State Compensation Insurance Fund Will Not Renew Contract With PricewaterhouseCoopers
The State Compensation Insurance Fund -- which provides workers' compensation coverage to businesses that cannot get coverage from commercial insurers -- will not renew an accounting contract with PricewaterhouseCoopers, the Sacramento Bee reports. The decision ends a 20-year business relationship between the two entities and comes after a disagreement over a recent financial audit of State Fund (Chan, Sacramento Bee, 10/8). In an audit released in July, PWC recommended that State Fund increase its reserves of $9.8 billion by $1 billion to pay future claims. State Fund officials at the time challenged those results and cited a report by State Fund actuary Milliman USA that said reserve levels were adequate (California Healthline, 7/23). Jim Zelinsky, spokesperson for State Fund, said, "We had a significant disagreement over the 2002 audit. We think it makes good business sense to look at other accounting firms" (Sacramento Bee, 10/8). PWC Spokesperson David Nestor declined to comment on the audit dispute but said, "We are proud of the work that we have performed and believe that our audit report speaks for itself." According to the Los Angeles Times, the fund's action "underscores the unresolved issues dogging the state's ailing workers' compensation system" despite recently enacted reform legislation (Dickerson, Los Angeles Times, 10/8). Although Insurance Commissioner John Garamendi (D) has said State Fund needs to increase its reserves, Zelinsky said it "remains financially sound," the Bee reports (Sacramento Bee, 10/8). Garamendi on Tuesday did not object to State Fund discontinuing its contract with PWC, and said, "We have no reason to believe that (State Fund) isn't acting in good faith" (Los Angeles Times, 10/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.