The Rhode Island Department of Business Regulation continued legal efforts today to obtain computer hard drives of 22 employees at the state's primary workers' compensation insurer.
DBR filed motions with Superior Court Judge Melanie Wilk Thunberg in Warwick, R.I., asking for reconsideration of her ruling last week that the material from Beacon Mutual Insurance Co. should not be made available.
In addition to that request, the department asked the court to order copies made of all the hard-drive material it seeks while the issue is being argued.
Richard Berstein, executive counsel to the DBR, said the ruling last week was a "disappointment and surprise," and was worrisome because it could impact the market conduct examination process used by regulators throughout the nation.
Joseph Solomon, president and chief executive officer of Beacon, said in a statement after the ruling last week: "We appreciate, and are grateful of Judge Thunbergs's ruling today. It acknowledges that the legal concerns we raised with the court are valid. We will continue to cooperate with the Department of Business Regulation within the confines of the law."
The DBR, according to Mr. Berstein, had begun a market conduct exam in February 2005 of the quasi-public insurer. He said the probe heated up after an anonymous whistleblower made allegations of improper activity against Beacon's top management.
Beacon Chairman Sheldon Sollosy resigned last month before a forensic auditing team went in and demanded the hard drives. Auditors earlier said they found that when Mr. Sollosy owned a temporary manpower firm, he blocked Beacon staff efforts to examine whether he was paying proper workers' comp insurance rates for Beacon coverage.
Judge Thunberg's ruling said the information subpoenaed by DBR was "overbroad, overreaching and unduly burdensome and entirely unreasonable."
Among the computer hard drives sought were those of the human resources director, Pamela Alarie, and Michael Lynch, a Beacon attorney. The judge said that turning over hard-drive material would interfere with attorney-client privilege as well as "displaying to the world a host of highly personal matters."
Mr. Berstein said that market conduct exams by statute are confidential, and that the kind of data sought is very common in a forensic audit.
He would not say if the department intends to appeal to the Rhode Island Supreme Court, but the latest motions would lay the groundwork for such a move.
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