Rehabilitation of state insurer Injured worker fund: Board takes closer look at managerial operations as 1998 losses projected.

December 20, 1998

THERE'S something amiss at the Injured Workers Insurance Fund, Maryland's largest insurer of employers for worker compensation cases. For more than eight decades, the state agency has been an insurer of last resort for local governments and small businesses. Today, the fund covers 27,000 employers.

In the past two years, the fund's profits totaled $12 million, plus dividends of $10 million paid to its clients. This year, however, the fund expects to lose $15 million, even after tapping $10 million from its reserves.

Those fluctuations are a sobering reality of the competitive insurance world. But IWIF, despite its recent private trappings, is still the state's primary insurer of workers hurt on the job; it is governed by a board appointed by the governor. Its solvency and sound financial management are essential to the state's economy.

IWIF's shifting fortunes have drawn attention to the executives' compensation and to curious moves by the fund president, Paul M. Rose, to champion a no-bid contract from a Baltimore health care company and a plan for the fund to buy that firm.

The Sun's Walter F. Roche Jr. reported that Mr. Rose in 1996 threw out a dozen bids to manage the fund's care system, instead negotiating an exclusive contract with Statutory Benefits Management Corp. of Baltimore.

Mr. Rose later proposed that IWIF buy Statutory Benefits and last month urged that the firm get an immediate one-year extension of its three-year contract.

An outside audit of IWIF's 1996 contract found significant departures from established procurement procedures with nearly no justification or documentation.

The fund's board, which rejected the one-year extension for Statutory Benefits and called for new bids, shows signs of taking closer control and of insisting on proper procurement procedures. That is a decidedly healthy step for the state agency, which needs to pull itself out of the red.

Pub Date: 12/20/98

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