Agency bonuses coincide with loss State insurance fund drops $14.9 million

cars among staff perks

Leader's raise exceeds limit

December 03, 1998|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

Even as the state Injured Workers' Insurance Fund heads toward a $14.9 million operating loss this year, its president, Paul M. Rose, is taking home an annual salary of $147,000 and has collected a bonus of $28,400.

Rose's pay is $27,000 a year more than the governor's and is one of the highest among state agency heads, including the state judicial system, where the top judge is paid $135,775. Rose also has the use of an agency-owned Ford Explorer and Cadillac Seville.

His compensation is only part of the payouts to the IWIF management team, which include vehicles and bonuses.

The disclosure of IWIF salaries, bonuses and other benefits comes a week after its board voted to reject Rose's recommendation of a one-year, $7 million extension on a no-bid contract with Statutory Benefits Management Corp. An internal audit had concluded that IWIF did not follow its procedures in awarding the original contract.

IWIF's board voted 5-1 last week to order that the agency solicit new bids for the managed care contract. The three-year pact with Statutory Benefits Management expires June 30.

The fund's financial condition, including the projection of a $14.9 million net operating loss for the current year, was spelled out in a Nov. 11 report to Rose detailing the fund's financial results through Oct. 31.

In fact, the report states that the losses would have been about $10 million higher if the agency had not dipped into its reserves.

Rose declined to discuss his salary or bonuses. Last year, his salary was $127,222.24, according to records in the state comptroller's office. This year, Rose received a 15.5 percent raise, which exceeded a 6 percent ceiling on state agency salary increases. As a result, part of Rose's raise was paid out of a separate account in the agency budget.

Created by the legislature in 1914, IWIF provides workers' compensation insurance coverage for thousands of Maryland companies. It is run by a board appointed by the governor and funded by premiums paid by employers buying its insurance.

Agency has 55 vehicles

In a recent interview, Rose acknowledged that he was assigned a 1995 Ford Explorer but denied any knowledge of the 1995 Cadillac Seville.

Maryland Motor Vehicle Administration records show the Cadillac is owned by the board. The original value of the car was a little over $45,000. The vehicle was seen recently parked in the lower level of the garage at IWIF headquarters on Loch Raven Boulevard in Towson.

The two vehicles listed as assigned to Rose are among 55 owned or leased by IWIF, according to a recent agency motor vehicle inspection survey. Other vehicles in the agency motor pool include a 1997 Chrysler LHS, assigned to a vice president, four 1998 Ford Tauruses and two Mercury Villagers.

Car part of severance deal

MVA records show that the agency gave away a 1995 Ford Taurus as part of a severance agreement with departing Vice President Michael A. Exum. Exum, according to a copy of the April 29, 1997, agreement filed with the MVA, also got $90,000 in severance pay and a personal computer with accessories. The agreement was signed by Rose.

The MVA records show that the car was valued at a little over $11,000 when Exum took title to it.

Exum, who left the agency last year, declined a request for comment.

According to IWIF sources, at least two other departed IWIF executives received severance payments in the past two years ranging up to $40,000. One departing executive also got a computer.

Rose said he could neither confirm nor deny the severance agreements or any details about them.

In addition to the $28,400 bonus collected by Rose, several other IWIF executives have been paid bonuses this year of $3,300 to $13,500, according to the comptroller's records. Among those getting $8,500 were vice presidents Robert Marshall, Robert E. Merritt, Nancy Winter and Debra J. Zezeski. Doreen Horvath, another vice president, received $5,100.

Marshall's annual salary is $80,000, Merritt's is $118,000, Winter's is $86,390 and Zezeski's is $80,539, according to state records. Horvath's salary is listed at $111,300.

Bonus paid for last year

IWIF board members said in interviews this week they knew some but not all of the details of the salaries and bonuses. Board member Gregory D. Chasney said he was aware of Rose's salary but not the details of the bonus payments. He said he knew that Exum had been paid $90,000 in a severance agreement but said he did not know about the car.

Board member Daniel E. McKew said the bonus paid to Rose early this year was based on the fund's performance last year, when, he said, the agency had good financial results and was able to return $10 million in dividends to policyholders. He said the board would determine early next year what bonus, if any, to pay for this year.

McKew said he was told that the 1995 Cadillac was being used as a pool car and that, at his urging, the car will be sold.

Salary set before hiring

McKew said Rose's salary had been agreed to before he became a member of the board a year ago. He said he was not aware of the details of the severance agreements until he asked recently for copies.

After reviewing those agreements yesterday, McKew said he did not find them to be unreasonable. He said severance agreements are common in the private sector.

Pub Date: 12/03/98

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