Security Fund Takes Over Eel River Workers Comp Payments

December 27, 2002

California Department of Industrial Relations (CDIR) Acting Director Chuck Cake has ordered the state’s Self Insurers’ Security Fund to take over payment of Eel River Sawmill’s workers’ compensation claims following the company’s default on payment of benefits.

According to the CDIR bulletin, Eel River operated a lumber sawmill and power generation plant in Fortuna. The sawmill closed a year ago leaving workers’ compensation claims, which were being paid by proceeds from the power plant, but that is now scheduled to be closed as well.

El River, which has been self insured since 1980, advised California’s Self Insurance Plans (SIP) on Dec. 10 that it was defaulting, as it was unable to pay benefits on its remaining self-insured workers’ compensation liabilities.

“Employees receiving workers’ compensation benefits for workplace injuries are first protected from a self-insured company’s inability to pay benefits with a security deposit employers are required to post,” stated SIP manager Mark Ashcraft. “The second protection is the Security Fund’s guarantee to pay all benefits due that exceed the deposit posted. Eel River Sawmill defaulted on benefit payments so we turned their security deposit and workers’ compensation liabilities over to the Security Fund, which will ensure continued benefit payments to injured workers.”

An SIP audit determined that the company had understated its liability on 142 open indemnity claims by $2,159,824 and had a total remaining liability on its worker’s compensation claims estimated at $7,021,506.

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