Criminal Probe Launched at State Workers’ Comp Insurer
The California Highway Patrol, Department of Insurance and San Francisco District Attorney's Office on Wednesday launched a task force to conduct a criminal investigation into alleged financial misconduct by former officials at the State Compensation Insurance Fund, the Sacramento Bee reports (Chan, Sacramento Bee, 7/26).
State Fund is the largest workers' compensation insurer in California, controlling about 32% of the market and collecting $3.6 billion in premiums in 2006.
CHP said it created the task force in response to information it received from State Fund as part of an external audit of the insurer.
The audit uncovered financial transactions involving the sale of discounted policies through outside associations with links to former board members. The total in misappropriated funds could be as high as $1 billion, according to the insurance department.
The findings led to the forced retirement last year of James Tudor, State Fund's then president, and Renee Koren, who was a vice president at the time.
A spokesperson for the district attorney's office in San Francisco said the task force investigation could take "up to a year."
A separate "top-down audit" of State Fund under the oversight of Insurance Commissioner Steve Poizner (R) is expected to release its findings in September or October, according to the Los Angeles Times (Lifsher, Los Angeles Times, 7/26).