Michael F. Easley, Governor
Buck Lattimore, Chairman

Stephen T. Gheen
Chief Deputy Commissioner
Office: 919-807-2540
Home: 919-384-1292
Gheen@ind.commerce.state.nc.us

Bernadine S. Ballance, Commissioner
Thomas J. Bolch, Commissioner
Laura K. Mavretic, Commissioner
Christopher Scott, Commissioner
Dianne C. Sellers, Commissioner
Pamela T. Young, Commissioner

North Carolina
Industrial Commission

 

MEMORANDUM

 

TO:         All Interested Parties

FROM:   Stephen T. Gheen, Chief Deputy Commissioner

DATE:    October 15, 2003

RE:         Reciprocal of America (Update)

            The North Carolina Insurance Guaranty Association, (“NCIGA) is processing and paying Reciprocal of America’s “covered claims” as required by North Carolina law. Please see Chairman Buck Lattimore’s Memorandum of July 30, 2003.

The NCIGA has denied liability for a group of claims that arise from a predecessor of Reciprocal of America, the Virginia Insurance Reciprocal. The Virginia Insurance Reciprocal entered into an “Acquisition of Assets and Assumption of 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.

            The SunHealth claims were consolidated for hearing on the issue of coverage pursuant to an Order entered on September 2, 2003. The initial hearing was held on September 30, 2003.

            Deputy Commissioner Wanda Blanche Taylor issued an interim Order on October 14, 2003 requiring the employers in each SunHealth case to resume payment of compensation benefits, including past due benefits. Please reference the attached Order by Deputy Commissioner Taylor.

            Deputy Commissioner Taylor conducted an additional hearing on the issues involved in the SunHealth claims on October 15, 2003. Further Orders entered by Deputy Commissioner Taylor will be posted on the Industrial Commission’s website. It is not anticipated that Deputy Commissioner Taylor will issue any additional orders before December 15, 2003.

The NCIGA will continue to process and pay compensable claims, other than the SunHealth cases. 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 me at (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 as it becomes available.

I.C. NOS. 402156, 467439, 616611, 326412, 822818, 944966, 734300, 902560, 426774, & 705360, ALICE M. CRUMB, MARY COUNTS, VAUGHN CRISP, MITZI HANSLEY, KAREN WILMOUTH, ANNIE E. WILSON, SANDY C. PROCTOR, RHONDA WEATHERS, RUBY GAYLORD BATTLES, IRENE PAIT, and MARY G. PITTMAN, , Employees, Plaintiffs v. WILSON MEMORIAL HOSPITAL, ST. LUKE’S HOSPITAL, HARRIS REGIONAL HOSPITAL, WAYNE MEMORIAL HOSPITAL, and SOUTHEASTERN REGIONAL MEDICAL CENTER, Employers, and SUN HEALTH GSIA, THE RECIPROCAL GROUP, and NORTH CAROLINA INSURANCE GUARANTY ASSOCIATION, Carriers, Defendants. ORDER by STEPHEN T. GHEEN, Chief Deputy Commissioner, N.C. Industrial Commission. Filed 2 September 2003.

            These cases come on ex mero motu related to the scheduling of hearing of certain issues as set forth in this Order that are common to the above captioned cases.

A P P E A R A N C E S

    Plaintiff:  Davis, Murrells, & Lyles, Attorneys, Beaufort, North Carolina; Janet Lyles appearing for Alice M. Crumb.

 

                    Cox, Gage & Sasser, Attorneys, Charlotte, North Carolina; Charles Sasser appearing for Mary Counts.

 

                    Goldsmith, Goldsmith & Dews, Attorneys, Marion, North Carolina; Julie Dews appearing for Karen Wilmouth.

 

                    Duffus & Melvin, Attorneys, Raleigh, North Carolina; Gregory Gunter appearing for Annie E. Wilson.

 

                    McGougan Law Firm, Attorneys, Tabor City, North Carolina; Dennis Worley appearing for Rhonda Weathers.

