Calif. Appellate Court Directs Trial Court to Determine Whether Delegation Clause is Unconscionable

SAN DIEGO — A California appellate court has remanded an Applied Underwriters workers’ compensation coverage dispute, directing the trial court to determine whether a delegation clause in a reinsurance participation agreement is unconscionable and thus unenforceable.

On Dec. 22, the California Court of Appeal, 4th District, found the trial court erred in denying Applied Underwriters’ motion to compel arbitration a dispute arising from the RPA without deciding whether the RPA’s delegation clause is unconscionable.

Ramar Production Services purchased workers’ compensation insurance from California Insurance Co. (CIC) through Applied Underwriters Inc.’s “Equity Comp Program,” a “profit sharing plan” in which …