CDI Dismisses State Fund Lawsuit

May 18, 2004

The California Department of Insurance (CDI) said it dismissed the lawsuit against State Compensation Insurance Fund (SCIF) May 18. The suit was originally filed because SCIF allegedly refused to allow the Department’s designated examiners to conduct an examination of SCIF’s operations. The legislative mandate (SB 228) requires that the Insurance Commissioner report on SCIF’s financial condition, underwriting practices, and rate structure and report to the Legislature and the Governor on the potential of reducing rates by July 1, 2004.

The CDI designated three examiners who have special expertise that make them uniquely qualified to assist the CDI in conducting an operational review of SCIF, but said SCIF refused to allow them in to conduct the necessary exam.

Due to SCIF’s refusal to permit the examiners to conduct the exam and the delay that has resulted, the CDI said it is now too late for them to perform their examination properly and prior to the July 1 deadline.

“Due to SCIF’s delays, we do not want the Court to engage in what is now a pointless act,” Commissioner John Garamendi said. “We will therefore attempt to obtain the information we need by using Department staff and assuming that we receive cooperation from SCIF, we believe that we can produce an adequate report for the Legislature by the July 1 deadline. However, we still believe that the report would have been more complete and effective if our designated examiners had been available to assist us.”

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