CIGA Allowed to Establish
MPN
The
California Insurance Guarantee Association is
filing an application to establish its own
Medical Provider Network. The decision has the
potential to provide significant savings for
employers whose claims are now being handled
by CIGA.
CIGA takes the action after the California
Workers’ Compensation Appeals Board ordered
Administrative Director Andrea Hoch of the
California Division of Workers’ Compensation
to allow CIGA to participate.
“This benefits all those employers who,
through no fault of their own, are the victims
of an insolvent insurer,” says Richard
Guilford, outside counsel for CIGA.
Earlier this year, Hoch denied CIGA’s
application to establish an MPN on the grounds
that CIGA is not an insurer within the meaning
of Labor Code section 4616. But CIGA
disagreed, saying it falls within the
provisions of the Labor Code because it
“shall have the same rights as the insolvent
insurer would have had if not in
liquidation.”
In February, Guilford argued during a public
hearing on the MPNs that if CIGA were not
allowed to participate, a huge number of
claims would fall outside the coverage of the
MPNs, thus eliminating any cost savings. CIGA
handles over 50,000 claims that are still open
from the rash of insolvencies in the 1990s and
paid out over $400 million in medical benefits
in 2004.
CIGA challenged Hoch’s decision before the
WCAB, which ruled that CIGA is an insurer.
CIGA assumes “the obligations of an
insolvent insurer, in the case of a policy of
workers’ compensation insurance, to provide
workers’ compensation benefits under the
workers’ compensation law of the state,”
the board said, adding that CIGA “shall have
the same rights as the insolvent insurer…”
The Division of Workers’ Compensation has
accepted the WCAB’s decision and expects
CIGA’s MPN application sometime this week.
(Article
taken from Worker's Comp Executive)
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