Loading…
Sunday, December 21, 2014
Current Weather
Loading Current Weather....
HomeNewsState
Published: Wednesday, 11/1/2006

BWC audit shows employer premiums were manipulated

BY JAMES DREW AND STEVE EDER
BLADE STAFF WRITERS

COLUMBUS An internal audit by the Ohio Bureau of Workers Compensation has found several instances in which executive staff instructed employees to change employer premium rates without sufficient documentation.

At a news conference this morning, William Mabe, the agency s administrator-CEO, said the 17-page audit has been turned over to the bureau s Special Investigation Unit to probe what happened from January, 2003, through September, 2005.

Citing the bureau s ongoing investigation, Mr. Mabe would not identify the employees involved in changing premium rates, why the changes were made, whether any elected officials were involved, which employers had their rates changed, and the financial impact on the scandal-plagued agency.

He did say that the changes may have involved verbal orders that would not have left a paper trail.

I do not have any evidence of fraud. What I have evidence of is a lack of controls. What I have evidence of is files that are incomplete, where I can t explain why things happened, Mr. Mabe said.

It s unclear when the investigation will be completed, said Nancy Smeltzer, the bureau s press secretary.

The investigation is the latest controversy to an agency that has been hit with a series of body blows since April, 2005: the resignation of Administrator-CEO James Conrad in the wake of the rare-coin scandal that led to the indictment of Tom Noe, the firing of chief investment officer Jim McLean in the $215 million loss through a Bermuda-based hedge fund, and the indictment and conviction of chief financial officer Terrence Gasper on massive corruption charges.

The bureau uses a number of factors to determine premium rates, including the type of business, job classifications, and risk assessments based on experience and accident histories.

Of the 179 cases in which executive staff ordered the division of employer operations to change premium rates, internal auditors found that 27 appeared not to follow the rules or did not document why changes were made.

One involved an electrical employee who worked for a company for 30 years, retired, and was later diagnosed with asbestosis.

The internal audit says the employer who is not identified did not appeal the claim in 2004, but threatened to close because their premium increased.

After an inquiry to the BWC Constituent/Legislative Affairs and subsequent review of the case by BWC management, the entire claims costs were removed from the employers experience. Authorization documentation involved an e-mail form management citing the approval for the adjustment, the audit says.

The internal audit began in November, 2005, said Keith Elliott, the bureau s manager of internal audit.

Mr. Elliott is the bureau official who first raised serious questions about the Capital Coin funds that Noe controlled. Noe is on trial in Lucas County Common Pleas Court, charged with embezzling more than $2.2 million from the coin funds he managed for the bureau.

Mr. Mabe, who was appointed the bureau s administrator-CEO on Oct. 31, 2005, by Gov. Bob Taft, said he turned his attention to the premium rate-making process because of the problems found in the investment department.

My bias was if there were a lack of controls in investments in one part of the organization, it probably existed in another part of the organization, Mr. Mabe said.

State Sen. Marc Dann, the Youngstown-area Democrat who is running for attorney general, requested the internal audit in an Oct. 17 public records request. Mr. Mabe initially would not release the audit, saying that confidential law enforcement investigatory records are not public records.

After Mr. Dann threatened to sue the bureau late last week, Mr. Mabe wrote that the audit would be completed soon and released by today. He said records that are part of the investigation will not be released until the probe is completed.

Today, Mr. Mabe referred to high political season as among the reasons why the bureau decided to release the audit, which he said is not completed.

Mr. Dann said the audit, because it lacks details, raises a lot more questions than it answers.

These people have tried to cover up everything from the beginning to the end, he said.

The bureau has notified its external auditing firm, the agency s Oversight Commission, the Inspector General, and the attorney general s office about the audit, Mr. Mabe said.

Contact James Drew at:

jdrew@theblade.com

or 614-221-0496

Read more in later editions of The Blade and toledoblade.com



Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. If a comment violates these standards or our privacy statement or visitor's agreement, click the "X" in the upper right corner of the comment box to report abuse. To post comments, you must be a Facebook member. To find out more, please visit the FAQ.








Poll