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VPS Management Inc. v. Pacific Rim Assurance Co.3/17/1999
Modified and certified for publication 4/14/99 (order attached)
xref B121785
APPEAL from a judgment of the Superior Court of Los Angeles County. Daniel A. Curry, Judge. Affirmed.
In its first amended complaint, VPS Management, Inc. sued its workers' compensation insurer, Pacific Rim Asssurance Company (sued below as Pacific Rim Insurance Company), for negligence, fraud, and breach of contract. VPS appeals from the judgment entered following the trial court's grant of Pacific's motion for judgment on the pleadings. We affirm.
BACKGROUND
According to the first amended complaint, VPS bought workers' compensation insurance from Pacific between June 1990 and June 1993. The policy stated VPS was entitled to participate in dividends, on terms and conditions defined in the policy, namely the provisions of Pacific's dividend allocation plans.
Pursuant to the policy, Pacific was to furnish unit statistical reports containing financial information about VPS's claim loss history to the Workers' Compensation Insurance Rating Bureau (WCIRB) annually or more frequently as required by the Rating Plan. The Rating Plan, promulgated or approved by the Insurance Commissioner, required a workers' compensation insurer to exclude certain claim losses from the incurred medical and incurred indemnity amounts reported to the WCIRB. These excluded costs, loss expenses, are not used by the WCIRB in calculating experience rating modifications and do not affect an employer's experience rating modification.
The Rating Plan provided that for workers' compensation claims arising under policies with inception dates before January 1, 1993, defense medical-legal expenses were not to be classified and reported to the WCIRB as incurred losses, but were instead to be treated as defense expense. The complaint continues, alleging that Pacific nevertheless wrongly included in its reporting its defense medical-legal expenses (including reserves therefor), combining them with incurred losses when reporting claim losses to the WCIRB, in violation of the Rating Plan. The effect of Pacific's conduct was to increase VPS's premiums. Higher incurred losses also effected a reduction or elimination of any policy dividends payable by Pacific to VPS.
The complaint further alleges that because of Pacific's concealment, VPS did not learn of Pacific's misclassifying and misreporting defense medical-legal expenses until 1996, after VPS caused an audit to be performed on its workers' compensation files. Even after Pacific was informed that incurred medical losses, defense costs and medical-legal costs had been improperly reported, Pacific refused to timely submit revisions to the WCIRB knowing that VPS would be precluded from modifying its experience modifications downward because of the "statute of limitations" in the Ratings Plan, providing that the WCIRB may revise no more than the current and two immediately preceding experience modifications for a company. Only an insurer can submit such revisions.
On August 24, 1998, the court granted Pacific's motion for judgment on the pleadings and denied leave to amend. The judgment, entered September 14, 1998, ordered VPS take nothing by its first amended complaint and awarded costs to Pacific.
DISCUSSION
"Because a motion for judgment on the pleadings is similar to a general demurrer, the standard of review is the same. [Citation.] We treat the pleadings as admitting all material facts properly pleaded, but not contentions, deductions or Conclusions of fact or law. . . . The burden of proof is squarely on the plaintiff. [Citation.] The judgment of dismissal will be affirmed i
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