State Workers’ Comp Insurer Details Internal Changes
The State Compensation Insurance Fund on Tuesday sent a status report to lawmakers that cited administrative changes and reforms in the wake of a criminal investigation into alleged financial misconduct by former officials, the Los Angeles Times reports (Lifsher, Los Angeles Times, 8/29).
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.
The California Highway Patrol, Department of Insurance and San Francisco District Attorney's Office in July formed a task force to investigate State Fund after an audit of financial transactions led to the forced retirement last year of its president and vice president (California Healthline, 7/26).
The total in misappropriated funds could be more than $1 billion, according to the insurance department.
The status report from Jeanne Cain, chair of State Fund, noted "significant progress in getting the organization back on track."
The report does not, however, detail the criminal investigation, noting that State Fund "does not want to jeopardize" the probe in any way (Los Angeles Times, 8/29).
According to the report, State Fund has made several improvements, including:
- Tightening controls for administering contracts, including a review of all significant contracts by legal staff and other departments;
- Strengthening its administrative fee program; and
- Reforming internal auditing procedures by requiring auditors to report to a new committee and to the CFO (Swett, Sacramento Bee, 8/29).
Insurance Commissioner Steve Poizner (R) said he was pleased that the report showed "that progress appears to be under way" at the insurer.
Cain on Aug. 29 was scheduled to present the report to Sen. Mike Machado (D-Linden), chair of the Senate Banking, Finance and Insurance Committee.
State Fund is lobbying for legislation to expand the five-person executive board to 11 members. The organization also wants the proposed bill to increase the number of non-civil service executives to include a CFO, chief information technology officer and a chief investment officer, according to Cain (Los Angeles Times, 8/29).