Black Compean & Hall L.L.P.

Attorneys at Law

BCH Succeeds: No Exceptions To Claim Filing Deadline for CIGA

Posted on 08/30/2010


The Firm represented the California Insurance Guarantee Association (CIGA) which is required to pay certain claims when a California admitted insurance company becomes insolvent.  On August 30, 2010, Frederick G. Hall of Black, Compean, Hall & Eli L.L.P., now Black, Compean & Hall L.L.P., prevailed on appeal in HCM Healthcare, Inc. v. California Ins. Guarantee Assn. (2010) 187 Cal. App. 4th 1317.  The Second Appellate District, Division Eight, held CIGA was correct in denying two claims as untimely where the plaintiffs / insureds failed to present claims to the state liquidator for the insolvent insurer or CIGA “on or before the last date fixed for the filing of claims in the domiciliary liquidating proceedings,” pursuant to Insurance Code section 1063.1(c)(1)(C).

Mr. Hall successfully argued that CIGA’s denial was correct even though the plaintiffs / insureds did not know of one of the claims prior to the deadline, and notwithstanding that the claims may be accepted and “deemed” timely by the domiciliary liquidator under that state’s liquidation laws. 

The plaintiffs were insured under a policy issued by the now insolvent Legion Insurance Company, which was domiciled in Pennsylvania.  Two lawsuits were filed against them, one suit was not filed until after the June 30, 2005 “last date fixed” for the filing of claims in the Pennsylvania liquidation proceeding.  The plaintiffs filed their respective proofs of claim with the Pennsylvanialiquidator after June 30, 2005, and tendered their defense in each suit to CIGA.  CIGA denied both claims because the claims were not presented prior to the “last date fixed.”  Plaintiffs contended that the proofs of claim were not late since Pennsylvania law provided that claims filed after the “last date fixed” may be accepted by the liquidator where there is good cause, and the CIGA statute should be interpreted to incorporate Pennsylvania’s late filing procedures since the California Legislature deferred to “the domiciliary liquidating proceeding” with regard to the last date for filing of claims.  Plaintiffs also argued they could not have complied with the claim filing deadline as to the claim that was not even known prior to the “last date fixed.”  The Court of Appeal agreed with CIGA finding Insurance Code section 1063.1(c)(1) is unambiguous.  The Appellate Court also held that the exceptions for filing late claims under Pennsylvania'sliquidation statutes did not trump California’s requirement that the claim be presented on or before the “last date fixed.”  The Appellate Court agreed with our arguments that CIGA may enforce a different deadline for claims than an out of state liquidating authority might apply after exercising its discretion in deciding whether or not to accept a late filed claim.  The Appellate Court noted that plaintiffs’ observation that Pennsylvanialaw was more lenient merely emphasized that California is more strict, a strictness that we argued and the Appellate Court agreed it must enforce. 

 

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