The scandal-scarred board of Rhode Island's state-sponsored workers' compensation insurer, after a marathon meeting last week, agreed to fire two top executives who had been under suspension.
But when the Beacon Mutual Insurance Company board session ended at 2:15 a.m. on April 20, the group had still not decided whether to yield to a request to turn over employee computer hard drives, a spokesperson said.
The State Department of Business Regulation has sought computer data in an audit of the company. The insurer has been under increasing scrutiny following revelations that certain companies with cozy links to Beacon management were charged improperly low rates.
Bill Fischer, speaking for Beacon, indicated some action on the request for hard drives might occur after the board obtained more information.
He said the board decided that suspended Chief Executive Officer Joseph Solomon and Vice President of Underwriting David Clark would be terminated for cause and without severance effective April 19.
The latest board action followed its April 14 board meeting in Warwick, R.I., at which one of its members resigned and the two executives were suspended with pay.
The board called the April 14 meeting after a demand by Republican Gov. Donald Carcieri that all board members in place since 1994 resign and that they fire Mr. Solomon and Mr. Clark.
In a letter sent a day before the meeting, the governor said the board's refusal to meet with him that afternoon demonstrated "its continued lack of understanding of the severity of this situation and its responsibilities to its policyholders and the state."
His demand to the board came after a special independent committee issued a report finding a raft of abuses had been permitted at Beacon–the nonprofit enterprise which insures 90 percent of the state's employers.
The committee was called in to investigate after a whistleblower alerted auditors to a variety of problems involving employers with close ties to Beacon management who were given unjustifiably low rates for coverage.
Among the companies was Paul Arpin Van Lines, whose chief financial officer, Edward Braks, was a Beacon board member until his April 14 resignation. The committee said Beacon gave Mr. Braks company credits that were "unearned and unwarranted due to a history of losses."
Among other businesses spotlighted in the report were a temporary personnel concern owned by Beacon's former board chairman, Sheldon Sollosy, and a contractor that did work at below cost on the home of Mr. Solomon while he was Beacon CEO.
Mr. Sollosy resigned in February after an investigation found that he kept Beacon contract auditors from properly evaluating the risk at his firm.
With Mr. Solomon's departure the board has appointed Clifford Parent, Beacon's vice president of claims, as interim CEO. Mr. Parent has been with Beacon 14 years.
Mr. Fischer said the board had voted in principle to adopt the recommendations in the committee report, which called for the appointment of an ethics officer and various changes in oversight and reporting.
Beacon for months now has been locked in a court battle with the State Department of Business Regulation, which sent in a team of forensic auditors in an expanding market conduct exam. The auditors made the request for the hard drives, which the insurer refused to turn over.
Richard Berstein, executive counsel for the DBR, noted that the material sought in the market conduct exam is much broader in scope than the material examined by the special committee for its report.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.