Calif. departments start joint probe into SCIF

SACRAMENTO, Calif.--The California Highway Patrol, California Department of Insurance and San Francisco District Attorney's Office said Wednesday they have formed a joint task force to investigate allegations of "potential misconduct" by former employees of the State Compensation Insurance Fund.

The investigation is separate from the insurance department's ongoing top-to-bottom review of San Francisco-based SCIF, for which it has regulatory oversight.

In April, about half a dozen fraud investigators from the department's law enforcement division began investigating whether any laws were broken in the payment of administrative fees in connection with SCIF's group insurance programs, which provides discounted workers compensation insurance for members of trade associations.

California Insurance Commissioner Steve Poizner ordered the audit and demanded structural and operational changes at SCIF, the state's largest workers comp insurer, following the abrupt firings in March of SCIF President James C. Tudor and Vp Renee Koren. SCIF attributed the firing to results of an internal review, which focused in part on its group insurance program (BI, April 2).

Two of SCIF's five board members resigned last year amid conflict-of-interest concerns over their role in placing and administering some group business with SCIF for which their companies received fees.

The findings of the insurance department's independent examination are expected this fall.

The California Highway Patrol said in a statement that SCIF has been cooperating fully with investigators.

The agencies involved in the new task force will not comment on any matter related to the criminal investigation until its completion.