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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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