Judge Denies SCIF’s Request for Preliminary Injunction

San Francisco Superior Court Judge James Warren denied a request for a preliminary injunction against California Insurance Commissioner John Garamendi by the State Compensation Insurance Fund Aug. 5.

The injunction would have prevented the Commissioner and the Department of Insurance from interfering with management within State Fund.

The judge also overruled the demurrer filed by the CDI, allowing the case to continue in the San Francisco Superior Court, State Fund spokesperson Jim Zelinski said. The next step, according to Zelinski, is that State Fund will await a response to their lawsuit, which was filed May 28. The Commissioner has agreed to respond within 20 days.

“If Mr. Garamendi should issue an inappropriate order to State Fund, we will return to the Court,” State Fund president Dianne Oki said in a press release.

Commissioner Garamendi responded to the ruling in a press release, stating: “This is an extremely important decision for Californians. I am pleased that the judge found that the largest workers’ compensation insurer in the nation is subject to regulation just as every other insurer in this state. I look forward to working cooperatively with State Fund to address its financial and management issues. I will continue to fight for the only real solution which is immediate and substantial legislative reform of the entire workers’ compensation system.”

State Fund also requested the CDI’s approval for a quota share reinsurance agreement that would transfer more than $4 billion of premium off of State Fund’s books, substantially improving State Fund’s surplus and capital position.

Both parties had previously agreed that the CDI would give 10 days notice to State Fund prior to issuing any further directives, Zelinski added.