North Carolina
Industrial Commission

MEMORANDUM

TO:         All Interested Parties

FROM:   Chairman Buck Lattimore

DATE:    July 30, 2003 [See also Chairman Lattimore's April 23, 2003 Memo]

RE:         Reciprocal of America (Update)

            We have been informed that Reciprocal of America, a Virginia insurance company, has now been ordered Liquidated effective June 20, 2003. Commonwealth of Virginia, ex rel. State corporation Commission v. Reciprocal of America, The Reciprocal Group, and Jody M. Wagner, Treasurer of Virginia. Reciprocal of America issued workers’ compensation insurance policies in the State of North Carolina.

            The best available information suggests that approximately 500 potential claims exist in North Carolina. Our current understanding is that Reciprocal will pay four weeks of temporary total disability benefits to claimants currently receiving benefits.

The North Carolina Insurance Guaranty Association, (NCIGA) will begin processing and paying “covered claims” as required by North Carolina law. In anticipation of activation of the NCIGA, they have started the process of securing claim files and related documents.

The NCIGA has informed the Industrial Commission that prior to the insolvency of Reciprocal of America, a predecessor of Reciprocal of America, the Virginia Insurance Reciprocal, entered into an “Acquisition of Assets and Assumption or Liabilities and Reinsurance Agreement” (“Assumption Agreement”) dated June 24, 1999 with SunHealth Group Self Insurance Association of North Carolina (“SunHealth”).  The NCIGA’s position is that SunHealth claims are not “covered claims” within the meaning of the North Carolina Insurance Guaranty Association Act, N.C. Gen. Stat. §58-48-1, et seq. The best information available to the Industrial Commission is that approximately twelve claims are SunHealth workers’ compensation claims.  A letter expressing the position of the NCIGA can be found on the Industrial Commission web site.

             Pursuant to N.C. Gen. Stat. §58-48-85, proceedings in Reciprocal of America cases are stayed in the Deputy Commissioner Section of the Industrial Commission for 120 days. Any party to any proceeding that is stayed may, upon application and notice, seek a vacation or modification of such stay in an individual case. Motions for relief from stay for all cases at the Deputy Commissioner level of the Industrial Commission should be addressed to Chief Deputy Commissioner Gheen and served upon the NCIGA. Motions to vacate a stay for cases at the Full Commission level of the Industrial Commission should be directed to Mr. Phillip Hopkins, Docket Director.

The contact for the NCIGA is:

William C. Delbridge
North Carolina Insurance Guaranty Association
Post Office Box 176010
Raleigh, NC 27619-0610
Phone: (919) 783-9813
Fax: (919) 783-5262

            If any claimant or insured employer should experience any problems with Reciprocal of America claims, questions should be directed to: Stephen T. Gheen, Chief Deputy Commissioner, (919) 807-2540 or gheen@ind.commerce.state.nc.us. Communication by e-mail is requested if possible, though not required.

            The Industrial Commission website (www.comp.state.nc.us) will be updated as needed with additional information.

See also Letter Expressing Position of the NCSIGA.

See also Chairman Lattimore's April 23, 2003 Memo.