RemedyTemp Gains the Upper Hand in CIGA Workers’ Comp Case

October 20, 2005

RemedyTemp Inc., which operates as Remedy Intelligent Staffing and RemX Specialty Staffing, on Thursday said the California Supreme Court has decided not to hear an appeal by the California Insurance Guarantee Association (CIGA) from a July 25, 2005, decision of the California Court of Appeal (Second District) in favor of RemedyTemp.

The Supreme Court’s ruling lets stand the Court of Appeal’s decision that CIGA should bear responsibility for the workers’ compensation claims of approximately 500 RemedyTemp employees covered by the now-defunct Reliance National Insurance Company.

Last year, RemedyTemp established a $5.9 million reserve in connection with the case in the event it did not ultimately prevail. With the positive development, the company said it is evaluating the reserve and expects to provide details with its fiscal fourth quarter and year-end results in early December.

CIGA, a statutorily created association that all workers’ comp insurers admitted to business in California are required to join and fund, covers the obligations of failed insurers.

CIGA had reportedly argued that because workers’ comp policies held by RemedyTemp’s clients on their own employees did not specifically exclude coverage for temporary employees, the issuers of those policies, and not CIGA, were obliged to cover the claims.

The Court of Appeal disagreed, holding that CIGA should not be dismissed from the claims because RemedyTemp, its clients, and their insurers all intended that Reliance, whose policies are now CIGA’s responsibility, would be the sole source of insurance for injuries to the temporary employees.

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