When it comes to cases against Applied Underwriters, RPNA’s Nick Roxborough is the go-to expert for commentary. Workers’ Comp Executive reached out to Nick regarding the most recent lawsuit against Berkshire Hathaway’s subsidiary filed in New York. The plaintiff is seeking a $6 million bond and at least $18 million in trebled damages.
According to a September 28 article, what makes this suit of particular interest is that it challenges the way Applied structures, sells, and operates its SolutionOne workers’ comp and payroll program. The plaintiff maintains that Applied Underwriters uses an unfiled and unapproved Reinsurance Participation Agreement (RPA) to siphon off money that should be reserved to pay claims, according to the article.
The suit makes numerous references to the recent enforcement actions in California against Applied and its EquityComp program, one of which was successfully handled by RPNA (see Luxor Cabs v. Applied Underwriters Captive Risk Assurance Company) as well as the decision in the Shasta Linen case. EquityComp also used unfiled and unapproved RPAs that include arbitration clauses and applied hefty loss development factors to claims if the policy is canceled or non-renewed.
Regarding the SolutionOne program, Nick advises that brokers should “…check their files—or the insured’s—to determine if clients in the SolutionOne program have RPAs. Applied has been known, according to court cases, to go directly to insureds and require them to sign documents the broker hasn’t seen and isn’t familiar with.” Nick continued to say in the article, “Brokers who find such RPAs might want to read them to determine whether or not there is joint and several liability, and in any event, may want to carefully consider recommending the employer contact counsel.”