North Carolina
Industrial Commission

MEMORANDUM

TO:        All Interested Parties

FROM:  Chairman Buck Lattimore

DATE:   November 8, 2002 [SEE ALSO Chairman Lattimore's April 4, 2003 Memorandum]

RE:         P.H. Glatfelter/RFS Ecusta Workers’ Compensation Claims in North Carolina

RFS Ecusta has filed bankruptcy in Federal Bankruptcy Court in Delaware. Ecusta has approximately two hundred active workers’ compensation claims in the State of North Carolina, including a significant number of asbestos occupational disease claims, which it assumed from P. H. Glatfelter. The following is our current understanding of the situation.

Glatfelter operated a paper manufacturing facility in western North Carolina. Glatfelter was certified by the North Carolina Department of Insurance as an approved self-insurer for workers’ compensation claims. As a part of that certification, Glatfelter posted a security deposit with the Commissioner of Insurance in the approximate amount of 1.6 Million Dollars.

Glatfelter sold its North Carolina operations to Ecusta in approximately 2001. Ecusta agreed to assume and pay Glatfelter’s existing self-insured workers’ compensation claims. The North Carolina Department of Insurance permitted Ecusta to substitute a statutory security deposit for that of Glatfelter. Ecusta did not seek approval from the Department of Insurance as an approved self-insurer in North Carolina for the claims it assumed from Glatfelter. Ecusta did purchase commercial workers’ compensation insurance coverage for its operations in North Carolina for claims other than the claims assumed from Glatfelter.

Based upon coverage information available to the Industrial Commission, the following coverage history is applicable to Glatfelter/Ecusta claims:

January 17, 1992 to July 15, 2001:  Self Insured

September 17, 2001 to September 17, 2003:  Continental Casualty Company

Ecusta is now in Federal Bankruptcy. Pursuant to the automatic stay afforded by Federal law, the Industrial Commission has stayed all proceedings against Ecusta.

Ecusta has ceased processing claims and paying workers’ compensation benefits on claims assumed from Glatfelter. The Industrial Commission presented this matter to the North Carolina Self-Insurance Guaranty Association. The NCSIGA contends that the claims assumed from Glatfelter are not “covered” claims within the meaning of N.C. Gen. Stat. §§97-130, et. seq. as Ecusta was not an approved self-insurer. The NCSIGA’s letter detailing its position on this matter is available on the Industrial Commission’s website.

I have met with Commissioner Jim Long of the North Carolina Department of Insurance. His office is currently reviewing the situation and our request for advice on the proper procedure by which claimants can access Ecusta’s statutory security deposit held by the Department of Insurance.

Chief Deputy Commissioner Stephen Gheen has advised Glatfelter that it would appear that Glatfelter is responsible for resuming processing and payment of all claims assumed by Ecusta. A response is expected shortly. Unless Glatfelter timely resumes payment of ongoing benefits in the cases outstanding in North Carolina, Glatfelter and the NCSIGA will be added as party defendants in these cases and the Deputy Commissioner Section will schedule an immediate hearing on the issues of payment of benefits in the assumed claims. If a hearing is scheduled, this information will be posted on our website.

Employees whose claims were assumed by Ecusta from Glatfelter are experiencing and may expect a continuing disruption in the processing and payment of their claims. The Industrial Commission is proceeding diligently to make the period of disruption as brief as possible.

Ecusta employees who filed claims during the period of commercial insurance coverage should experience no disruption in the processing or payment of their claims. If any claimant does not receive benefits to which they are lawfully entitled or should benefits awarded be suspended or terminated for unexplained reasons in these cases, please notify the Industrial Commission.

Questions or concerns regarding Glatfelter/Ecusta claims should be directed to:  Stephen T. Gheen, Chief Deputy Commissioner, 919-807-2540 or gheen@ind.commerce.state.nc.us. Due to the volume of inquiries, email communication is requested if possible, though not required.

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