County auditor contests hiring

Ex-state insurance chief paid to consult on Isabel

Storm victims surveyed on claims

Balto. County executive didn't seek bids for job

January 03, 2004|By Laura Barnhardt | Laura Barnhardt,SUN STAFF

As former state insurance commissioner Steven B. Larsen met last night with victims of Tropical Storm Isabel, Baltimore County's auditor was questioning whether Larsen's hiring by the county executive violated bidding procedures.

More than 100 Eastern Baltimore County residents attended a meeting at the Bowleys Quarters Improvement Association hall to talk with Larsen, who is conducting an investigation for County Executive James T. Smith Jr. into the insurance industry's response to Isabel.

Larsen asked residents to fill out a 20-page, 26-question survey about how insurance companies responded to their claims.

"I know people have walked out of meetings frustrated before," Larsen told the crowd, "but we can't do anything before we have this information."

Larsen, who was hired three weeks ago, is being paid $24,000 for his work, which includes recommending possible reforms. The storm hit Sept. 18-19.

County Auditor Brian J. Rowe has concluded that Smith might have violated bidding procedures in hiring Larsen. Rowe, in a two-page memo to the County Council, wrote that Smith's contract with Larsen should have been subject to competitive bidding, as are most county expenditures of $5,000 or more.

A spokesman for Smith disagreed. Calling the matter "a difference of opinion," spokesman Damian O'Doherty said Larsen's contract didn't have to be bid because Larsen is the only one qualified for the job, making him a "sole-source" contractor and his hiring exempt from competitive bidding requirements.

O'Doherty said the county attorney and budget director approved the awarding of the contract.

"Anyone who understands Annapolis, anyone who understands the legislative process, anyone who understands the Baltimore County procurement process, anyone who understands the plight of Isabel victims and anyone who understands the unique talents of Larsen understands this is a genuine, bona fide sole-source contract," O'Doherty said.

Larsen declined to comment on the matter last night.

Rowe, in his memo, takes issue with the administration's sole-source argument. "We were advised by the state insurance administration that there are a number of insurance consulting firms, including those that employ prior Maryland insurance commissioners, that could perform these services," he wrote.

Further, Rowe said, the administration offered no documentation to show that the investigation was an emergency, which also could have exempted it from competitive bidding procedures.

County Councilman T. Bryan McIntire called the investigation "a state issue, not a county issue. Even if the executive had put it out for a bid, I'm not sure what purpose Larsen's [report] will serve."

McIntire said Smith might just be out to embarrass the current state insurance commissioner, Alfred W. Redmer Jr., and Gov. Robert T. Ehrlich Jr., who appointed Redmer.

Councilman John Olszewski Sr. said that because Redmer has said that he is conducting the review that Smith has commissioned Larsen to do, the county may be spending $24,000 to duplicate the state's efforts.

"It doesn't make sense if they end up coming up with the same recommendations," Olszewski said.

O'Doherty said Larsen, who was also chief legislative officer for Gov. Parris N. Glendening, is uniquely qualified to make recommendations about what kinds of changes the county could lobby for in this year's legislative session.

"The executive's intentions may be good. But I don't think this a proper use of county taxpayers' money," said council Chairman Kevin Kamenetz. "It would be like the General Assembly funding a study to determine whether the county was efficiently filling in potholes. That's not their purview."

Kamenetz said it would have been more appropriate for Smith to ask state legislators to fund the study of the insurance industry's response to Isabel's victims.

The council is authorized to review contracts that cost $25,000 or more. "This one is, mysteriously, $24,000," Kamenetz said, noting that the council's only remedy will be to wait for the budget process in the spring.

"If there is $24,000 to waste, we may need to cut $24,000 from some department's budget, or maybe, alternatively, we should be giving $24,000 directly to the Isabel victims," he said.

Councilman Vincent J. Gardina said he does not object to Larsen's contract. "I think it might help alleviate some of the problems people have been having with the insurance companies," he said. "The [executive] needs someone to coordinate the effort. ... There is an imminent need to get these insurance claims resolved. ... Redmer's responses to the people down there were despicable."

At last night's meeting, the former commissioner said he hopes he will be able to make his recommendations to Smith in the next few weeks.

"But first we have to figure out the scope of the problem," he said. "We're trying to identify common themes, to see where and when the system broke down. Was it when the policies were purchased or when the claims were made?"

Larsen said his job is not only to look for ways to help the victims of Isabel, but also to suggest possible insurance reforms to prevent similar problems after natural disasters.

Thomas Stem, whose house on Bay Drive in Bowleys Quarters was condemned, said last night that he didn't receive his first insurance payment for flood damage until the day before Christmas. He has yet to be reimbursed for wind damage.

"I'm hoping these meetings result in Congress' changing the way the flood insurance program is operated," he said.

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