Longtime insurance industry insider Larry Mulryan has been appointed by Governor Schwarzenegger to replace Cal/Chamber’s Jeanne Cain as Chairman of State Compensation Insurance Fund’s board. The Governor also appointed one new member and there are two other terms expiring this month which will be eventually filled by Governor Brown.

Mulryan has sat on the SCIF Board for some time.  He served as interim president of State Fund at the beginning of the scandals as a result of the firings of other executives. He was brought in as an outsider to supervise SCIF through a most difficult period and to work with the Board to search for a candidate to replace him.

Mulryan came to SCIF originally from California Guarantee Insurance Fund which underwent its own reformation after his departure.

He told the Workers’ Comp Executive this morning that “We have a very talented Board.  I want to do what I can to see that the Board is fully involved with the major policy decisions we have to make to see that SCIF continues to accomplish its mission effectively and competitively.  I will want to be certain that our Board committees are focusing on the key issues we have to face and resolve.”

Appointed as a new board member is Scott Reid. Since 2009, he has been cabinet secretary in the Office of the Governor. Reid has also served as undersecretary of the State and Consumer Services Agency, was chief deputy director for the Department of Consumer Affairs, chief deputy cabinet secretary for the Office of Governor Schwarzenegger, deputy secretary for policy and planning at SCSA.  He was the director of the Office of the Insurance Advisor. 

Jeanne Cain was not reappointed by the Governor.  She is executive vice president of policy for the California Chamber of Commerce. In a departure message via email to all State Fund employees Cain among other things, confirmed the continuing investigation. Here is the full text of her email;

Dear Colleagues, 

As I leave my role as Board Chair of State Compensation Insurance Fund (State Fund), I want to thank Governor Schwarzenegger for giving me the opportunity to lead State Fund through arguably the most difficult time in its history.  State Fund is a different and much stronger organization than it was when I started in 2004, and recent and ongoing changes will ensure that it remains that way. 

None of State Fund’s success could have been accomplished without your talent and dedication.  I was blessed to have your support as we made significant and long lasting reforms to its operations.  It is truly a new day with new ways at State Fund. 

Since the Board’s unprecedented action in recent years to set State Fund on a new course, the organization has made significant strides toward transformative change and sound corporate governance.  The pace and magnitude of this change has been remarkable and has already resulted in a more open, more accountable and more collaborative operation. 

During my tenure a number of high profile events and significant changes transpired at State Fund.   In 2006 the Board commissioned an internal review of State Fund’s operations that ultimately set State Fund on a new course. 

• We referred the results of that internal investigation in June 2007 to the California Highway Patrol (CHP), which has jurisdiction over state agencies like State Fund.   CHP formed a task force with the San Francisco District Attorney's office and California Department of Insurance to further investigate these findings, which remains ongoing.
• The California Department of Insurance (CDI) conducted operational audits in 2007 and 2008 that identified 145 findings requiring State Fund’s attention and remediation.  We are proud that CDI’s recently released 2010 Operational Review confirms State Fund has fully remediated, or has made substantial and ongoing progress toward remediating, all but one of those findings.   Full remediation of that single remaining item is expected in 2011.
• In 2008 State Fund sponsored two bills that were eventually signed into law by the Governor.  AB 1874 strengthened our corporate governance by expanding the State Fund Board from five to 11 voting members, enabling the formation of effective oversight committees, and placing new training and other requirements on board members.  SB 1145 provided State Fund with six exempt management positions, allowing the organization to recruit top executives to fill key management positions, and it also made State Fund subject to the Bagley-Keene and California Public Records Act. 

Given the important role State Fund plays in California’s economy, it was my goal to ensure the board had the capacity and focus to align the organization’s operations with the highest standards for business practice and operate with responsible transparency. 

Some of the critical changes to improve governance included: 

• Implementation of an auditable whistleblower hotline and education program for employees to report such concerns.
• A reorganized and strengthened Internal Audit function that now reports to State Fund’s President and Board of Directors.
• Centralized accounting, finance, financial reporting and internal control functions placed under the direction of a permanent Chief Financial Officer.
• Improvements to governance documentation to ensure policies, procedures and lines of authority are clearly delineated. 

As Board Chair, I have steadfastly and persistently probed State Fund and its programs to ensure all facets of the organization could withstand the greatest scrutiny.  I have great confidence that our work these past several years, and the changes within the organization now underway, have set State Fund on a course for long-term stability and continued success. 

I am grateful for the opportunity to have served as State Fund Board Chair during such an important and transformative period in the organization’s history.  Certainly, this has not been an easy road, and future challenges lie ahead as State Fund realigns its operations geographically to more effectively manage the cost of workers’ compensation for all Californians. I am confident you will maintain State Fund’s commitment to keeping California workplaces safe, caring for workers who are injured on the job, and maintaining an open door for all businesses. 

-30-