THIS NOTICE MAY AFFECT YOUR RIGHTS PLEASE READ IT CAREFULLY

Transcription

1 THIS NOTICE MAY AFFECT YOUR RIGHTS PLEASE READ IT CAREFULLY NOTICE OF PENDENCY OF CLASS ACTION AND PRELIMINARY APPROVAL OF SETTLEMENT REGARDING WORKERS COMPENSATION INSURANCE TO CERTAIN CALIFORNIA EMPLOYERS WHO ARE OR WERE INSURED WITH ONE OF THE INSURANCE CARRIER DEFENDANTS LISTED BELOW SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES CALIFORNIA SAMPLE SERVICES, INC., ) Case No. BC ON BEHALF OF ITSELF AND ) ALL OTHERS SIMILARLY SITUATED, ) ) Plaintiffs, ) vs. ) ) PACIFIC RIM ASSURANCE COMPANY ) and DOES 1 through 100, inclusive, ) ) Defendants. ) TABLE OF CONTENTS PAGE 1. Why should I read this notice? What is a class action? What is this lawsuit about? What is the WCIRB? Who is included in this class action? What are the terms of the settlement? Do I need to do anything in order to participate in the settlement? What information will be needed concerning my business? What does class membership mean? Who represents the class? How can I exclude myself from the class? What is the effect of exclusion? What if I want to object or comment on the settlement? What is the effect of the final settlement approval? Where do I get additional information? Why Should I Read This Notice? The purpose of this Notice is to inform you that there is now pending in this Court a class action on behalf of certain California employers who purchased workers compensation insurance from Pacific Rim Assurance Company. On April 29, 1999, this Court gave preliminary approval to a settlement of the class action. The purpose of 1

2 this Notice is to describe the settlement to you. You should read this Notice to determine whether you wish to participate in the class action settlement. 2. What Is A Class Action? A class action is a type of lawsuit in which one or a few named plaintiffs bring suit on behalf of all of the members of a similarly situated group to recover damages for all of the group, without the necessity of each member filing an individual lawsuit or appearing as an individual plaintiff. Class actions are used by the courts where the claims raise basic issues of law or fact that are common, making it fair to bind all class members to the orders and the judgment in the case, without the necessity of hearing essentially the same claims over and over again. Use of a class action eliminates the necessity of filing multiple suits, and assures that all class members are bound by the results of the lawsuit. 3. What Is This Lawsuit About? On July 12, 1996, a lawsuit was filed in Los Angeles County Superior Court, case No. BC , entitled California Sample Services, Inc. v. Pacific Rim Assurance Company. The lawsuit was brought by the Class Representative (California Sample Services, Inc.) on behalf of itself and on behalf of the Class defined below. The Class Representative is represented by Roxborough, Pomerance, Gallegos & Nye LLP and Shernoff, Bidart, Darras & Dillon ( The Plaintiff Class Counsel ). The Class Representative is an employer that purchased workers compensation insurance from Pacific Rim Assurance Company (herein, Pacific Rim ) from at least 1991 through The Class Representative alleges that Pacific Rim misreported medical-legal cost information for its individual injured workers claims to the California Workers Compensation Insurance Rating Bureau ( WCIRB ) from January 1, 1984 to December 31, The Class Representative was affected by such misreporting in the form of artificially inflated workers compensation premiums. Through the course of extensive investigation into the issue of medical-legal misreporting, the Plaintiff Class Counsel discovered that The Class Representative could not have been the only employer which suffered similar damages. As a result, The Class Representative alleges that they and other employers, whose premiums were calculated using the California Experience Rating System, ended up paying higher premiums for their workers compensation insurance. The Class Representative seeks relief based upon theories of breach of the implied covenant of good faith and fair dealing, negligence and unfair business practices under Business & Professions Code sections 17200, et seq. Following the filing of the lawsuit, the California Department of Insurance requested that the parties mediate their dispute, monitored by the Department of Insurance. Thereafter, the parties reached a settlement, endorsed by the Department of Insurance and preliminarily approved by this Court. On April 29, 1999, the Los Angeles Superior Court issued an order preliminarily certifying this case as a class action for settlement purposes and defining The Plaintiff Class as follows: All persons or business entities within the State of California which purchased workers compensation insurance policies from Pacific Rim incepting January 1, 1984 through December 31, 1992, and which, during that time, had at least one indemnity claim filed against it and an earned premium of no less than $5,000. On the same date, the Los Angeles Superior Court also approved the sending of this Notice to all California employers who purchased workers compensation insurance policies from Pacific Rim from January 1, 1984 through December 31, 1992, which, during that time, had at least one indemnity claim filed against them and an individual earned premium of no less than $5,000, to allow them the opportunity to indicate whether they want 2

