SCIF Gets a Three-Year Restraining Order Against the Commissioner
By Robert Warne - August 26, 2003 The complex status designation assigned to the SCIF v Garamendi suit by San Francisco Superior Court Judge Robert Dondero Aug. 22, will prevent California Insurance Commissioner John Garamendi from boarding State Fund for the next three years while the high seas debate over risk based capitol requirements is sorted out.
The judge’s decision is the latest development in the lawsuit filed May 27 to clarify the California Department of Insurance’s (CDI) authority in relation to the statutory mandate of the Fund.
In its filing State Fund sought a preliminary injunction and declaratory relief from the CDI.
On Aug. 5, Judge James Warren ruled that the case would continue in San Francisco Superior Court but denied State Fund injunctive relief and overruled a demurrer filed by the CDI.
Following the decision Garamendi said, “I am pleased that the judge found that the largest workers' compensation insurer in the nation is subject to regulation just as every other insurer in this state.”
But State Fund President Dianne Oki said, "If Mr. Garamendi should issue an inappropriate order to State Fund, we will return to the Court."
On Aug. 21 State Fund bolstered its argument for a complex designation, according to the Workers’ Comp Executive, with a motion that claimed even CDI attorneys believed that the department’s position was contrary to California law and that risk based capitol statutes do not apply to State Fund.
The next day, on Aug. 22 the judge concluded that the legal intricacies associated with the suit warranted the complex designation. The decision in essence puts a three-year restraining order on Garamendi from the Fund on the grounds of risk based capitol requirements.
It also buys State Fund some time to beef up its reserves as it digests the massive influx of business it’s experienced over the last three years.
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