Opinion ID: 835369
Heading Depth: 2
Heading Rank: 4

Heading: Insurance Operations and Schedule P Filings

Text: Following the sale of the BICO name and certificate of authority, CCCC began to write more workers' compensation insurance in Oregon, including renewals of policies that BICO had written before 1999. Because of its limited business in Oregon before 1999, CCCC had deposited only $445,000 with DCBS, and only $185,000 of that amount was a deposit for its workers' compensation business, the rest of the deposit being related to other forms of insurance business that it conducted within Oregon. CCCC's Schedule P for 1998, filed in March 1999, indicated that its required deposit for workers' compensation insurance was only $130,000. During 1999 and 2000, however, CCCC increased its Oregon business, earning premiums of about $5.1 million in 1999 and $3.6 million in the first half of 2000. CCCC, however, did not file a Schedule P for 1999 when it was due in March 2000 and never made any additional deposit. DCBS wrote to CCCC in March 2000 asking the company to file its Schedule P, but CCCC failed to respond. DCBS again wrote to CCCC in August 2000, and again received no response. [4] CCCC continued to write workers' compensation insurance policies in Oregon until August 18, 2000. In October 2000, after CCCC had become insolvent, as discussed below, CCCC, in connection with discussions with DCBS over the liabilities of CCCC and its affiliated insurers, finally filed a Schedule P for 1999 and a separate Schedule P for the period ending June 30, 2000. The latter Schedule P calculated CCCC's deposit requirement as of June 30, 2000, to be $6.6 million. CCCC did not make any deposit to cover that obligation, and CCCC did not identify SNIC's deposit as a credit for that obligation. For its part, SNIC filed a Schedule P for 1998 in May 1999. That schedule reflected SNIC's ownership of the $10.6 million deposit that had been transferred from BICO to SNIC. However, like CCCC, SNIC did not file a Schedule P for 1999 when that form was due in March 2000. In August 2000, Stewart Levine, the statutory accounting manager for both CCCC and SNIC, sent a letter to DCBS enclosing a Schedule P for SNIC for 1999. That form indicated that SNIC had received no premiums, paid no losses, and conducted no workers' compensation insurance business in Oregon. The form failed to disclose the pooling agreement or indicate that, because of the pooling agreement, SNIC was a second-level reinsurer for CCCC. The form calculated that SNIC's required deposit was the statutory minimum of $100,000 that was required to do business in Oregon. Levine's letter noted that SNIC had an existing deposit of $10.4 million, [5] and it requested that DCBS release those funds (except for the required $100,000 minimum deposit) to SNIC. DCBS rejected SNIC's request and demanded that SNIC and all of its affiliated companies submit Schedule P forms indicating their liabilities as of June 30, 2000. Although Levine did not mention anything about CCCC to DCBS in connection with his efforts to recover the SNIC deposit, in an internal Superior Group memo prepared in connection with DCBS's request he wrote: Superior National  Oregon owes us $10,293,957. Commercial Compensation [ i.e., CCCC]  We owe Oregon $6,570,498. These calculations are as of June 30, 2000.