Flash Report: CDI Drops Precedential Designation In A-Brite Decision

A precedential decision by former Insurance Commissioner Dave Jones has been reversed by Insurance Commissioner Ricardo Lara.  New Insurance Commissioner Ricardo Lara agreed to a settlement with State Fund that removes the precedential designation from the decision in A-Brite Blind & Drapery Cleaning but allows the decision to stand only or that insured.

The decision is no longer able to be cited as precedent by policyholders challenging the State Fund’s tiered rating modifiers.

Workers’ Comp Executive has proved exclusive coverage of this dispute for its premium subscribers.

“We believe the A-Brite decision was an error and that we would have prevailed had we moved forward with the Writ of Mandamus. However, there was immediate harm to State Fund from the precedent set and it was in our best interest to remove the precedent as soon as possible,” State Fund’s Jennifer Vargen tells Workers’ Comp Executive. “We had already complied with the A-Brite decision under protest. Any future such mistaken decisions will be challenged vigorously as the facts support that our entire rating plan was filed with CDI.”

Former Commissioner Jones declared the tiering modifier illegal and unenforceable finding that it had not been filed for approval before use. State Fund disputes this finding and says that it indeed was filed and accepted by Department staff who agreed to keep the tiering algorithm confidential.

State Fund says that since this dispute first emerged is has refiled its workers’ comp rates and the tiering modifier is once again filed publicly.

Under the deal signed yesterday by Commissioner Lara, State Fund agreed not to challenge the A-Brite decision in Superior Court with a Writ while the Department agreed to remove the precedential designation from the order.

As Workers’ Comp Executive reported in yesterday’s premium edition, the A-Brite decision was already being cited in other disputes over State Fund’s once secretive tiering algorithm. Thousands of policies were potentially affected.

As part of the settlement, State Fund agreed to abide by the order and recalculate A-Brite’s premiums for the affected policy years without applying its tiering modifier. The decision did allow State Fund to use other modifiers, such as its territorial rating modifier and its direct account discount.

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