3 to accept the benefits of the settlement more fully described below. The Court has set the date of August 23, 1999 to have a hearing on whether to finally approve the settlement. You are not required to appear at this hearing in order to accept the benefits of the settlement and you are not required to send in any further information to the Court regarding the settlement, unless you want to exclude yourself from the settlement, in which case you are required to take the actions more fully described in section What Is The Workers Compensation Insurance Rating Bureau? The Workers Compensation Insurance Rating Bureau of California ( WCIRB ) is a legislatively mandated organization that collects data about injured workers claims and employers payroll, and uses this data to develop workers compensation premium rates. The WCIRB requires that all employer workers compensation information be reported pursuant to its Unit Statistical Plan. Another important part of the WCIRB s duties is computing experience modifications ( EX-MODS ) for employers whose workers compensation insurance premiums are subject to experience rating. Experience rating applies to all qualifying employers over a certain size (corresponding to an annual premium of approximately $5,000). Under the WCIRB s Experience Rating Plan, each employer s claim losses, claim expenses, and payroll are reported by its insurance carrier to the WCIRB on an annual basis. The WCIRB then uses this data to calculate the employer s EX-MOD, using a formula set forth in the rating plan. The EX-MOD is a percentage figure that is used to adjust the employer s workers compensation premium, based on claims experience. Generally, the higher the losses reported, the higher the resulting premium. The Unit Statistical Plan in effect from 1983 through 1992 required that medical costs incurred in the defense of a workers compensation claim be reported in a particular manner. The manner in which such information was reported had a direct impact on the employer s EX-MOD, which in turn determined that employer s future premium rate. In 1995, a system of open competitive rating incepted in California. Workers compensation carriers set their own premium rates, approved by the California Department of Insurance. Workers compensation carriers must still report certain statistical information to the WCIRB. 5. Who Is Included In This Class Action? On April 29, 1999, the Court certified for settlement purposes a preliminary statewide Plaintiff Class under California Code of Civil Procedure section 382 and Chapter 15 of the Los Angeles Superior Court Rules. The Plaintiff Class is defined as set forth in Section 3 above. The class settlement excludes from participation all persons who, in accordance with the terms of this Notice, execute a timely request for exclusion from the settlement, and thus, voluntarily opt-out of this class action proceeding. 6. What Are The Terms Of The Settlement? The terms of the settlement in this case, preliminarily approved by the Court on April 29, 1999, are as follows: a. Pacific Rim shall make available to The Plaintiff Class benefits totaling $487,500 in the form of policy premium credits to be dispersed to The Plaintiff Class. The policy premium credits shall be freely transferrable between Pacific Rim and the following workers compensation carriers also subject to proposed settlement approval before the Los Angeles Superior Court: California Compensation Insurance Company (Los Angeles Superior Class Action Case No ) (herein, Cal Comp ) and Superior National Insurance Company (Los Angeles Superior Class Action Case No. BC ) (herein, Superior National ). The policy premium credits may be used to reduce premium owed by The Plaintiff Class upon renewal of a Pacific Rim, Cal Comp or Superior National workers compensation policy or upon inception of a new such policy, subject to the applicable carrier s underwriting standards ( the Class Benefit ). b. The policy premium credits will be sent to each policyholder for each policy issued from January 1,

