P. W. Stephens, Inc. v. State Compensation Insurance Fund

In this appeal, we conclude that respondent State Compensation Insurance Fund (SCIF) may impose “surcharges” as part of the premiums charged to its insureds. However, such surcharges must be reasonably and fairly imposed and are subject to administrative review. Accordingly, we affirm the decision of the trial court.

Background

Appellant P. W. Stephens, Inc. (appellant) provides residential and commercial asbestos abatement services. SCIF provides workers’ compensation insurance to appellant. Appellant has no other recourse than to procure its insurance from SCIF, since no private insurance carriers are willing to offer such insurance to asbestos removal companies, such as appellant.

In its complaint for injunctive relief and damages, appellant alleged that as part of the premium SCIF charged appellant for workers’ compensation insurance, SCIF imposed surcharges which are illegal, unreasonable and unfair. The trial court sustained SCIF’s demurrer to the first amended complaint and dismissed the action.

Discussion

I. SCIF and Its Rating Organization

SCIF is at once both an agency of the state and an insurance carrier. In these two roles, it is self-operating and of a…