Source: http://ri.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20150206_0000017.RI.htm/qx
Timestamp: 2020-05-25 02:59:40
Document Index: 134012775

Matched Legal Cases: ['§ 7', '§ 7', '§ 3', '§ 3', '§ 3', '§ 5', '§ 10', '§ 10', '§ 11', '§ 14']

FindACase™ | Heritage Healthcare Services, Inc. v. Beacon Mut. Ins. Co.
Heritage Healthcare Services, Inc. v. Beacon Mut. Ins. Co.
Heritage Healthcare Services, Inc., et al.
The Beacon Mutual Insurance Co., et al
Providence County Superior Court. (PB 02-7016). Associate Justice Michael A. Silverstein.
For Plaintiffs: Jason B. Adkins, Pro Hac Vice.
For Defendants: Jordan D. Hershman, Pro Hac Vice.
We are called upon to determine whether a dismissal pursuant to Rule 12(c) of the Superior Court Rules of Civil Procedure in favor of the state-chartered workers' compensation insurance provider, The Beacon Mutual Insurance Company (Beacon), and against the plaintiffs, a certified class of approximately 14,000 Beacon policyholders, was properly granted.[1] In the proceedings below, a justice of the Superior Court found that the plaintiffs' claims were derivative in nature and, as a consequence, were subject to the procedural requirements set forth in G.L. 1956 § 7-1.2-711(c)[2] and Rule 23.1 of the Superior Court Rules of Civil Procedure.[3] There was no dispute with the hearing justice's finding that the plaintiffs had failed to file suit in accordance with § 7-1.2-711(c) and Rule 23.1. As a result, he dismissed the complaint and entered judgment on behalf of Beacon. On appeal, the plaintiffs insist that their claims met the requirements of a
direct, and not a derivative, action. Accordingly, the plaintiffs argue that the Superior Court erred in dismissing their complaint. In contrast, Beacon argues that dismissal of the complaint was proper because the plaintiffs' claims are classically derivative in nature and thus subject to the procedural prerequisites of such cases, prerequisites that were not satisfied before suit was commenced. For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.
Beacon was created as a legislative response to a growing workers' compensation insurance crisis in the state.[4] P.L. 2003, ch. 410, § 3(f). The General Assembly's stated purpose for enacting the legislation that created Beacon was " to ensure that all employers in the state of Rhode Island have the opportunity to obtain workers' compensation insurance at the lowest possible price." [5] Id. at § 3(a). Accordingly, Beacon was established to act as the " workers' compensation insurance carrier of last resort." Id.
Beacon's charter provides that the company is to be " operated as a domestic mutual insurance company." [6] P.L. 2003, ch. 410, § 3(b). The charter further specifies that the " management and control of [Beacon] is vested solely in the board." Id. at § 5. As such, Beacon's board has been granted the authority to exercise certain enumerated powers. Id. at § 10. Specifically, Beacon has the discretion to " [d]eclare dividends to its policyholders when there is an excess of assets over liabilities, and minimum surplus requirements" have been attained. Id. at § 10(6). Further, Beacon's charter says that Beacon " may" declare dividends, evidencing that this power is discretionary. Id. In addition, Beacon and " any workers' compensation insurance policyholder may mutually consent to modify the rates for that policyholder's workers' compensation insurance policy, provided [Beacon] files notice of the modification with the director of the department of business regulation." Id. at § 11(d)(2). Finally, Beacon's charter provides in part that " [a]ll premiums and other money paid to [Beacon] * * * are the sole property of [Beacon] and shall be used exclusively for the operation and obligations of [Beacon]." Id. at § 14. With Beacon's statutory framework as a background, we turn our attention to the allegations set forth in plaintiffs' complaint.
In December 2002, Heritage Healthcare Services, Inc. (Heritage) initiated litigation against Beacon, seeking to recover under the theories of breach of contract and breach of fiduciary duties. Since that time, this case has traveled what this Court has previously described as a " serpentine journey." Heritage Healthcare Services, Inc. v. Marques,14 A.3d 932, 933 (R.I. 2011). During the ...