 

                    Edelstein & Payne, Attorneys, Raleigh, North Carolina; Travis M. Payne appearing for Ruby Gaylord Battles.

 

                    R. James Lore, Attorney at Law, Raleigh, North Carolina; appearing for Irene Pait.

 

                    Beaver, Holt, Sternlicht, Glazier, Carlin, Britton & Courie, Attorneys, Fayetteville, North Carolina; Mark Sternlicht appearing for Mary G. Pittman.

 

                    Pro Se. Sandy C. Proctor, 6319 Tonya Road, Elm City, North Carolina, 27822.

 

                    Pro Se. Mitzi Hansley, Route 5, Box 712, Goldsboro, North Carolina, 27533.

 

                    Pro Se. Vaughn Crisp, 77 Mariah Drive, Sylva, North Carolina, 28779.

 

Defendant: Young, Moore & Henderson, Attorneys, Raleigh, North Carolina; Dawn Dillon Raynor, Terryn Owen, Joe Austin and Michael Ballance appearing for Wilson Memorial Hospital, Southeastern Regional Medical Center and St. Luke’s Hospital.

 

                    Russell & King, Attorneys, Asheville, North Carolina; Sandra King appearing for St. Luke’s Hospital in I.C. File No. 467439.

 

                    Pro Se. Mark Leonard, Harris Regional Hospital, 68 Hospital Road, Sylva, North Carolina, 28779.

 

                    Pro Se. William Paugh, Wayne Memorial Hospital, 2700 Wayne Memorial Drive, Goldsboro, North Carolina, 27534.

 

                    Pro Se. Cameron Highsmith, St. Luke’s Hospital, 220 Hospital Drive, Columbus, North Carolina, 28722.

 

                    Pro Se. J. Luckey Welsh, Jr., Southeastern Regional Medical Center, 300 West 27th Street, Lumberton, North Carolina 28359.

 

                    Pro Se. Christopher Durrer, Wilson Memorial Hospital, 1705 Tarboro Street SW, Wilson, North Carolina, 27893.

 

            Additional Parties: Stuart Law Firm, PLLC, Raleigh, North Carolina; Catherine R. Stuart, appearing for the North Carolina Self-Insurance Guaranty Association, aligned as a party defendant.

 

                    Nelson, Mullins, Riley & Scarborough, Attorneys, Raleigh, North Carolina; Christopher J. Blake appearing for the North Carolina Insurance Guaranty Association, aligned as a party defendant.

 

* * * * * * * * * * *

            Information available to the Industrial Commission appearing:

            1.     That the Reciprocal Group (hereinafter “Reciprocal”), a foreign insurance company domesticated in the Commonwealth of Virginia, is in the process of liquidation by Order of a court of competent jurisdiction as of June 20, 2003 in the case Commonwealth of Virginia, ex rel. State corporation Commission v. Reciprocal of America, The Reciprocal Group, and Jody M. Wagner, Treasurer of Virginia.

            2.     Reciprocal of America issued workers’ compensation insurance policies in the State of North Carolina.

            3.     Reciprocal was a member of the North Carolina Insurance Guaranty Association (hereinafter “NCIGA”) for a relevant period of time in regard to the above captioned workers’ compensation actions.

            4.     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.

            5.     SunHealth was an approved as a self-insurance group in the State of North Carolina for a relevant period of time in regard to the above captioned cases. As an approved self-insurer, SunHealth was a member of the North Carolina Self-Insurance Guaranty Association.

            6.     Claimants were receiving ongoing weekly disability and other benefits under the North Carolina Workers’ Compensation Act in one or more of the above captioned cases. It appears from a number of motions filed in several of the individual cases that the Reciprocal Liquidation has terminated ongoing benefits.

            7.     Claimants in a number of individual cases have filed motions to require the respective employer to continue paying benefits upon the termination of payments by Reciprocal.

