State Compensation Insurance Fund Did Not Inflate Premiums, Judge Rules
San Francisco Superior Court Judge John Munter last week ruled that the State Compensation Insurance Fund -- the workers' compensation insurer of last resort for California businesses -- did not overcharge employers, the Los Angeles Times reports. The suit, led by Los Angeles-based A&J Liquor and involving nearly 164,000 policyholders, alleged that between 1987 and 1994, the state fund inflated premiums to build artificially high reserves that could later be used to undercut competitors when the industry was deregulated in 1995. The suit alleged illegal business practices, including fraud, breach of contract and deceit, according to the Times. In his ruling, Munter wrote that the State Fund "acted in good faith toward its policyholders with respect to the matters of reserving, dividends and premiums." Fred Puglisi, attorney for the State Fund, said it would try to recoup approximately $500,000 in legal fees from plaintiffs in the case. But Drew Pomerance, attorney for the plaintiffs, said they are considering an appeal, adding, "We believe [the judge] made erroneous factual findings, he misconstrued the evidence and he made significant errors of law" (Dickerson, Los Angeles Times, 6/24).
The New York Times yesterday examined the "debilitating impact" of workers' comp insurance costs which have been driven up by medical and legal costs and the "boom and bust" cycle of the insurance industry. The average medical cost per workers' compensation claim in California has nearly quadrupled over the past 10 years to $35,201, and critics say that injured workers receive "longer [and] more expensive" health care, according to the Times. The average cost of workers' compensation insurance in the state has almost doubled over the past three years, prompting some companies to lay off employees, close or leave the state, the Times reports. The Legislature is considering about 50 bills that include workers' compensation system reforms (Treaster, New York Times, 6/23).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.