Judge Rejects Overcharge Claim Against SCIF

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 action suit that alleged California's State Compensation Insurance Fund overcharged thousands of policyholders.

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

Plaintiffs charged that the State Fund breached the implied covenant of good faith and fair dealing, committed fraud and deceit, 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 claim reserving and other challenged practices. "At all relevant times and in all material respects, State Fund's management acted in good faith toward its policyholders with respect to the matters of reserving, dividends and premiums," the judge noted.

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