            8.     That the above captioned cases appear to have common questions of fact and law as to the jurisdiction of the North Carolina Industrial Commission and the liability of the employers and respective Guaranty funds and should be consolidated for the purpose of hearing of jurisdictional and matters of liability for payment of benefits of compensable claims by the respective employers and respective Guaranty funds.

            9.     That Young Moore and Henderson, P.A., has filed a letter with the Industrial Commission dated August 28, 2003 indicating representation of the employers “in the underlying workers’ compensation claims . . . but . . . not represent the hospital listed . . . as to the issue of whether they are liable for payment of compensation until such time as the Commission makes a determination as whether North Carolina Insurance Guaranty Association is responsible for payment of these claims . . . .”

            10.     There exists an apparent conflict of interest in the North Carolina Insurance Guaranty Association representing or attempting to represent the above captioned employers while attempting to deny that the claims are “covered claims.”

            11.     Legal proceedings in the Commonwealth of Virginia as to the payment of the SunTrust cases in North Carolina are scheduled, but the duration and results of those proceedings is unknown.

* * * * * * * * * * *

            Based upon the forgoing, and for good cause, it is therefore:

ORDERED

            1.     That the North Carolina Self-Insurance Guaranty Association is joined as a party to the workers’ compensation actions in each of the above captioned cases and aligned as a party defendant.

            2.     That the North Carolina Insurance Guaranty Association is joined as a party to the workers’ compensation actions in each of the above captioned cases and is aligned as a party defendant.

            3.     The above captioned cases are consolidated for the limited purpose of determining all jurisdictional issues of the North Carolina Industrial Commission and the respective liability of the defendants and determination of payment of ongoing workers’ compensation benefits as a result of the liquidation of Reciprocal.

            4.     That Deputy Commissioner Wanda Blanch Taylor is assigned to the hearing of the issues in these consolidated cases.

            5.     The parties shall appear before Deputy Commissioner Taylor on the 30th day of September 2003 at 9:30 a.m. or as soon thereafter as this matter can be heard at the North Carolina Industrial Commission, 430 N. Salisbury Street, Raleigh, North Carolina; Dobbs Building, 2nd Floor, Room 2173 for the purpose of hearing the issues designated hereinafter.

            6.     That to the extent that Young Moore and Henderson, P.A. does not represent the above captioned employers, the employers shall appear either pro se or by additional counsel at the hearing noted immediately above.

            7.     The issues for determination at the above referenced hearing shall include:

a.         Legal obligation of the North Carolina Insurance Guaranty Association, if any, to pay compensable claims pursuant to North Carolina law in the consolidated cases.

b.         Legal obligation of the North Carolina Self-Insured Guaranty Association, if any, to pay compensable claims pursuant to North Carolina law in the consolidated cases.

c.         Legal obligation of the respective employers, if any, to pay compensable claims pursuant to North Carolina law in the consolidated cases.

d.         Identification of those cases in which liability for payment of compensation has been established and in which benefits have been terminated by Reciprocal’s Liquidation. In such cases, determination of whether the resumption of the payment of benefits by any party other than Reciprocal is legally appropriate pending a final determination of the legal duties of the respective parties.

e.          If appropriate, determination of whether or not orders should be entered providing for the payment of benefits during any appeal pursuant to N.C. Gen. Stat. § 97- 86.1.

f.          The issue of payment of attorney fees and costs pursuant to N.C. Gen. Stat. § 97-81.1

g.          Any other issue ancillary to a determination of the forgoing issues.

            8.     That all motions filed in individual cases alleging contempt of any employer for failure to pay ongoing weekly benefits upon the liquidation of Reciprocal is specifically reserved for hearing.

            9.     That the parties shall direct all further communications, motions and other pleading to Deputy Commissioner Taylor until such time as the issues consolidated for the purpose of hearing are finally determined in the Deputy Commissioner Section of the North Carolina Industrial Commission.

            10.     That Deputy Commissioner Taylor shall, by appropriate order, set dates for the filing of briefs and contentions by the parties.

