Denny's Inc. v. Workers' Compensation Appeals Board

Denny’s Inc. (Denny’s) petitions this court by a writ of review challenging the decision of the Workers’ Compensation Appeals Board (WCAB) to dismiss the California Insurance Guarantee Association (CIGA) as a party to a workers’ compensation claim. Denny’s contends CIGA is statutorily required to guarantee a proportionate share of an insolvent insurer’s disability obligation when a permissibly self-insured employer is jointly and severally liable for the claim.

Unfortunately, one of Denny’s employees suffered a work-related cumulative injury over a one-year period that overlapped two months with the time Denny’s elected to insure itself for workers’ compensation purposes. The 10-month balance was the responsibility of a private insurance company which became insolvent. Denny’s fervently argues that it should only have to pay its 20 percent proportionate share of the disability award and CIGA should pick up the balance.

We agree with the WCAB and find the claim outside CIGA’s indemnification responsibility. Essentially, Denny’s made the business decision to opt for self-insurance over private insurance and to not purchase an excess workers’ compensation policy. To use an…