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Scott Penn, Inc. v. Mississippi Workers' Compensation Group Self-Insurer Guaranty Association

Supreme Court of Mississippi

August 31, 2017

SCOTT PENN, INC., AUSTIN, INC., KENT HILLMAN LOGGING, INC., WINONA HARDWOOD, INC., TALLAHATCHIE HARDWOOD, INC., GREG WINSTEAD LOGGING, INC. AND SOUTHERN LOGGING, INC.
v.
MISSISSIPPI WORKERS' COMPENSATION GROUP SELF-INSURER GUARANTY ASSOCIATION

          DATE OF JUDGMENT: 06/02/2016

         MADISON COUNTY CIRCUIT COURT, HON. JOHN HUEY EMFINGER TRIAL JUDGE

          TRIAL COURT ATTORNEYS: ANDREW D. SWEAT KIMBERLY NELSON HOWLAND JAMES D. SHANNON KATHRYN LINDSEY WHITE M. GARNER BERRY TROY PHILIP HUSKEY JOHN DAVID PRICE

          ATTORNEYS FOR APPELLANTS: KATHRYN LINDSEY WHITE JAMES D. SHANNON

          ATTORNEYS FOR APPELLEE: JENNIFER HUGHES SCOTT ANDREW D. SWEAT KIMBERLY NELSON HOWLAND

          BEFORE RANDOLPH, P.J., KITCHENS AND CHAMBERLIN, JJ.

          RANDOLPH, PRESIDING JUSTICE.

         ¶1. The Mississippi Workers' Compensation Group Self-Insurer Guaranty Association ("Guaranty Association") was ordered by the Mississippi Workers' Compensation Commission ("Commission") to assess former members of the Mississippi Comp Choice Workers' Compensation Self-Insurers Fund ("Comp Choice"). Subsequently, the Guaranty Association filed suit in the Madison County Circuit Court to collect the assessments. Former members of Comp Choice[1] appealed the circuit court's grant of summary judgment in favor of the Guaranty Association. Finding no error, we affirm the judgment of the Madison County Circuit Court, as to Austin Inc.-Randolph, MS and Winona Hardwood, Inc.

         FACTS AND PROCEDURAL HISTORY

         ¶2. On January 20, 2009, the Commission entered an order accepting the surrender of Comp Choice's Certificate of Authority and terminated Comp Choice's status as an approved group self-insurer fund. Subsequently, the Commission

identified several failures by Comp Choice to satisfy its obligations and requirements as a self-insurer, and despite repeated attempts by the Commission and Comp Choice to rehabilitate these wrongs, surrender of the Certificate became the only viable option at the end of the day. Based on the facts leading to the surrender of the Certificate of Authority, the Commission could easily find Mississippi Comp Choice to be a "self-insurer in default" pursuant to the broad definition of such found in § 71-3-157, and we do hereby find that in several respects, Mississippi Comp Choice has failed to satisfy many of its obligations under the Mississippi Workers' Compensation Law. Such default, which we hereby find to have occurred as of the effective date of surrender of Certificate, or as of January 20, 2009, by operation of statute authorizes this transfer of responsibility to the Group Guaranty Association for the administration and payment of the workers' compensation liability of the Fund. . . .
The Commission finds that the indemnity agreements required by Commission General Rule 7, which jointly and severally bind all members of Mississippi Comp Choice to meet the workers' compensation obligations of each and every other member, are valid and enforceable. The Commission further finds that should the remaining assets of Mississippi Comp Choice be exhausted in the payment and administration of claims, the Group Guaranty Association should then look to the enforcement of those agreements including making any assessments necessary to satisfy those financial obligations.

         The Guaranty Association is a "statutorily created legal entity formed to provide a mechanism for payment of covered claims under the Workers' Compensation Law, to avoid financial loss to claimants because of the insolvency of a group self insurer, and to provide an association to assess the cost of such protection among self-insurers."

         ¶3. On April 19, 2010, the Commission found that "a careful evaluation of the remaining assets and outstanding claims unfortunately shows an insufficient amount of Comp Choice assets to cover the projected claim payout." The Commission ordered an assessment in the amount of $1, 948, 463 of the former members of Comp Choice for the last four years showing losses. The amount was necessary to "cover the fund deficiency, the proper estimated value of non-current assets, and the anticipated administrative and legal fees." The Commission ordered that all assessments be calculated based on each member's share of the total premiums earned and be paid within sixty days of receiving the assessment notice. The Commission also imposed a 5% per month fine, with a minimum fine of $100, for any member failing to timely pay the assessment.

         ¶4. On May 18, 2010, former members of Comp Choice filed a Notice of Appeal in the Hinds County Circuit Court, challenging the April 19, 2010, order of the Commission. Comp Choice asserted that the order and assessment (1) were not supported by substantial evidence and law; (2) were arbitrary and capricious; (3) were beyond the power of the Commission; and (4) violated statutory and/or constitutional rights of Comp Choice. Comp Choice requested that the appeal act as supersedeas to the ...


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