United Parcel Service of America - Page 60




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          dividend payment.  See Cal. Code Regs. tit. 10, sec. 2504 (1999).           
               From 1979 through 1983, petitioner self-insured its workers'           
          compensation risks in California.  R.L. Kautz, a company                    
          unrelated to petitioner or Liberty Mutual, administered this                
          program.  Liberty Mutual wrote the workers' compensation                    
          insurance for petitioner in all other States that were not                  
          monopolistic during this period.                                            
               Any employer in California seeking to be self-insured for              
          workers' compensation must submit an application to the State and           
          obtain State approval.  Any employer seeking to change from a               
          self-insured to an insured program for workers' compensation must           
          also submit an application to California and obtain State                   
          approval.                                                                   
               On October 3, 1983, Mr. Eugene Schoenleber of petitioner's             
          insurance department requested that Mr. Al Sharlun submit a                 
          proposal for taking over the administration of petitioner's                 
          California workers' compensation program from R.L. Kautz.  Mr.              
          Sharlun worked in Liberty Mutual's national sales department,               
          which handles large national accounts.  Subsequently, petitioner            
          and Liberty Mutual agreed that Liberty Mutual would write an                
          insurance policy for petitioner's 1984 California workers'                  
          compensation liability.                                                     
               On December 15, 1983, the State of California sent a letter            
          to petitioner reflecting its understanding that it was the                  





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