            11.     No costs are taxed.

                                 S/                                
STEPHEN T. GHEEN
CHIEF DEPUTY COMMISSIONER

I.C. NOS. 402156, 467439, 822818, 734242, 902560, 426774, 705360, 616611, 734300, & 944966, In Re: Sunhealth GSIA/The Reciprocal Group.. ORDER by WANDA BLANCHE TAYLOR, Deputy Commissioner, N.C. Industrial Commission. Filed 14 October 2003.

A P P E A R A N C E S

            Plaintiff: Davis, Murrells & Lyles, Beaufort, NC; Janet Lyles, appearing for Alice M. Crumb. 

                    Cox, Gage & Sasser, Charlotte, NC; Charles Sasser appearing for Mary Counts. 

                    Goldsmith, Goldsmith & Dews, Marion, NC; Julie Dews appearing for Karen Wilmoth.

 

                    McGougan Law Firm, Tabor City, NC; Dennis Worley appearing for Rhonda Weathers.

 

                    Edelstein & Payne, Raleigh, NC; Travis M. Payne appearing for Ruby Gaylord Battles.

 

                    Lore & McClearen, Raleigh, NC; James R. Lore appearing for Irene Pait.

 

                    Beaver, Holt, Sternlicht, Glazier, Carlin, Britton & Courie, Fayetteville, NC; Mark A. Sternlicht and Janet H. Downing appearing for Mary G. Pittman.

 

                    Grimes & Teich, Asheville, NC; Henry E. Teich appearing for Vaughn Crisp.

 

                    Duffus & Melvin, Raleigh, NC; Gregory Gunter appearing for Annie Wilson.

 

                    Sandy C. Proctor, Pro Se.

 

            Defendants: Nelson, Mullins, Riley & Scarborough, Raleigh, NC; Joseph W. Eason and Christopher J. Blake appearing for the North Carolina Insurance Guaranty Association.

 

                    Stuart Law Firm, Raleigh, NC; Catherine R. Stuart and Charles C. Kyles appearing for the North Carolina Self Insurance Guaranty Association.

 

                    Ward & Smith, New Bern, NC; S. McKinley Gray, III and David Hawley appearing for Southeastern Regional Hospital and Wilson Memorial Hospital.

 

                    Hunton & Williams, Charlotte, NC; Brent A. Rosser appearing for St. Luke’s Hospital.

 

                    Van Winkle Law Firm, Asheville, NC; Allan R. Tarleton appearing for Harris Regional Hospital.

 

* * * * * * * * * * *

            This matter came on for hearing before the undersigned on September 30, 2003 in Raleigh, North Carolina for the determination of which defendant(s) should pay interim benefits to the claimants during the continued litigation of this matter. Prior to the hearing, each defendant hereto entered a stipulation that it would not appeal this interim order.

            Upon consideration of the evidence, the written contentions of the parties, and the applicable law,

            IT IS HEREBY ORDERED that defendant-employers St. Luke’s Hospital, Inc., Southeastern Regional Medical Center, Wilson Memorial Hospital and Harris Regional Hospital shall commence the payment of weekly disability and other benefits retroactive from their termination as a result of the liquidation of Reciprocal of America and continue to pay such benefits until further Order of the Industrial Commission. These payments are made without prejudice to be reimbursed by any other parity-defendant who might ultimately be adjudged to be liable for such benefits in these matters.

                       

                                 S/                                
WANDA BLANCHE TAYLOR
DEPUTY COMMISSIONER

 WBT/spc


Read Chairman Lattimore's July 30, 2003 Memo.

Read Letter Expressing Position of the NCSIGA.

Read Chairman Lattimore's April 23, 2003 Memo.


N.C. Industrial Commission ·   4340 Mail Service Center ·   Raleigh, NC 27699-4340
Main Telephone: (919) 807-2500 ·   Fax: (919) 715-0282
NCIC Home Page: http://www.ic.nc.gov/