State Compensation Insurance Fund has "achieved significant
progress in getting the organization back on track," or so says
board President Jeanne Cain in a letter. It was sent today to
Senator Mike Machado and accompanies a status report on the Fund's
internal operations.
The report does not detail any of the findings of the
organization's independent internal review or of the on-going
investigation by the California Department of Insurance, California
Highway Patrol and San Francisco District Attorney's Office, but it
does outline a number of steps taken to "set a new course" at the
State Fund, including the hiring of Stephen C. Kolakowski as a
temporary Chief Financial Officer.
Interim President Larry Mulryan also retained workers'
compensation insurance management expert Neal Conolly of CP
Associates to assist with ongoing operational changes at the Fund.
According to the reports, Connolly was chosen in part for his
familiarity with State Fund, having led an earlier review of its
operations on behalf of the board.
Other positions under consideration for hire include a Chief
Information Technology Officer, Chief Investment Officer, Chief
Underwriting Officer and General Counsel, all of which the Fund is
now advocating the legislature adopt in this legislative
session.
In her letter, Cain also addressed the organization's interest
in expanding the board to include a corporate governance committee,
ethics committee, investment committee and audit committee – a
little difficult to accomplish with only five board members. This
follows in part the proposal put forth by Dale Debber, publisher of
Workers' Comp Executive some time ago. Click here to see the Debber
proposal.
Assembly Bill 1682 (John Benoit, R-Riverside), which seeks to
increase the board's size to 11, is currently serving as a place
holder and is expected to pass this session.
In the letter to Machado, Cain clearly points out that none of
the changes made are a result of concern about the financial health
of State Fund, or the quality of work performed by employees.
According to the report, in the five months since Cain appeared
before the Senate Banking, Finance and Insurance Committee to
discuss the organization's state of affairs and pending
legislation, efforts have been made to tighten internal
controls.
In so doing, she reports, the group administrative fee program
has been reformulated to include mandatory audits, and the creation
of a code of ethics for board members, officers and employees.
The five-month investigate into whether any criminal conduct has
taken place at State Fund or in connection with its operations is
still on-going, and little information has been made available on
its status.
-30-
Filed by Christine Stanley in Sacramento