The New York Workers' Compensation Board (WCB) is awaiting formal notification of an action filed against it by CRM Holdings relating to CRM's management of eight self-insured trusts in the state.
CRM filed the action with the New York State Supreme Court in Poughkeepsie, a county-level tribunal, seeking a ruling that it did not mismanage the trusts.
WCB spokesman Brian Keegan said the board has not yet been served with the action. If it is served by mail, the board will have 30 days to respond, he said, and if it is served in person, the board will have 20 days to respond.
CRM spokesman Michael McKeon said the company filed the action as a "proactive" response to a Sept. 29 WCB letter to CRM insurer Indian Harbor Insurance Company indicating that the board may file an action against CRM.
The letter, signed by WCB general counsel Kenneth J. Munnelly, charges CRM with breach of contract, breach of fiduciary duty, negligence and deceptive business practices in connection with CRM's management of the eight self-insured trusts.
Mr. Keegan said the board had made no decision to sue, and the letter was "purely a precautionary measure" in case it decided to take action. The letter, he added, is required by law in the event the board decides to take further legal action, and the language in the letter is "required by law to ensure its validity."
In June the WCB and CRM reached a settlement on similar charges in which Compensation Risk Managers LLC agreed to surrender its license to do business as a third-party administrator. CRM admitted no wrongdoing as part of that settlement.
Mr. McKeon said the settlement should have been the end of the matter. He said CRM understands that the board is just reserving its right through the letter, but he stated CRM filed its action "because we're not going to sit around and wait while our reputation is tarnished."
He added, "The original charges were unjustified and unwarranted, and the fact that [the WCB] settled those charges without a single hearing, or a single finding against us, I think says it all."
Mr. Keegan said via email, "It would be inappropriate for me to comment on CRM's suit against the board at this time."
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