CIGA and novation (California)

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CIGA and novation (California)

Postby laesquire on Thu Oct 22, 2009 2:13 pm

SCENARIO:

1. Three carriers on a CT claim.

2. Carrier 1 does a contract novation so carrier 2 buys out their liability.

3. So now it is just carrier 2 and 3.

4. Carrier 2 goes bankrupt and CIGA takes them over.


QUESTION:

1. Is carrier 1 back in the case since carrier 2 was taken over by CIGA?
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Re: CIGA and novation (California)

Postby rosellavera on Thu Oct 22, 2009 3:26 pm

Novation requires the consent of all parties. Consideration is still required for the new contract but it is usually assumed to be the discharge of the former contract. Did the carriers have the original employer's consent?
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Re: CIGA and novation (California)

Postby laesquire on Thu Oct 22, 2009 5:03 pm

Interesting. I would have to check. I think it was just among the two carriers.
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Re: CIGA and novation (California) (California) (California)

Postby rosellavera on Thu Oct 22, 2009 6:33 pm

IMHO - The original contracting parties are the employer and insurance carrier #1. If insurance carrier is party #1 who transfers (or call it novation) its contractual rights and duties to a third party (insurance carrier #2) it remains liable unless expressly or impliedly released by the other party (ER) to the contract.
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Re: CIGA and novation (California)

Postby laesquire on Sun Nov 01, 2009 4:28 pm

Interesting. So maybe since the Employer did not sign off on it, no novation. It is more of a contract between the carriers. The enforceability money wise is a good as the solvancy of the carriers.
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Re: CIGA and novation (California)

Postby steve appell on Wed Nov 18, 2009 8:35 am

An IC is not required to get the ER's permission prior to settling liability for policy insurance. Also, CIGA has no authority to undue a prior buyout agreement between co defendants AKA Novation. Therefore, it seems to me that IC #1 remains out, CIGA subsequently gets dismissed due to joint and several status with IC #3, and IC #3 has all the liability.
Steve

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