San Francisco Superior Court Judge Peter Busch put pen to paper and formally approved what he said from the bench over seven weeks ago -- that California Gov. Arnold Schwarzenegger's executive order establishing a two day a month furlough does not apply to the State Compensation Insurance Fund.  But this order does not cover all State Fund employees. So now the fight is on to extend that protection to all State Fund employees, not just those represented by the California Attorneys, Administrative Law Judges and Hearing Officers (CASE), which brought the successful lawsuit.

That it took seven weeks to get a final order was a surprise and that said order was limited only to CASE's members was an even bigger surprise. Pat Whalen, lead attorney for CASE in the litigation, told Workers' Comp Executive that the original order he submitted to the Judge for approval covered all SCIF employees not just those represented by CASE. "But DPA [Department of Personnel Administration], objected to the language. They thought it should only apply to the attorneys," he said, noting that Busch ultimately sided with the state.

It puts State Fund’s management again in the middle – caught in a place they have been trapped since the Governor’s furlough issue first arose.

From the outset, Jan Frank, State Fund president, worked, first behind the scenes, then as a litigant, to keep the order from applying to State Fund workers. State Fund salaries are paid through policyholder premiums not the state's general fund. But DPA balked at the notion. Frank again came down on the side of her employees when CASE brought its lawsuit. Even though State Fund was named as a defendant in the action, Frank submitted a brief supporting the union.

Frank told the court in a memorandum of point and authorities, that all powers to administer SCIF activities reside with its board of directors. The insurance code, her brief pointed out says “the board is vested with full power, authority and jurisdiction over the State Compensation Insurance Fund.” Insurance Code §11781 states in pertinent part that the board… “may perform all acts necessary or convenient in the exercise of any power, authority or jurisdiction over the fund, either in the administration thereof or in connection with the insurance business to be carried on by it under the provisions of this chapter, as fully and completely as the governing body of a private insurance carrier."

Spokeswoman Jennifer Vargen said on Friday that SCIF's legal department is now reviewing the ruling and determining how to proceed. In the meantime, the Service Employees International Union issued a demand that State Fund immediately extend the exemption to all employees of the carrier. They are demanding an answer by the close of business today or else they would pursue their own legal action to force the issue.

A copy of Judge Busch's order can be found by clicking here.

-30-