SCIF

MacGregor Yacht Corporation (MacGregor) sued its workers’ compensation insurer, State Compensation Insurance Fund (SCIF), to recover in tort and in breach of express and implied contract for damages resulting from the insurer’s failure to investigate, defend and settle claims reasonably and from its overestimate of the amounts necessary for claims reserves. The trial court dismissed the tort cause of action as barred by the statute of limitations. Following a nonjury trial on the breach of contract claims, the court found that SCIF breached the express terms of the contract, based on SCIF’s failure to conduct any follow-up investigation into many of the workers’ compensation claims and its failure in some instances to deny the claims within the statutory 60-day period. The court also found SCIF breached the implied covenant of good faith and fair dealing by refusing to permit the insured access to claim files or other relevant claims data, refusing or failing to settle claims reasonably, setting unreasonably high reserves, modifying and concealing its reserving practices which maximized receipts at the expense of its insureds, and setting reserves at a “maximum probable…