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1997 TOP NEWSMAKERS: A LOOK AT 10 WHO COMMANDED ATTENTION

Posted On: Dec. 21, 1997 12:00 AM CST

With the International Brotherhood of Teamsters winning what many called the most significant organized labor victory in years, union President Ron Carey should be ending 1997 as one of the country's most powerful labor leaders.

Instead, 1997 closes with the invalidation of his re-election this year to the top Teamsters post over James P. Hoffa because of campaign finance irregularities and his disqualification from seeking the union's presidency in a new election set for March.

Whatever Mr. Carey's current troubles, many viewed the Teamsters contract settlement with United Parcel Service of America Inc. in August after a 15-day strike as a major win for labor after nearly two decades of few triumphs and far more setbacks.

Refusing to back down in the face of UPS' "best offer," the company's 185,000 Teamsters won concessions on pay and pension issues and a company commitment to convert thousands of part-time jobs to full-time status. UPS Chairman James P. Kelly later said the Atlanta-based company's dropping of a demand to withdraw from the multiemployer pension plans and create its own plan for Teamster-represented employees was its biggest concession.

If there ever was an individual who clearly learned the lessons from the past, at least on employee benefit issues, it is Bill Clinton.

Three years ago, President Clinton's health care reform package went down in flames, a victim of overambition and perhaps some administration arrogance.

How things have changed. Scaling back his goals, last year President Clinton lent his support -- at a critical time -- to gain passage of a modest measure curbing pre-existing condition exclusions in health plans.

This year President Clinton, responding to a public backlash against practices associated with managed care plans, appointed and embraced recommendations from a blue-ribbon panel on health care quality.

He also promised that his drive to further reform the health care system would be limited in scope.

During the year, President Clinton also made an impact on risk management. Last year, President Clinton vetoed a federal product liability reform bill but said he would support what he considered a "reasonable" bill. He followed that statement this October by indicating his support for a compromise product liability reform proposal worked out by members of his staff and Sen. John D. Rockefeller IV, D-W.Va.

The secretive society of Johnson & Higgins directors became famous this year for two things: selling the 150-year-old private company and making a huge amount of money for themselves doing it.

J&H ended a century and a half of ownership by its directors in March when its board, led by Chairman David A. Olsen, sold the brokerage to rival Marsh & McLennan Cos. Inc. for $1.8 billion in cash and Marsh stock.

The move followed years of internal debate among J&H officials, who maintained publicly that the company was not for sale while fretting privately that it was losing ground to consolidating rivals, hindered by its inability to make acquisitions for stock.

The deal that ended that debate shocked many inside J&H, where private ownership was a deeply ingrained part of the corporate culture.

Whether the takeover ultimately proves a good thing for the company and its clients remains to be seen. Without question, though, it was good for J&H's board.

According to a recent lawsuit, the 24 directors pocketed more than half of the purchase price, with Mr. Olsen collecting about $63 million, former J&H Vice Chairman Richard A. Nielsen about $55 million and the remaining 22 directors at least $36 million each.

Other top J&H managers received an undisclosed cut of the proceeds, while $500 million was earmarked for roughly 600 key employees and another $297 million went to 45 retired directors.

Some aren't happy. Nine retirees, including former J&H Chairman Robert V. Hatcher Jr., are suing J&H's board for allegedly rigging the sale to benefit themselves.

"It's going to be real messy," one J&H official predicted of the litigation.

The emphasis is on education at the Risk & Insurance Management Society Inc. under new executive director Linda H. Lamel.

Ms. Lamel became only the third executive director to head the 47-year-old society, replacing Eugene Ricci, who retired.

She arrived with a background in education and politics, having served as president of The College of Insurance, deputy superintendent of the New York Insurance Department and chief of staff to the lieutenant governor of New York. She left a position as a principal with Management Consulting Services in South Orange, N.J., to take the RIMS job.

Among her top priorities is to establish the Fellow in Risk Management, an advanced professional designation program similar to one in place in Canada.

Since Ms. Lamel arrived at RIMS, the society has hired Amy Geffen as director of professional development. Ms. Geffen will focus on using technology to make it easier for risk managers to take continuing education courses.

The society in September cut six staff support positions after a review of operations revealed redundancies in some areas. The cuts will save about $250,000, which will be used to hire new personnel in 1998, most of whom will work to develop RIMS' educational programs.

Mississippi Attorney General Mike Moore's crusade against the tobacco industry began showing results this year.

Mr. Moore became the standard-bearer in the flood tide of lawsuits against tobacco makers, leading the charge with Mississippi's 1994 suit seeking recovery of its Medicaid costs for treating smokers' illnesses.

Liggett Group Inc. was the first to settle, reaching an agreement with 22 attorneys general to create a fund to reimburse the states. Liggett also agreed to acknowledge on a warning label that cigarettes are addictive, and it admitted marketing cigarettes to teenagers.

In June, the rest of the industry agreed to a proposed settlement of more than $360 billion with dozens of states that had joined the effort led by Mr. Moore. The industry agreed to make the payments in return for some immunity against future lawsuits.

Shortly after that agreement, Mississippi came to terms with the industry in a separate arrangement that ensures the state receives more than $3 billion to resolve the lawsuit it had filed against tobacco makers. If the proposed national settlement is approved, it will supersede the Mississippi settlement.

