SC Administrative Law Court Decisions

This matter is before the Court on Petitioner National Council on Compensation Insurance, Inc.’s (“NCCI”) request for a contested case hearing filed on September 14, 2007. Petitioner sought review of the August 21, 2007 decision of the South Carolina Department of Insurance disapproving NCCI’s Workers’ Compensation Voluntary Loss Cost Filing with a proposed effective date of December 1, 2007 (“Filing”).

The Court convened a hearing on the merits in this matter on May 12, 2008. Appearances were made on behalf of NCCI by Mitchell Willoughby, Esquire, James H. Harrison, Esquire, Tracey C. Green, Esquire and Benjamin P. Mustian, Esquire. On behalf of the South Carolina Department of Insurance (“Department”), an appearance was made by Jeffrey A. Jacobs, Esquire. Elliott F. Elam, Jr., Esquire, Consumer Advocate appeared on behalf of the Consumer Advocate. William L. Smith, II, Esquire and J. Kevin Holmes, Esquire appeared on behalf of the South Carolina Small Business Chamber of Commerce.

At the commencement of the hearing, the Parties informed the Court that they had reached an oral agreement settling the contested issues and fully resolving the matter (“Settlement Agreement”). The parties reported to the Court the terms and conditions of the Agreement, which, as attested to by the undersigned signatures, are as follows:

1. This Agreement pertains to the loss costs to be used as part of the voluntary program, which consists of all employers whose applications for workers’ compensation insurance have been accepted by a licensed workers’ compensation carrier in South Carolina.

2. This Agreement does not pertain to self-insurance programs.

3. This Agreement does not pertain to the assigned risk program, which consists of those insureds that have been unable to secure coverage in the regular (voluntary) program, and have been assigned to a servicing carrier that will provide coverage in the assigned risk program.

4. The parties agree to an increase of nine and eight-tenths percent (+9.8%) in the overall average loss cost level for coverage written in the voluntary program for other than “F” classifications.

5. The parties agree the current overall average loss cost level for coverage written in the voluntary program for “F” classifications shall remain in effect without change.

6. The parties agree that the existing workers’ compensation classification code relativities for use with respect to the newly approved loss cost level shall be revised and updated by NCCI in accordance with NCCI’s current class relativity procedures and consistent with the class ratemaking methodology on which the relativities established by NCCI in the Filing that is the subject of this case are based.

7. The parties agree to maintain the currently approved Loss Adjustment Expense provision of 17.8% of incurred losses.

8. The Parties agree that the increase to loss costs specified herein is necessary and will establish loss costs that are neither excessive, inadequate, nor unfairly discriminatory.

9. The loss cost levels established by this Settlement Agreement are effective July 1, 2008.

10. In accordance with the provisions of Chapter 73 of Title 38 of the South Carolina Code of Laws, NCCI agrees to file with the Department a subsequent voluntary loss cost filing reflecting any changes in loss costs and rating values with a proposed effective date of July 1, 2009.

11. NCCI agrees to continue to work with the Department to review the issues and recommendations addressed in the Target Market Conduct Examination Report (“Report”), and agrees to work in good faith with the Department to develop a plan designed to reasonably address the recommendations set forth on page 18 (items 1 through 6 of the Report).

12. The parties agree that the terms of this Settlement Agreement constitute the full agreement of the parties in settlement of this matter.

13. The Parties agree to advocate that the Court accept and approve this Settlement Agreement in its entirety as a fair, reasonable and full resolution of the above-captioned proceeding; to take no action inconsistent with the acceptance and approval of this Settlement Agreement by the Court; to cooperate in good faith with one another in recommending to the Court that this Settlement Agreement be accepted and approved by the Court; and to use reasonable efforts to defend and support any Court order issued approving this Settlement Agreement and the terms and conditions contained herein.

14. The Parties each agree that a Party’s consent to the terms of this Settlement Agreement does not constrain, inhibit, impair, or prejudice it with respect to arguments made or positions asserted in other proceedings. Further, the Parties agree that the terms of this Settlement Agreement or the Parties’ consent thereto will not be precedential in future proceedings.

15. The parties further agree that they freely and voluntarily entered into this Settlement Agreement and that this Settlement Agreement constitutes the full and final resolution of this matter.

NOW, THEREFORE, based upon the agreement of the Parties as set forth above, I hereby find and conclude that the terms and provisions of the Settlement Agreement are fair and reasonable, are consistent with Chapter 73 of Title 38 of the South Carolina Code of Laws, and are otherwise consistent with applicable law.

I FURTHER FIND AND CONCLUDE that the Settlement Agreement should be approved and adopted as the Order of the Court.

ORDER

Accordingly, based upon the agreement of the parties, and the findings and conclusions set forth above, it is therefore:

ORDERED that the Settlement Agreement is hereby approved and adopted in full and final resolution of all issues in this case.

AND IT IS SO ORDERED.

_________________________________

Marvin F. Kittrell, Jr.

Chief Administrative Law Judge

May 22, 2008

WE CONSENT AND AGREE: