State Fund Obtains Court Judgment in Suit by Southern California Grapegrower Over Claims Handling and Reserving Practices.

SAN FRANCISCO--(BUSINESS WIRE)--May 29, 1996--State Compensation Insurance Fund, which provides workers' compensation coverage to approximately half of all California businesses, today announced it has obtained a favorable judgment in a lawsuit by a Southern California grapegrower.

State Fund obtained the judgment in Riverside County Superior Court against Vladimer Marion Tudor Jr., president of Tudor Ranches Inc., in Mecca, Calif. in the Coachella Valley. The judgment dismisses various claims for damages sought by Tudor, who alleged State Fund mishandled and also over-reserved workers' compensation claims, which increased premiums and lowered dividends.

The Tudor Ranches case is among several widely watched lawsuits filed by a group of Southern California attorneys, including Nicholas Roxborough, over State Fund's claims reserving and handling practices. State Fund provided workers' compensation coverage to Tudor Ranches -- which employs up to 2,000 people during seasonal grape harvests -- from 1970 to 1991 when the suit was filed.

"We are very pleased with the judgment which vindicates the State Fund," said Charles Savage, State Fund's legal counsel. "State Fund is confident that other meritless suits against the Fund will similarly fail."

State Fund's outside legal counsel, trial attorneys Finley Taylor and Justine Casey, point out that State Fund's underwriting and claims practices have been historically validated in extensive audits conducted over the past five years by the California Department of Insurance (DOI) and independent actuaries.

"Our legal counsel successfully obtained the court's rulings to preclude Tudor Ranches from introducing into evidence improper, irrelevant and unfairly prejudicial materials," Savage said. "We are prepared to demonstrate that it has always been State Fund's philosophy to set reserves that are appropriate and realistic for each individual case."

Executive Vice President Dianne Oki added, "There has never been an incentive for State Fund to over-reserve or mishandle claims."

In its most recent audit of State Fund, Oki noted, the DOI concluded that reserves were "adequate" and that "the Fund monitors its case development on a timely basis."

"State Fund's excellent financial and operating results from 1990 to 1995 further underscore the appropriateness of State Fund's underwriting and claims practices," said Oki.

State Compensation Insurance Fund is California's largest provider of workers' compensation insurance coverage with approximately 250,000 policyholders. Established in 1914, the State Fund assures the availability of workers' compensation insurance to all California employers and competes with private carriers -- at no cost to taxpayers.

The State Fund is a self-supporting, non-profit public enterprise, which returns all funds in excess of expenses, claims and necessary surplus to its California employer policyholders.

CONTACT: State Compensation Insurance Fund

Charles Savage, 415/565-1237

Jody A. Carr, 415/565-3898

or

Healy Partners & Co.

Jim Zelinski, 415/546-6166