comp. coverage. ReadyTemp's carrier was Reliance. After Reliance went belly-up, CIGA was joined.

After CIGA requested to be dismissed because other insurance was available (Jacuzzi separately had a policy with Home Assurance), the WCAB issued an en banc decision holding that both ReadyTemp and Jacuzzi were jointly and severally liable for WC benefits, despite any attempted contractual agreement to the contrary. It then ruled that Jacuzzi's separate policy with Home Assurance, even though not intended for the purpose of a special employee such as the applicant, nevertheless does offer insurance for just such workers' compensation injuries and was therefore "other available insurance" within the meaning of the Insurance Code Section 1063.1, subdivision (c)(9), and granted CIGA's dismissal.

The Court of Appeal affirmed the WCAB's dismissal of CIGA, holding that the separate policy by Jacuzzi satisfied the "other insurance" requirement, even if that was not the parties' intent. The case is potentially far-reaching because of the possible ramifications involving the very large "temporary employment" agencies which have cropped up everywhere and are intended to help ease an employer's burden for WC insurance concerns, among other things.

Because of its potential long range impact, the decision was expressly made prospective only.

To read the very long opinion in its entirety (in MS Word format), please click here.

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