California Fund Pays over $11 Million in Defaulted Workers' Comp Claims

Dec. 7, 2001
California's Self Insurers' Security Fund will take over payment of the workers' compensation claims of two companies following their bankruptcies and subsequent default on more than 600 self-insured claims.

California Department of Industrial Relations Director Stephen J. Smith ordered the state's Self Insurers' Security Fund to take over payment of HomeBase Inc. and San Francisco French Bread Co. workers' compensation claims, following the bankruptcies of both companies and subsequent default on more than 600 self-insured claims.

On Nov. 13, the San Francisco Bread Co. was turned over to the Self Insurers' Security Fund following its Oct. 24 default to pay its nearly 100 workers' compensation claims estimated at approximately $2 million. On Oct. 24, its workers' compensation insurance carrier, Reliance, was declared insolvent by the state of Pennsylvania and ordered to discontinue payment on the claims.

While California Labor Code Section 3702.8 does permit a self-insured employer to sell off their workers' compensation claims to a carrier, it must be done by a Special Excess Workers' Compensation Insurance Policy. San Francisco French Bread Co. chose to sell off the liabilities without entering into this type of policy, thereby retaining liability for its claims.

On Nov. 19, Smith ordered the Self Insurers' Security Fund to take over payment of HomeBase Inc. workers' compensation liability resulting from the company's default on its claims. HomeBase Inc., operators of 42 House2Home home decorating superstores throughout California, filed a Chapter 11 bankruptcy petition Nov. 7, 2001. The company is liquidating all its stores.

HomeBase self-insured its workers' compensation claims in California and currently has about 500 claims being handled by Gallagher Bassett. Liabilities were estimated at approximately $9.1 million.

The Security Fund is a private, nonprofit mutual benefit corporation that guarantees the payment of all self-insured workers' compensation claims in California. The state has one of the largest workers' compensation self-insurance programs in the nation. Employers choose to self-insure their workers' compensation liabilities on behalf of their employees for reasons of cost effectiveness, greater control over their claims program, and increased safety incentives with improved loss control results.

For more information on self insurance, visit www.dir.ca.gov/SIP/sip.html.

edited by Sandy Smith ([email protected])

About the Author

EHS Today Staff

EHS Today's editorial staff includes:

Dave Blanchard, Editor-in-Chief: During his career Dave has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeekEHS Today, Material Handling & LogisticsLogistics Today, Supply Chain Technology News, and Business Finance. In addition, he serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2021), which has been translated into several languages and is currently in its third edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

Adrienne Selko, Senior Editor: In addition to her roles with EHS Today and the Safety Leadership Conference, Adrienne is also a senior editor at IndustryWeek and has written about many topics, with her current focus on workforce development strategies. She is also a senior editor at Material Handling & Logistics. Previously she was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck?, which made the Cleveland Plain Dealer's best sellers list.

Nicole Stempak, Managing Editor:  Nicole Stempak is managing editor of EHS Today and conference content manager of the Safety Leadership Conference.

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