Raymond G. Farmer, as Director of the South Carolina Department of Insurance, Petitioner,
CAGC Insurance Company, In Liquidation, Respondent. South Carolina Property and Casualty Insurance Guaranty Association, Appellant,
CAGC Insurance Company, In Liquidation; Raymond G. Farmer, in his capacity as Ancillary receiver of CAGC Insurance Company, In Liquidation; and CompTrustAGC of South Carolina a/k/a CompTrustAGC of South Carolina, Inc., Respondents. Appellate Case No. 2016-000192
November 8, 2017
From Richland County G. Thomas Cooper, Jr., Circuit Court
A. Van Dine, III, Allen Mattison Bogan, Erik Tison Norton,
all of Nelson Mullins Riley & Scarborough, LLP, of
Columbia, for Appellant.
Michael A. Molony, Thantus Douglas Concannon, Russell
Grainger Hines, all of Young Clement Rivers, of Charleston,
for Respondent CompTrustAGC of South Carolina a/k/a
CompTrustAGC of South Carolina, Inc., and Geoffrey Ross
Bonham, of Columbia, for Respondent Raymond G. Farmer.
declaratory judgment action, the South Carolina Property and
Casualty Insurance Guaranty Association
("Association") appeals the circuit court's
grant of CompTrustAGC of South Carolina, Inc.'s
("CompTrust") motions to quash discovery and be
dismissed as a party. We reverse, finding CompTrust's
Association is a nonprofit entity created by the South
Carolina Property and Casualty Insurance Guaranty Association
Act ("Guaranty Act"), §§ 38-31-10 to -170
of the South Carolina Code (2015), which controls the
Association's duties, liabilities, and obligations. The
Association, in statutorily prescribed circumstances,
protects insureds of insolvent insurance carriers. S.C. Code
Ann. § 38-31-60 (2015); S.C. Prop. & Cas. Ins.
Guar. Ass'n v. Carolinas Roofing and Sheet Metal
Contractors Self-Ins. Fund, 315 S.C. 555, 557, 446
S.E.2d 422, 424 (1994). The Association must "pay
covered claims to the extent of the [A]ssociation's
obligation and deny all other claims . . . ." S.C. Code
Ann. § 38-31-60(d) (2015). As we will see, what
constitutes a "covered claim" as defined by §
38-31-20(8) is the core of this case.
insurers who write insurance to which the Act applies must
become members of the Association. S.C. Code Ann.
§§ 38-31-20(11), 40 (2015). The Association is
funded by member assessments, which are passed on to
consumers in the form of increased premiums. S.C. Code Ann.
§ 38-31-60(c) (2015).
was created in 1982 as a South Carolina unincorporated
business trust and operated as a self-insurance trust,
providing workers' compensation coverage to its
self-insured members ("Self-Insured Coverage").
Self-insured organizations such as CompTrust are not subject
to the Guaranty Act, are not members of the Association, and
pay no assessments to it.
Insurance Company ("CAGC") is a North Carolina
insurance company established in 2007 by some of
CompTrust's principals. In 2008, CAGC became a licensed
insurer in South Carolina and began issuing South Carolina
workers' compensation liability insurance policies to
prior participants in CompTrust. CAGC was a member of the
Association and paid assessments to the Association based on
the policies it issued.
December 28, 2010, CompTrust and CAGC executed a
Self-Insurance Loss Portfolio Transfer Assumption Agreement
(the "LPT Agreement"), wherein, inter
alia, CompTrust paid $3, 586, 527.01 for CAGC
to assume all of CompTrust's liabilities on approximately
seventy active workers' compensation claims arising out
of the Self-Insured Coverage ("Transferred
Claims"). The LPT Agreement was approved by the South
Carolina Workers Compensation Commission and the North
Carolina Department of Insurance. CompTrust voluntarily
dissolved on April 1, 2011.
November 30, 2011, less than a year after execution of the
LPT Agreement, the South Carolina Department of Insurance
("Department") determined CAGC was financially
unsound. On January 18, 2012, the Department suspended
CAGC's authority to transact insurance business in South
Carolina. Also in January 2012, CAGC was placed into
receivership in North Carolina. On January 6, 2014, a North
Carolina court declared CAGC insolvent.
January 17, 2014, Raymond G. Farmer, Director of Department,
petitioned the Richland County Circuit Court to commence this
ancillary receivership for CAGC in South Carolina. That ...