CDI Dismisses SCIF Lawsuit

California’s Department of Insurance has dismissed the lawsuit against State Compensation Insurance Fund (SCIF) which was originally filed because SCIF reportedly 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 Department’s designated examiners, Conolly, Plunkett and Barbagallo (the “CPB Group”) reportedly have special expertise that make them uniquely qualified to assist the Department in conducting an operational review of SCIF, yet SCIF did not allow them in to conduct the necessary exam.

Due to SCIF’s reported refusal to permit Conolly, et. al. to conduct the exam and the delay that has resulted, it is now too late for Conolly, et. al. 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,” said Commissioner John Garamendi. “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.”