Tricor California, Inc. v. State Compensation Insurance Fund

Plaintiffs Tricor California, Inc., Tricor America, Inc., and Tricor International (collectively, Tricor) appeal from the judgment dismissing their case against their workers’ compensation insurer, defendant State Compensation Insurance Fund (SCIF.) Tricor alleged SCIF engaged in bad faith claims handling resulting in Tricor’s paying unjustified higher premiums and wrongly being denied dividends. We agree with Tricor’s contentions that the trial court erred in dismissing its complaint. We hold that Tricor properly could present evidence of negligent claims handling as evidence of bad faith and breach of contract by SCIF; that SCIF is not immune from punitive damages awards; and that Tricor did not fail to exhaust administrative remedies. We reverse the judgment.

Facts and Procedural History

Tricor bought three consecutive one-year workers’ compensation insurance policies, covering the period from October 30 to the following October 29 for, respectively, 1985, 1986, and 1987, from SCIF. Tricor’s second amended complaint alleged that SCIF “was created in 1914 by the California Legislature as a public enterprise fund to write workers’ compensation insurance as a…