4 through December 31, The policy premium credits will be available for use for a period of thirty-six (36) months from the date of issuance. The value of the policy premium credit will be calculated following notification to the Plaintiff Class and opportunity to opt-out of the proposed settlement. c. After expiration the total thirty-six (36) month redemption period, Pacific Rim shall calculate the value of any unredeemed policy premium credits issued, and shall issue additional policy premium credits from the residuary of the class settlement. The second policy premium credit will be valid for a fourteen (14) month period from the date of issuance. d. In addition to the Class Benefit, Pacific Rim and The Class Representative agreed The Plaintiff Class Counsel shall receive $250,000 in attorneys fees and reimbursable costs not to exceed $12,500 to reimburse the time and expenses incurred by The Plaintiff Class Counsel in connection with the litigation against Pacific Rim. In addition, this amount reflects the benefit The Plaintiff Class Counsel conferred upon The Plaintiff Class. e. The settlement is more fully described in the papers and pleadings on file with this Court which can be obtained as set forth below. The Court will decide whether to finally approve this settlement at the hearing for final approval on August 23, f. If you elect not to use your policy premium credit by renewal of a current workers compensation policy or procurement of a new workers compensation policy with Pacific Rim, Cal Comp or Superior National, then you will not receive the Class Benefit conferred by this settlement. Thus you may consider the opt-out procedures explained more fully in paragraphs 11 and Do I Need To Do Anything In Order To Participate In The Settlement? No. If you wish to remain a member of The Plaintiff Class, you do not need to do anything at this time. 8. What Information Will Be Needed Concerning My Business? None. If you would like to participate in the settlement, Pacific Rim will mail your policy premium credit as discussed above. No claim forms will be required. You do not need to provide any further information. 9. What Does Class Membership Mean? If you remain a member of The Plaintiff Class, then: a. The Class Representative and The Plaintiff Class Counsel, including those listed on this Notice, will act as your representative and counsel for the approval of the settlement with Pacific Rim. You are not required to pay for these lawyers services, or for the costs of the lawsuit. b. You will be entitled to participate in the Class Benefit resulting from the settlement in favor of The Plaintiff Class. c. You will be bound by the terms and conditions of the settlement and releases, as well as any judgment or dismissal entered in the lawsuit. 10. Who Represents The Class? a. The Class Representative. Plaintiff California Sample Services, Inc. has been designated as The Class Representative by the Court. b. Class Counsel. The Court has appointed the following Plaintiff Class Counsel to represent your 4

5 interests and those of The Plaintiff Class: Nicholas P. Roxborough, Esq. Michael J. Bidart, Esq. Drew E. Pomerance, Esq. Shernoff, Bidart, Darras & Dillon Roxborough, Pomerance, Gallegos & Nye LLP 600 South Indian Hill Boulevard Wilshire Boulevard, Suite 1200 Claremont, California Los Angeles, California How Can I Exclude Myself From The Class? If you do NOT want to participate in the settlement and wish to exclude yourself, that is, to opt-out of this settlement, then you must submit a letter requesting exclusion to: Pacific Rim Compensation Insurance Group c/o Heywood G. Friedman, Esq., Law Office Of Heywood G. Friedman, West Agoura Road, Suite 200, Westlake Village, California 91361, postmarked by no later than August 9, 1999 ( the Opt-Out Request ). The Opt-Out Request must include your Pacific Rim policy number(s) (this can be found on the mailing envelope for this Notice) and must be signed by the employer(s) named in the Pacific Rim policy. DO NOT WRITE REQUESTING EXCLUSION IF YOU WISH TO SHARE IN THE CLASS BENEFIT. 12. What Is The Effect Of Exclusion? By electing to be excluded from the settlement (a) you will not share in the Class Benefit, (b) you will not be bound by any further orders or judgment entered for or against The Plaintiff Class, and (c) you may pursue any claims you may have against Pacific Rim by filing your own lawsuit at your own expense. 13. What If I Want To Object To Or Comment On The Settlement? If you decide to remain a member of The Plaintiff Class and you wish to object to the settlement or otherwise comment upon the settlement, you must file such objections or comments with the court by August 9, Any papers filed with the court must be served on The Plaintiff Class Counsel (set forth in Paragraph 10.b.) and counsel for Pacific Rim (set forth in Paragraph 11). If you do not file an objection or comment by August 9, 1999, you will be precluded from appearing at the fairness hearing for final approval of the settlement on August 23, What Is The Effect Of The Final Settlement Approval? The proposed settlement does not constitute an admission of liability on the part of Pacific Rim. If the Los Angeles Superior Court grants final approval of the settlement, the claims of all members of The Plaintiff Class against Pacific Rim will be dismissed, including all claims that have been asserted or that could have been asserted against Pacific Rim in connection with medical-legal misreporting to the WCIRB. No member of The Plaintiff Class would be permitted to continue to assert any such claim in any litigation against Pacific Rim. 15. Where Do I Get Additional Information? If you decide to remain a member of The Plaintiff Class and you wish to communicate with or obtain information from The Plaintiff Class Counsel, you may do so by writing to The Plaintiff Class Counsel at one of the addresses listed in Section 10 above. PLEASE DO NOT CONTACT THE COURT, THE WCIRB OR THE DEPARTMENT OF INSURANCE. This Notice provides only a summary of matters relating to the settlement. You may seek the advice and guidance of your own private attorney at your own expense if you wish. For more detailed information, you may review the pleadings, records and other papers on file in this litigation. You may inspect these documents during regular Court hours at the Los Angeles Superior Court, located at 111 North Hill Street, Los Angeles, California. 5

6 Dated: April 29, 1999 By Bruce E. Mitchell Commissioner of the Los Angeles Superior Court Sup3not 6