While skyrocketing costs endanger workers' compensation insurance in many states, SAIF Corp. of Salem, Ore., is a rare bird in the wilderness: a failing state-owned insurer that suddenly stopped its fall and rose to become a striking business success.
Three years after it was losing $1 million a week, the company reports that it expects to end 1991 more than $45 million in the black. SAIF has reduced premiums to the company's 37,000 business clients by 23 percent in the last two years while doubling its payments to legitimately injured workers. And in addition to rate reductions, it has refunded $37 million to policyholders.
But even more striking in the $60 billion workers' compensation field -- which private insurers in many other states are abandoning as unprofitable -- is that SAIF executives largely attribute the turnaround to a crackdown on fraud and abuse.
In the process, SAIF's president and chief executive, Stan Long, has riled lawyers, providers of medical services and leaders of the insurance industry, who say he has unfairly exaggerated the cost of fraud and the failings of the insurance industry.
Although experts have in the past generally attributed the rising costof workers compensation to medical costs, litigation and expanding benefits, a small but growing group of government officials and insurance executives across the country now say that exaggeration of claims and outright fraud are costing billions of dollars a year.
Executives of SAIF, a mutual insurance company that competes with privately owned carriers for workers' compensation business in Oregon, say their experience shows that in many states where workers' compensation is in crisis, part of the blame lies with insurers who refuse to look insurance cheats straight in the eye.
"Most companies come away from a case involving fraud saying, 'We just dodged another bullet,'" said Brian M. Steffel, senior vice president and claims officer of SAIF, which stands for State Accident Insurance Fund. "They are dodging their obligation to fight fraud."
But the company has riled lawyers, chiropractors and private insurers who say SAIF has portrayed them unfairly.
SAIF's critics charge that that the company has denied rightful payments to truly injured workers as it has tripled its rate of rejecting claims.