Judge Rejects Overcharge Claim Against SCIF

|

NU Online News Service, April 10, 12:28 p.m.EDT?A judge has ruled against a $1 billion class actionsuit that alleged California's State Compensation Insurance Fundovercharged thousands of policyholders.

|

The complaint claimed that the State Fund overcharged 163,900California businesses from 1989 to 1995 through the use of a"maximum probable potential" claims reserving method. Thisreserving method unjustifiably increased experience-rated premiumsand lowered potential dividends, the suit alleged.

|

Plaintiffs charged that the State Fund breached the impliedcovenant of good faith and fair dealing, committed fraud anddeceit, and violated California's unfair competition law.

|

But, State Superior Court Judge John Munter in San Francisco,after a 113-day trial, upheld the State Fund's method of claimreserving and other challenged practices. "At all relevant timesand in all material respects, State Fund's management acted in goodfaith toward its policyholders with respect to the matters ofreserving, dividends and premiums," the judge noted.

|

The judge also gave the State Fund permission to seek recoveryof its attorney fees from the class. "We could not have wished fora better decision," said Dianne C. Oki, president of the StateFund.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.