Garamendi Reviewing SCIF's Allegations
By Caroline McDonald
NU Online News Service, May 29, 3:53 p.m. EDT?A legal action filed by the California State Compensation Insurance Fund, is accusing State Insurance Commissioner John Garamendi of improper efforts to control its operation.
A spokesman for the commissioner said he is reviewing the suit. "We have a period of time to respond to this," said Norman D. Williams. "We're in the process of reviewing and preparing a response now."
The San Francisco-based State Fund said in a statement yesterday that it has filed a complaint against Mr. Garamendi and the department to "clarify his and CDI's authority as well as to determine the applicability of risk-based capital statutes to State Fund."
The statement continued that State Fund receives its authority to provide workers' compensation insurance directly from the California Constitution and statutory mandate.
State Fund also said Mr. Garamendi's efforts to "exert control" are "illegal and unwarranted" because the Fund is solvent and has "adequate claims reserves to meet its obligations" to injured workers and employers.
Just last month Mr. Garamendi directed the State Fund to ease access requirements for small businesses who pay $25,000 or less in annual premium. He also directed the State Fund to amend review processes for other new business applications.
In March he advised the State Fund to develop a business plan to address its financial problems?calling for the organization to reduce its premium writings.
The State Fund, which has experienced exponential growth in recent years because of lack of capacity in the market, now writes more than 50 percent of all workers' comp policies in the state.
Mr. Garamendi responded in a statement that the allegations are incorrect. He said that, "Our actions in regard to the State Fund have been taken to ensure that it continues to have the ability to provide affordable and available workers' compensation insurance to California employers."
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