IR #2002-20
Thursday, December 26, 2002

Dean Fryer
Susan Gard

State takes over Eel River Sawmill's workers' compensation program

SAN FRANCISCO - California Department of Industrial Relations Acting Director Chuck Cake ordered the state's Self Insurers' Security Fund to take over payment of Eel River Sawmill's workers' compensation claims following the company's default on payment of benefits.

Eel River Sawmill, self insured since 1980, advised California's Self Insurance Plans (SIP) Dec. 10 that it was defaulting because it was unable to pay benefits on its remaining self-insured workers' compensation liabilities.

"Employees receiving workers' compensation benefits for workplace injuries are first protected from a self-insured company's inability to pay benefits with a security deposit employers are required to post," said SIP manager Mark Ashcraft. "The second protection is the Security Fund's guarantee to pay all benefits due that exceed the deposit posted. Eel River Sawmill defaulted on benefit payments so we turned their security deposit and workers' compensation liabilities over to the Security Fund, which will ensure continued benefit payments to injured workers."

As a result of an audit, SIP found the company understated its liability on 142 open indemnity claims by $2,159,824 and had a total remaining liability on its worker's compensation claims estimated at $7,021,506.

Eel River Sawmills operated a lumber sawmill and power generation plant in Fortuna. The sawmill closed a year ago leaving workers' compensation claims, which were being paid by proceeds from the power plant. The power plant is now closing.

The Security Fund is a private, nonprofit mutual benefit corporation that guarantees the payment of all self-insured workers' compensation claims in California.

The state has one of the largest workers' compensation self-insurance programs in the nation. Employers choose to self insure their workers' compensation liabilities because of cost effectiveness, greater control over their claims program, and increased safety incentives that come with improved loss-control results.

For more information on self-insurance, visit