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General Reinsurance issued an excess insurance policy to San Francisco Bay Area Rapid Transit District (“BART”), which is a self-insured employer for workers’ compensation. This dispute arises out of a multiple myeloma workers’ compensation claim of a former BART employee, Michael Gonsolin who worked as a BART police officer. BART settled the case with Gonsolin at the WCAB which entered a Partial Order Approving Compromise and Release with Open Medical Award. One week after the settlement was approved BART sent a Notice of Claim to General Reinsurance, its excess carrier asking them to foot part of the bill.

BART contended that General Reinsurance was obligated to pay the claim because, as stipulated by the parties and approved by the WCAB, Gonsolin’s injury occurred during the policy period, and BART has reached its retention limit triggering General Reinsurance’s coverage. General Reinsurance contends that it has no obligation to pay because Gonsolin’s injury in fact occurred after its policy had ended.

In Phase One of the federal court trial, the Court had to decide whether the parties can litigate the date of injury; that is, whether for purposes of the application of the excess policy, General Reinsurance is bound by the decision of the WCAB. In the case of BART v General Reinsurance (Case No. 14-cv-01866-J) the Court held that it indeed had jurisdiction to adjudicate the correct date of injury, and that General Insurance was not bound by any determination at the WCAB.

Issue preclusion may operate as a bar to litigation of an issue that was decided in an earlier administrative proceeding “if the agency, acting in a judicial capacity, resolved disputed issues of fact properly before it, in a proceeding in which the parties had an adequate opportunity to litigate the factual issues.” Issue preclusion does not apply here because General Reinsurance was not in privity with BART in the workers’ compensation proceedings.”Plainly, General Reinsurance was not a party to the earlier proceedings.”

Phase Two of this case is set for bench trial on 2/1/2016 08:30 AM before Magistrate Judge Jacqueline Scott Corley. Clearly this case points to the need for an employer to have a strategy that would involve and bind the excess carrier to the outcome of the underlying WCAB case in order to avoid the double bind that seems to be developing in this case.