State Compensation Insurance Fund's board of directors, at the onset of what promises to become a bigger scandal, has fired the insurer's president, Jim C. Tudor, and his long-time ally Renee Koren. She was vice president of group insurance programs. The firings come on the heels of an internal investigation ordered by the governor's office. An interim president has been appointed from the outside.

Highly placed officials within the government indicate more bombs are expected to fall as the outcome of the investigation becomes clearer. State Fund management and operations, including its group programs, came under scrutiny last year after the Executive uncovered the veil of secrecy and Tammany Hall-style political intrigue and possible payoffs that have surrounded the group safety program scheme for years.

California Insurance Commissioner Steve Poizner told the Executive "The State Fund is a high priority for me." He said that it has been a struggle for the Department to work with State Fund for many years because of former SCIF management's recalcitrant attitudes. "The Legislature clarified our role last year. I am happy to be working with the governor's office and the State Fund's board to fully implement the kind of changes that are necessary to protect so many of California's injured workers and employers."

Employees Notified

State Fund employees were notified of the dismissals at 5:05 pm yesterday in an unprecedented internal email from Jeanne Cain, chairwoman of State Fund's board. She admonished employees to steer clear of any contact the ousted duo.

"Effective immediately, Jim Tudor and Renee Koren have resigned from State Fund and are no longer involved in any aspect of State Fund operations," the memo reads. "Therefore all communication with them regarding State Fund matters must cease. No employee is permitted to communicate in any way with Mr. Tudor or Ms. Koren regarding any subject involving State Fund."

Never before has any board member communicated directly with the employees of State Fund. The move was welcomed by many employees as bold and efficient. The tenor of the email has many employees postulating that the investigation has turned criminal. No indictments or arrests have been made.

New President

The board of directors will announce the interim president later today. It will be Lawrence 'Larry' Mulryan, former director of the California Insurance Guarantee Association.

Mulryan is well known, highly respected, and has integrity beyond reproach. He will be credible to both the Insurance Department and Legislature and brings with him the kind of respectability that will be needed as the continuing scandal unfolds.

One highly placed State Fund official told the Executive the regular board meeting was cancelled and then held without Jim [Tudor]. "We knew then that something was up," he said.

Tudor had stacked the executive committee, as the group of vice presidents is called, with his own appointments and lobbied former presidents Dianne C. Oki and Kenneth C. Bollier for many of its present members. Many of them are likely loyal to Tudor.

In fact, State Fund vice president and general counsel Charles Savage was who all management audit reports went to. Savage was hand-picked by Tudor and reported to Tudor including on these management audit issues.

"Tudor was a master manipulator," the executive says. "No one was surprised that he made it come out so he got the presidency." Koren was under Tudor's wing for years and is infamous among staff for her take-no-prisoners management style. The executive says that many of the vice presidents spoke badly about Koren "when she wasn't around."

Interviews with the investigation team bear this out, he says.

Neither Tudor nor Koren could be reached for comment.

Others Expected To Leave

Highly placed sources within the government tell the Executive that others on the executive committee are expected to leave in the near future, but as retirees. The sources say that the message is clear that cooperative retirements are likely better than the alternative.

The dismissals came after a two-month probe by the board, which had tapped two outside law firms to investigate, State Fund sources tell the Executive.

This was possible only after two board members, Frank Del Re and Kent Dagg, both of who operate State Fund safety groups, were forced to resign by the governor's office due to conflict of interest allegations. Those allegations were brought to light last year by the Workers' Comp Executive which reported that the board would be voting to increase commissions on group business, which would directly have benefited Del Re and Dagg. State Fund pays fees based on premium volume to group administrators.

Tudor has for years had a close relationship with Del Re, whose Western Insurance Administrators administers workers' compensation groups for seven trade associations. Del re is a former State Fund employee.

"Our president has been fired in disgrace and the lady who hired me was fired in disgrace too," one State Fund staffer, who requested anonymity, says. "Finally after all of these years State Fund employees are vindicated."

So is the integrity of the State Fund.

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