Flash Report: A Defiant Applied Underwriters Continues On

By: Dale Debber

“Applied Underwriters’ despite the Commissioners’ ruling tells me that it is going to attempt to foist upon the Courts and Judges of California its contention that its Reinsurance Participation Agreement (RPA) is legal,” says Carmel-based attorney Larry Lichtenegger, who had discussions on Tuesday with lawyers from both law firms representing Applied in California.

Applied Underwriters’ contends the RPA to be the governing document or contract in its EquityComp program. California Insurance Commissioner Dave Jones holds the RPA to be illegal and “void as a matter of law” because, as he says, it is an unfiled and unapproved collateral or side agreement which changes the terms and conditions and costs of the underlying policy.

Lichtenegger, who has the most cases averse to Applied Underwriters, says he is fighting in multiple cases Applied’s motions to compel arbitration which the RPA’s require. “Applied’s law firms tell me they are proceeding with their motions as scheduled despite the Commissioner’s ruling.”

They are even including one hearing before the same San Francisco Superior Court which has already ruled the RPA is void and unenforceable, he says.

Lichtenegger says they are wasting everyone’s time. Applied Underwriters is trying to protect its record, for appeals, he says. However, this means to me that Berkshire Hathaway, (NYSE: BRK A), one of the most financially solvent companies in the world, “is seeking to win their cases simply by overwhelming their insureds so they’ll give up rather than continue litigating their rights.”

“The message that needs and is being sent to Applied is that this will never succeed.” he says.

“The message that needs and is being sent to Applied is that this will never succeed.” – Larry Lichtenegger

The RPA also attempts to take away litigant’s rights to a jury trial. “We have to wonder what they are afraid of,” he commented humorously.

Flips Off CDI (Figuratively)

Brokers as of yesterday were telling Workers’ Comp Executive that Applied continues to encourage the sales of new and renewal EquityComp programs. But brokers who continue to do so do so at their own risk says the Department of Insurance:

“Brokers should not be selling illegal policies or agreements in California,” says Geoff Margolis, Deputy Commissioner and Special Counsel for the California Department of Insurance. “As the Commissioner determined, in Shasta Linen, workers’ comp rates or forms that are unfiled are therefore void as a matter of law and should not be sold by brokers or carriers.”

“It would be stupid for any broker to sell or renew clients into that program. They would be walking directly into a lawsuit they can’t likely defend,” Lichtenegger adds. “Any broker who sells that program after the Commissioners findings can, should be, and probably will be sued by their own client.”

Workers’ Comp Executive emailed Applied’s attorney in some of these cases and asked for the company’s reaction to the Commissioner’s ruling, and what actions it might take in response. We also asked them to confirm they are still selling in California and whether or not similar actions (to Commissioner Jones’) are expected in other states.

Applied’s general counsel, Jeffery Silver responded in an internal email the following: “Unless Steve indicates otherwise, I would not respond to Debber because he will distort anything we say.”

“Unless Steve indicates otherwise, I would not respond to Debber because he will distort anything we say.” – Jeffery Silver, Applied Underwriters General Counsel

Workers’ Comp Executive also extended in the email and hereby re-extends the invitation to Applied’s representatives to make any comment they’d like on these pages.

And there you have it.

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