Applied Underwriters Captive Risk Assurance Company, Inc. v. Tennessee Department of Commerce and Insurance

08/04/2025 IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE March 18, 2025 Session APPLIED UNDERWRITERS CAPTIVE RISK ASSURANCE COMPANY, INC., ET AL. v. TENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE Appeal from the Chancery Court for Davidson County No. 24-487-IV Russell T. Perkins, Chancellor ___________________________________ No. M2024-01239-COA-R3-CV ___________________________________ This appeal arises from a chancery court petition for interlocutory judicial review of an intermediate agency decision in a contested case proceeding before the Tennessee Department of Commerce and Insurance. The petition sought judicial review of the administrative law judge’s denial of a motion to dismiss. The department moved to dismiss the petition for lack of subject matter jurisdiction. The chancery court construed the challenge as a factual challenge to subject matter jurisdiction and determined that an adequate remedy would be available to the petitioners in the form of subsequent judicial review of a final administrative decision. Accordingly, the chancery court granted the motion to dismiss. Petitioners appeal. We affirm. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which J. STEVEN STAFFORD, P.J., W.S., and KENNY W. ARMSTRONG, J., joined. Daniel Olivas, Nashville, Tennessee and Janet Strevel Hayes, Knoxville, Tennessee, for the appellants, Applied Underwriters Captive Risk Assurance Company, Inc.; California Insurance Company; and Continental Indemnity Company. Jonathan Skrmetti, Attorney General and Reporter, J. Matthew Rice, Solicitor General, Pablo Varela, Assistant Attorney General, and Lauren W. Travis, Senior Assistant Attorney General, Nashville, Tennessee, for the appellee, Tennessee Department of Commerce & Insurance. Scott D. Carey, Claire Fox Hedge, and Meg Hancock, Nashville, Tennessee, for the appellee Milan Express Co., Inc.  OPINION I. FACTS & PROCEDURAL HISTORY This case contains an incredibly protracted and complicated procedural history. The present appeal stems from the chancery court’s dismissal of a petition for interlocutory review. Said petition was filed after an administrative law judge denied the petitioners’ motion to dismiss a contested case filed pursuant to the Uniform Administrative Procedures Act. Accordingly, our recitation of the facts comes largely from the pleadings and the record of other proceedings litigated between the parties. We will set forth only those facts which are necessary to the resolution of the present matter. In September 2008, Milan Express Co., Inc. (“Milan”), one of the appellees in this matter, purchased worker’s compensation insurance policies from Applied Underwriters Inc. (“Applied”), a nonparty in this case. The policies were offered as part of a product called “the Applied Underwriters Workers’ Compensation Profit Sharing Plan.”1 This plan consisted of “guaranteed cost workers’ compensation insurance policies and a ‘protected cell,’” which was to be maintained by Applied Underwriters Captive Risk Assurance Company, Inc. (“AUCRA”), one of the appellants in this matter. The policies themselves were “procured” through Continental Indemnity Company and California Insurance Company, the other appellants in this matter. We will refer to the three appellants collectively as “the Petitioners” throughout this opinion. Additionally, participation in this program also required Milan to enter into a “Reinsurance Participation Agreement” (“RPA”), which was issued by AUCRA on October 1, 2008. The validity and legality of this RPA and its various clauses is the source of much of the conflict and litigation that has taken place between these parties. Approximately three years after entering the agreement, it appears that Milan’s premium amounts increased significantly. Milan refused to pay the increased premiums, and the insurance policy was cancelled on June 18, 2011, for non-payment. The parties engaged in litigation and arbitration in multiple forums for several years regarding amounts allegedly owed by Milan under the terms of the policy. On March 7, 2016, AUCRA filed a new lawsuit in the District Court for Douglas County, Nebraska, in which it sought approximately $2,953,722.20 in damages.2 Milan filed its answer on April 11, 2016, and levied various counterclaims against AUCRA. It is 1 Milan states that it was required to purchase this insurance in order to “satisfy its obligations under worker’s compensation laws.” 2 Appellants AUCRA and Continental Indemnity Company are both corporations with thei