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The Incestuous Relationship between Government and Private Industry

It isn’t uncommon for employees to leave the public sector in order to make more money in the private sector, but some job moves can trigger accusations of unfair play.  One such case affecting the New York State workers’ compensation world is former chairman Robert R. Snashall who left the NY Workers’ Compensation Board (WCB) in 2003 to later become a regulatory consultant with Compensation Risk Managers (CRM).  CRM has been in the news lately as they will be surrendering their license later this year amid allegations of failures and improper acts.

 

CRM is an insurance trust that provides group self insurance programs to independent insurance brokers.  CRM claims that all of its groups are “approved, regulated and monitored by each state’s workers’ compensation regulators”.  In a recent settlement agreement with the New York State WCB, CRM will surrender its license to run self-insured workers' compensation trusts in New York.

 

CRM administered eight trusts which involved thousands of employers across the state and dozens in the mid-Hudson Valley, and they’ve been accused by the WCB of a variety of alleged failures and improper acts.  CRM has denied any wrongdoing, all the while every one of the eight self-insured trusts it manages became underfunded and are either closed or closing.

 

Accusations against CRM include:

  • Repeated failure to pay awards and installments of compensation to injured workers in a timely fashion
  • Repeated failure to file the proper forms with the board
  • Engaging in improper delay tactics
  • Routine failure to set adequate reserves in connection with claims
  • Submitting false information to the board and to its clients

 

CRMs failings have left a gap of $59 million that is needed to insure workers, and the WCB is looking to find non-CRM run trusts to take up the slack.  However, lawsuits brought on behalf of some of those trusts are muddying the waters, and now the WCB is trying to float a state bond to bridge the gap.  It isn’t known if the $59 million bond will be enough to cover the potential shortfalls of these trusts.

 

Liabilities for some CRM managed self-insured trusts (these trusts are collections of similar businesses that selectively come together to self-insure):

  • The Healthcare Industry Trust of New York – estimated total liabilities of $134 million as of September 2006
  • The Public Entity Trust of New York – estimated liabilities of $3 million as of Dec. 31, 2005
  • The Trade Industry Workers Compensation Trust for Manufacturers – estimated liabilities of $8.5 million as of Dec. 31, 2006

 

What is CRM paying for all of this?  Considering that New York is now struggling to come up with $59 million to cover shortfalls in the CRM managed trusts, CRM itself – which has admitted to no wrongdoing – has been fined a grand total of $151,000.

 

Where does former WCB chairman Robert R. Snashall fit into all of this?  He claims that he had nothing to do with negotiations between CRM and the WCB, however it is interesting that Snashall, an 8 year veteran of the WCB, provided consulting to CRM from 2004 until “sometime in 2007”.  In addition, the New York State Commission on Public Integrity lists Snashall as a lobbyist for both CRM and First Cardinal Corporation in 2005 and 2006.  In fact in 2005, even as the CRM managed trusts were reported to be underfunded, Snashall was championing the success of self-insured trust reforms that resulted in a “thriving group self-insurance market” in the state.

 

As the remaining underfunded CRM managed trusts are handed over to the state one by one and CRM surrenders their license, we have to wonder about this elusive thriving market that Snashall speaks of, and what to make of trusts that go bust after years of consulting from former WCB chairmen.  It begs the question – are private industry and government too close for comfort?

 

If you have a workers’ compensation claim that you’d like help with, please contact the law offices of Markhoff & Mittman.  Our attorneys can help you receive the compensation and assistance that you need.

 

Markhoff & Mittman, P.C.
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Suite 400
White Plains, NY 10601

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Phone: (914) 946-1452
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