Florida subsequently negotiated a similar arrangement.

The national proposal still needs Congressional approval. Mr. Moore and other experts predicted at a symposium in Washington in October that that approval would come in 1998.

By training, Rep. Charlie Norwood, R-Ga., is a dentist. But he made many employers want to gnash their teeth after they finished digesting a major piece of health care legislation introduced by the two-term Georgia congressman.

Rep. Norwood's bill -- the Patient Access to Responsible Care Act of 1997 -- has garnered support from nearly half of the House of Representatives.

The bill is a response to a managed care industry that wants "all of the power and none of the responsibility," says Rep. Norwood, 56.

No public policy establishes minimum protection for participants in self-insured managed care plans, and it is up to Con-gress to do something about it, he says.

Rep. Norwood has his own prescription. The PARCA bill, among other things, would open up managed care plans and all other types of plans, to punitive damage awards. It also would make it a lot more difficult for employers to establish preferred provider networks but would mandate coverage for services that many employers' plans do not cover.

Rep. Norwood intends to press for congressional consideration of his legislation next year.

Headlines, rumors and accolades continued to follow Patrick G. Ryan throughout 1997.

After acquiring Bain Hogg Group P.L.C. and then Alexander & Alexander Services Inc. in the fourth quarter of 1996, the chairman and chief executive officer of Chicago-based Aon Group Inc. kept up his growth by acquisition strategy in 1997 with the acquisitions of London broker Minet Group, Canadian broker Sodarcan Inc. and German broker Jauch & Huebener KGaA.

Acquisitions catapulted Aon's 1996 gross revenues up 130% to nearly $4 billion, more than securing its spot as the world's second-larg-est broker.

Despite ongoing worldwide integration, Aon continues to be the focus of acquisition rumors throughout the brokerage industry.

Mr. Ryan maintains at the moment that Aon is interested in acquiring boutique brokers in geographic areas where integration is not an issue.

For his efforts in building Aon, Mr. Ryan was named Executive of the Year in June by Crain's Chicago Business, a sister publication of Business Insurance, and was later named The College of Insurance's 1997 Insurance Leader of the Year.

A.J.C. Smith started 1997 in an unusual position: head of the world's second largest retail brokerage.

As chairman of Marsh & McLennan Cos. Inc. Mr. Smith had been used to occupying the No. 1 one spot on the retail brokerage list, which had been M&M's for decades. But through the takeover of Alexander & Alexander Services Inc., Aon Group Inc. had usurped M&M's position at the head of the retail brokerage standings in December 1996.

But in March Mr. Smith and M&M leaped back to the No. 1 spot with the $1.8 billion takeover of one of the jewels of the brokerage industry, Johnson & Higgins.

The move firmly planted M&M back in its usual position, but Aon continued to cause M&M head-aches.

M&M had been negotiating for months to buy London-based Minet P.L.C. from

St. Paul Cos. Inc. M&M still was haggling over the price

in May, when Aon stepped in and took Minet into its stable.

In September, Aon again outbid M&M. This time it was in Germany, and the target was the former Johnson & Higgins partner Jauch & Huebener.

But despite Patrick G. Ryan's best efforts, Mr. Smith is finishing the year at number one.

When David Strauss was selected in July to be the new executive director of the Pension Benefit Guaranty Corp., it wasn't surprising that many in the pension community were saying, "David who?"

While Mr. Strauss, as deputy chief of staff for Vice President Al Gore, had been a senior official in the Clinton White House, he did not -- unlike most of his predecessors at the PBGC -- have extensive experience in pension issues before joining the agency.

But in his first six months at the PBGC, Mr. Strauss has become not only well-known but also very popular among pension professionals due to a series of his decisions.

He drew raves from employers for his decision to eliminate the PBGC's Top 50 list -- the agency's annual compilation of the 50 worst-funded corporate pension plans. Mr. Strauss said the list had become obsolete.

He received accolades for trimming the burden of a PBGC audit program used to check if employers have paid the correct amount of pension insurance premiums.

Perhaps most refreshing of all for a government official was Mr. Strauss's attitude. He said he views employers as customers who are entitled to good service from the agency.

1997 was the best of times and the worst of times for Stephen Wiggins. For most of the year the chairman and founder of Oxford Health Plans basked in adulation for the company's success. The meteoric rise of the company, from its founding in 1986 to a Fortune 300 company and the country's fastest-growing managed health care company within a decade, made Mr. Wiggins a star.

Some headline-making moves by the company this year include using nurse practitioners as primary care providers, providing coverage for alternative care providers and permitting enrollees direct access to health care specialists. Employers and individuals took notice. Enrollment skyrocketed and profits surged -- or so Oxford thought.

The cheering ended, however, during a train wreck of a day in October. Amidst the stock market's Oct. 27th collapse, Oxford unexpectedly announced that computer problems caused the company to write off millions of dollars in uncollected bills. As a result, the company said it would lose more than $78 million in the third quarter. Wall Street took immediate action, knocking down the stock price from more than $68 a share to $25.88 in one day, a drop of 62.6%. Since then, the stock has slipped even lower.

Shareholder lawsuits followed the stock plunge. And Oxford has said it has misjudged its medical costs and will post a loss this year.

For Mr. Wiggins, the crash tarnished his once-stellar reputation. But if he returns Oxford to its former heights, he could add turnaround artist to his list of titles.