Applied Underwriters Appeals Arbitration Decision

Applied Underwriters Appeals Arbitration Decision

Applied Underwriters is asking a federal district court to vacate an arbitrator’s decision that it lost. Arbitration found Applied owes thousands of dollars to a former employer in its EquityComp program rather than the other way around as it alleged. It is a typical move for Applied which appeals lots of decisions it loses.

Moreover, the Berkshire Hathaway subsidiary also continues to advance legal arguments that appear at odds with the settlement it signed with the California Department of Insurance earlier this year.

The latest case involves a dispute with Barker Management over who is owed what for Barker’s time in Applied’s EquityComp workers’ comp program. CDI characterized Applied’s marketing of the program as using “bait and switch” tactics through the use of an unfiled and unapproved reinsurance participation agreement that modified the underlying workers’ comp policy issued by California Insurance Company. The RPA calls for disputes to be arbitrated.

The Department determined in the Shasta Linen decision that under insurance code section 11658 and Title 10 section 2268 the RPA was void and unenforceable as a matter of law because it was never filed. The decision was made “Precedential” to apply to other similar cases. Applied Underwriters’ settlement with the Department acknowledges the precedent of the Shasta decision.

In its petition to vacate the arbitration decision in the Barker case, however, Applied maintains that “neither insurance Code section 11658 nor Regulation 2268 apply to the RPA.”

Disputed Decision

Barker was in the program for 2013, 2014 and 2015. The company claims that it was over charged while in the program and asked an arbitrator for $290,222 in damages. Applied filed a counter claim for $118,738 that it maintains Barker still owes under the program due to Barker’s higher than estimated payroll.

Applied maintains in its petition to the Court that the arbitration decision should be vacated because Barker lacks a private right of action to enforce section 11658 to invalidate the RPA. It maintains that enforcing section 11658 is up to the Insurance Commissioner – something that Insurance Commissioner Dave Jones did do in the Shasta case. In court, Applied has returned to its original argument in the Shasta Linen case, and that is that Section 11658 does not apply to the RPA.

The case was filed with the Central District Court earlier this month. As of deadline, Barker had not responded to the petition.

Editor’s Note: As a matter of full disclosure, Applied Underwriters is currently appealing the dismissal of a lawsuit it brought against Workers’ Comp Executive, its publisher Dale Debber, and attorney Larry Lichtenegger alleging violation of trademark. Applied Underwriters filed the lawsuit for trademark infringement in the fall of 2015 and sought a temporary restraining order. The request for the TRO was denied, and later the entire case was dismissed with leave to amend. Applied didn’t amend. Workers’ Comp Executive obtained a judgment. Now Applied has filed an appeal in the Ninth Circuit Court of Appeal. Coverage of the original lawsuit can be found here.

Applied Underwriters was once but is no longer an affiliate of Berkshire Hathaway. Applied’s management bought it. Berkshire Hathaway bears no responsibility for any of the events which have transpired involving Applied Underwriters’ or its subsidiaries including California Insurance Company.