California First District Court of Appeals affirms ruling in insurance case

By Angela Underwood | Jul 26, 2017

SAN FRANCISCO -- The California First District Court of Appeals has affirmed a trial court's summary judgment, but reversed the fee award in an excess insurance liability case. 

The plaintiff, the  Marin Schools Insurance Authority (MSIA) may have been granted summary judgment to defendant schools excess liability fund (SELF), but the court of appeals has reversed the fee award regarding a workers’ compensation claim in a July 11 ruling.

The lawsuit and appeal, which date to a 1990 workers’ compensation claim for Joseph Digiacinto, come from SELF’s rejection to provide MSIA with excess coverage for an injury that took place in 1990, when SELF’s coverage for the claim was governed by 1989 memorandum of protection.

“At the time, a third party administrator—ESIS, Inc. (ESIS)—handled MSIA’s workers’ compensation claims,” according to the appeals court decision. 

Though ESIS authorized treatment in 2001 and 2004 on the claim, MSIA did not inform SELF until 2006 of the claim. By 2007, SELF rejected the claim again on the grounds “the notice was late and the late notice caused prejudice to SELF because MSIA had been exposed to liability apparently unrelated to the workplace injury,” according to the appeals court decision.

MSIA said SELF also severed contracts regarding several workers compensation cases including the claim. “MSIA’s contention that ESIS mishandled the claim was tried before a jury, which found for MSIA and against ESIS,” the appeals court decision ruled. “However, the court subsequently granted ESIS’s motion for judgment notwithstanding the verdict, finding ‘the jury verdict showed an implied finding that the claim would likely not have been compensable had it been properly handled.’”

MSIA filed the existing lawsuit against SELF in 2012, challenging its rejection for the claim, to which the trial court eventually approved SELF’s motion for summary judgment and awarded attorney fees. 

“The portion of the judgment awarding attorney fees and costs to SELF is reversed. In all other respects, the judgment is affirmed,” said the appeals court decision.

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