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INSURERS FILE SUIT TO CHALLENGE WORKERS' COMP STATUTE

 MINNEAPOLIS, May 25 /PRNewswire/ -- Several insurance companies today filed suit against Minnesota Commissioner of Commerce Bert McKasy, Commissioner of Labor and Industry John Lennes, and the Workers' Compensation Reinsurance Association (WCRA). The suit seeks to challenge the constitutionality of new legislation which affects roughly $400 million of excess reinsurance premiums paid by insurers and self- insured employers who were members of WCRA from 1979 to 1992.
 WCRA members were required by law to pay reinsurance premiums to the association. The members paid the reinsurance premiums to obtain insurance for their potential liability to pay catastrophic workers' compensation claims. Due to WCRA's management of these funds, it has been estimated that WCRA members have paid over $400 million in excess reinsurance premiums.
 WCRA, which was created by the legislature in 1979, previously authorized an excess premium distribution of $100 million to insurers and self-insureds. Commissioner Lennes approved the distribution, ordering that WCRA is required to equitably distribute excess premiums from previous periods to its members.
 After Lennes's order, and without authority, McKasy ordered that the excess premiums be given to employer policyholders. McKasy subsequently rescinded his order, but sought new legislation to accomplish the same result.
 WCRA recently authorized an additional distribution of $304 million to the members who paid the premiums. However, the legislature has now passed a new law which would retroactively require that both the $100 million and $304 million excess premium payments be given to employer policyholders.
 The plaintiff insurance companies include Minnesota Mutual Fire and Casualty, Federated Mutual Insurance Company, Liberty Mutual Insurance Company, Lumberman's Underwriting Alliance and Wausau Insurance Companies. The plaintiffs contend in part that the new statute is unconstitutional as a taking of property which belongs to the insurers and to which they are contractually entitled.
 The suit points out that the insurance companies paid the reinsurance premiums and faced assessments for deficiencies if the WCRA investment policies had failed.
 The suit also seeks to enjoin McKasy, Lennes and WCRA from enforcing the new statute until the constitutionality issues can be resolved.
 The plaintiffs are represented by Robins, Kaplan, Miller & Ciresi, a national law firm with offices in eight U.S. cities, including Minneapolis and St. Paul.
 -0- 5/25/93
 /CONTACT: James R. Safley, 612-349-8274, or Annamarie A. Daley, 612-349-8431, both of Robins, Kaplan, Miller & Ciresi/


CO: Robins, Kaplan, Miller & Ciresi ST: Minnesota IN: SU:

MA -- MN010 -- 2169 05/25/93 12:40 EDT
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Publication:PR Newswire
Date:May 25, 1993
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