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Procedures faulted at Ohio comp bureau

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COLUMBUS, Ohio—Inadequate policies and procedures within the Ohio Bureau of Workers Compensation and Industrial Commission allowed illegal and inappropriate activity to occur, according to a 2005-2006 audit report released last week.

Meanwhile, the state auditor is still investigating whether some employers' workers comp insurance rates may have been improperly lowered through the use of so-called manual overrides, in which officials deliberately changed rates that were set by formula.

The audit highlights four key findings: improperly monitored investments; deficiencies and an overall lack of control in the rate-setting process; poor internal communication; and abuse of power by a senior manager.

In particular, the audit states that former Chief Financial Officer Terrance Gasper accepted cash and other benefits from financial managers seeking to do business with Ohio's monopolistic workers compensation fund, which provides coverage to 280,000 employers in the state representing about two-thirds of the state's workers. Self-insured plans cover the rest of Ohio's workers.

Mr. Gasper, former BWC chief financial officer, pleaded guilty on June 7, 2006, to state and federal charges involving accepting bribes in return for bureau business. Mr. Gasper, who left the BWC in October 2004, is scheduled to appear in Franklin Common Pleas Court for sentencing on April 26.

The audit report also recommends specific actions the BWC can take to ensure that proper safeguards are in place to prevent a recurrence of illegal and/or inappropriate activity in the future.

"This is an important step toward restoring public trust and accountability within the Ohio Bureau of Workers Compensation," State Auditor Mary Taylor said in a statement. "The audit clearly reflects weaknesses in the system that escalated into major problems allowing for fraud, theft and corruption to occur."

The BWC responded positively to the audit report's findings.

"We're obviously pleased that the audit is complete, and BWC is going to continue to scrutinize and improve upon the internal controls that we have in place and will put in place going forward," a spokesman for BWC said. "The auditor did address many of the changes we've made thus far, but certainly we recognize that we have additional steps that we need to take to make sure we are properly serving the employers and employees of Ohio."