As Workers’ Comp Executive reported earlier this week, the California Department of Insurance and Applied Underwriters have reached a settlement agreement to end the dispute over the legality of the EquityComp program and its associated unfiled side agreements. The Berkshire Hathaway (NYSE: BRK.A) subsidiary is dropping its petition for a Writ of Mandate to block the department’s enforcement action and is making efforts to come into compliance with state filing requirements.
CDI’s Announcement was headlined with the following words:
“Berkshire Hathaway subsidiary’s bait and switch marketing tactics halted by regulator agreement”
“The Commissioner’s announcement of the terms of the settlement between the CDI and Applied Underwriters is a total defeat to Applied says attorney Larry Lichtenegger. “We have been confronted for a year now with arguments [made] by Applied in court hearings and arbitrations that the Commissioner’s decision in Shasta Linen was erroneous and not worth the paper, it was written on.”
It turns out the Commissioner’s decision was spot on. The Reinsurance Participation Agreement used by Applied is null and void as a matter of law. A Cease and Desist was ordered by the CDI.
“While we have successfully argued that Applied’s EquityComp program is unlawful on its face and have not relied on the Commissioner’s decision, the fact that Applied has now conceded the Decision’s validity is a great boon to insureds who are fighting with Applied over this misleading, fraudulent, and now concededly unlawful insurance program,” Lichtenegger adds.
“This settlement will do nothing but aid those who are contesting Applied’s efforts to gouge more money from them than is lawful. I complement the Commissioner for sticking to his guns and fighting for employers in California who have suffered from this Berkshire Hathaway product.”
Workers’ Comp Executive is presently analyzing all of the documents and will bring subscribers many additional details about the settlement and how it will affect California businesses.
For its part Applied Underwriters’ is saying the EquityComp Program is back – but it has many new agreed to with the Department limitations. There are indications – even in the Department’s own words – that many employers still should be concerned.
Workers’ Comp Executive is proud of its multi-year investigation and coverage of this important issue.
-30-
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.