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School bus driver Colleen Knowles sought workers’ compensation from her employer, Mountain Empire Unified School District.

The District is a self-insured employer under the workers’ compensation scheme, and its workers’ compensation claims are administered through the San Diego County Schools Risk Management Joint Powers Authority. The JPA purchased excess workers’ compensation insurance to cover claims exceeding a set retention. The District is an additional insured under those policies.

When a dispute over compensation arose, Knowles and the District sought adjudication before the Workers’ Compensation Appeals Board. An administrative law judge ultimately approved their stipulation that Knowles suffered a “specific” injury on May 6, 2003.

The distinction between a “cumulative” and a “specific” injury matters for determining which of JPA’s excess insurance policies was triggered. As JPA’s excess insurer during the stipulated injury date, Kemper Insurance Company indemnified the JPA until it went insolvent. The JPA then approached California Insurance Guarantee Association, a statutorily created insolvency insurer of last resort, to make up what Kemper had failed to pay.

But CIGA is only obligated to pay “covered claims,” defined to exclude claims for which other insurance is available. On this basis CIGA denied coverage, asserting Knowles suffered a cumulative injury, which meant that JPA might recover from a different excess insurer (other than Kemper).

CIGA then sued the JPA and the District for declaratory relief, asserting that because Knowles suffered a cumulative injury, JPA’s claim was not a “covered claim.” In their cross-complaint, defendants sought reimbursement from CIGA of benefit payments made to Knowles after Kemper went insolvent.

The trial court granted both of Defendants motions for summary judgment on the complaint and cross-complaint. and entered judgment in their favor, requiring CIGA to reimburse $129,836.91 plus costs. CIGA appealed that decision.

Central to the court’s ruling, and to CIGA’s appeal, is a jurisdictional question: Does the superior court have jurisdiction to find that Knowles suffered a cumulative injury even if this conflicts with the stipulation before the WCAB, or is injury characterization an issue within the WCAB’s exclusive jurisdiction? The court granted defendants’ motions because it believed the WCAB had exclusive jurisdiction to decide the nature of Knowles’s injury. The Court of Appeal agreed that it did, in the published case of CIGA v the San Diego County Schools Risk Management Joint Powers Authority.

Although this issue appears to be one of first impression in California, federal courts have rejected WCAB exclusivity in similar cases involving excess workers’ compensation insurance. (San Francisco BART Dist. v. General Reinsurance Corp. (N.D.Cal. 2015) 111 F.Supp.3d 1055, 1074 (BART I), affirmed (9th Cir. 2017) 726 F.App’x. 562 (BART II); San Diego Cty. Schs. Risk Mgmt. Joint Powers Auth. v. Liberty Ins. Corp., et al. (2018) 339 F.Supp.3d 1019, 1030 (Liberty).)

The Court of Appeal we agreed with these authorities and concluded, based on the purpose of excess insurance, that the superior court has jurisdiction to characterize Knowles’s injury in this action differently than was reflected in the WCAB stipulation.

Accordingly, it reversed the judgment and direct the trial court to enter a new order denying defendants’ motions for summary judgment.