ACRO CONSTRUCTORS v. STATE COMPENSATION INSURANCE FUND

Pearson, Simon, Warshaw & Penny, LLP filed on May 22, 2007 a class action lawsuit on behalf of a Los Angeles construction company, ACRO Constructors, against the State Compensation Insurance Fund (SCIF). The suit seeks restitution of premiums, dividends and credit for employers who purchased workers' compensation insurance coverage from SCIF during the years 2004 through 2007.

The complaint alleges that, in these years SCIF directors and managers diverted to their personal gain or permitted to be diverted through self-serving inattention to the interests of their insureds millions of dollars that should have been used to reduce premiums, pay dividends or credit to existing insureds of the Fund. SCIF is a not-for-profit insurer established by the State of California and charged with the responsibility of writing workers' compensation insurance for California's employers. It is obligated to manage premium dollars and the income from those funds to minimize employer workers' compensation costs while meeting the employers' obligations to industrially injured workers. The lawsuit seeks the recovery and appropriate allocation of the mismanaged sums paid to the administrators of so-called "Safety Groups" that did nothing to benefit the insured employers or their injured employee.

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