Samuel Hale, LLC is an Employer Carve-out Organization (ECO) designed to protect California businesses from excessive and unpredictable employment costs due to fraud and litigation. The company employs more than 10,000 employees in California.
The company’s revenues grew by 593% between 2018 and 2021. According to the Sacramento Business Journal, they one of 24 Sacramento based companies that are part of Inc. 5000 list of fastest-growing private companies in America.
A labor code “Carve-Out” is a provision of workers’ compensation reform legislation. Samuel Hale was approved by the State of California under Labor Code 3201.7 to conduct business under this provision which allows an employer to form a labor-management alternative workers’ compensation program known as a “Carve-Out.” The key feature of this carve-out is an Alternative Dispute Resolution (ADR) process instead of the Worker’s Compensation Appeals Board process..
An Alternative Dispute Resolution process is judicial procedure used for settling disputes without litigation. LC 3201.7 utilizes an ADR process to expedite workers’ compensation claims and minimize the costs and time of an employee-related injury through the use of an Ombudsman, Mediation and Arbitration.
The company just announced that it will insure its $50 million workers’ compensation risk through an Insurance Captive fronted by A+ rated, Arch Insurance, effective July 1, 2022.
“We’ve been working toward this for the last six years,” says Samuel Hale CEO, Michael A. DiManno. “The captive arrangement will enable us to maximize the advantages of our carve-out agreement which drives the economics of our business,” he adds.
California has a very high litigation rate on workers’ compensation insurance claims relative to the rest of the country. According to the WCIRB, California spends as much money on the frictional costs associated with litigation as it does in wage reimbursement to injured workers, making it one of the most expensive states in the U.S. for workers’ compensation premium.
Carve-outs were created by the Department of Workers’ Compensation to allow approved entities to handle their claim disputes through Alternative Dispute Resolution (ADR) instead of the overburdened court system. ADR, comp claims get settled quickly and employees get their money faster, while insurers can avoid the staggering costs of the slow legal system.
“This captive gives us a 10-year horizon on workers’ comp, which creates long-term stability for our customers in a very shaky financial climate,” DiManno says. “We now have maximum control over our program and can deploy the best cost-containment services based on our specific needs,” he explains.
Not much will change for customers in terms of service and Samuel Hale clients will maintain their rates extending their claim of never increasing premiums on their customers.