NAT. INDUS. CONSTRUCTORS v. SUPER. OF INS.
3/2/1995
National Industrial Constructors, Inc. (National) appeals from a judgment of the Superior Court (Kennebec County, Alexander, J.) affirming the decision of the Superintendent of Insurance that denied National's appeal challenging its assignment by the National Council on Compensation Insurance (Council) to the accident prevention account of the workers' compensation insurance residual market. The Superintendent permitted the Council to combine the loss ratios of entities under common control for purposes of safety pool eligibility and thereby assign National to the accident prevention account. National contends that the Superintendent erroneously interpreted the safety pool eligibility provisions of the Workers' Compensation Rating Act, 24-A M.R.S.A. § 2361-2374 (1990), repealed and replaced by P.L. 1991, ch. 885, § B-11 & B-12 (effective Jan. 1, 1993). We agree with National and vacate the judgment of the Superior Court.
In Maine AFL-CIO v. Superintendent of Ins., 595 A.2d 424 (Me. 1991), we explained the organization of the workers' compensation residual market:
In Maine, workers' compensation insurance is divided into two
markets, the voluntary market and the residual market. The
residual market is an assigned risk pool designed to protect
insurance carriers from risks that make it economically
unattractive to underwrite specific employers voluntarily,
thereby providing coverage for employers otherwise unable to
find insurers willing to insure them. The residual
Id. at 426. An employer is eligible for the safety pool if that employer:
(1) Has had no more than one lost-time claim in the last 3
years for which data is available, regardless of the resulting
loss ratio;
(2) Has a loss ratio which does not exceed 1.0 over the last 3
years for which data is available; or
(3) Has been in business for less than 3 years, provided that
the eligibility shall terminate if his loss ratio exceeds 1.0
at the end of any year.
24-A M.R.S.A. § 2366(3)(B) (1990). In contrast, an employer whose loss ratio exceeds 1.0 over the preceding 3 years is eligible for only the accident prevention account. Id. § 2366(2)(B). Employers in both the safety pool and the accident prevention account pay premiums that are determined by the application of an experience rating plan adopted by the Superintendent. Id. § 2366(5)(A). In addition to these premiums, employers assigned to the accident prevention account must pay a premium surcharge pursuant to section 2366(4)(B). Safety pool members do not pay this surcharge.
The facts in this case are uncontroverted. The Council, as the plan manager for the residual market, developed and administered the experience rating plan used to determine the premiums that employers in the residual market would pay. Both National and Rust Engineering Company are construction companies and wholly owned subsidiaries of Wheelabrator Technologies of America, Inc. National and Rust operate as separate companies under separate management, and each company has its own assets, equipments, and personnel. Rust began doing business in Maine in 1986, and National in 1989. When National initially obtained
Later in 1989, the Council filed, and the Superintendent approved, a revised experience rating plan. This plan contained a "combination of entities" provision that permitted the Council to combine the experiences of two or more entities with common majority ownership for purposes of measuring an individual employer's future risk and computing premiums for that employer. When National applied for additional coverage for a new job site in 1990, the Council emp
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