Michael F. Easley, Governor Buck Lattimore, Chairman Stephen T. Gheen |
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.
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.
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
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.