News Briefs

MASSACHUSETTS

Fed Probe Firing of MassMutual CEO: Federal prosecutors are investigating the conduct that led to the firing of former MassMutual Insurance Comany chief executive Robert J. O’Connell, the company disclosed in court documents.

The company acknowledged the federal probe as part of a complaint, filed in Hartford Superior Court, that seeks to stop Connecticut Attorney General Richard Blumenthal from releasing MassMutual’s internal investigative reports into O’Connell’s actions. In its complaint, the Springfield, Mass.-based life insurance company cited criminal investigations being conducted by Massachusetts Attorney General Tom Reilly and the U.S. attorney’s office in Massachusetts as a reason to keep the reports confidential.

In firing O’Connell in June, the company accused him of engaging in a “systematic and pervasive pattern of willful abuse of authority,” and “willful gross misconduct.” The company also said he had used unauthorized trading techniques to boost the value of a supplemental retirement fund and bought a company-owned condominium in Florida at a below-market price.

O’Connell has vowed to fight his dismissal, saying virtually every accusation is unsubstantiated.

Rell Gets Tough with Unsafe Truckers: State inspectors cracking down on trucking companies in the wake of a deadly crash in Avon in July mistakenly skipped thousands of interstate carriers, including some with troubling safety records.

Gov. M. Jodi Rell told the Department of Motor Vehicles to target the 25 state trucking companies with the worst driver and vehicle safety records, but the only companies that made the list were those that operate within Connecticut. The agency ignored companies that cross state lines because officials mistakenly thought that’s what Rell wanted, The Hartford Courant reported. Inspectors skipped nearly 9,000 Connecticut-based interstate carriers.

Rich Harris, a spokesman for Rell, said she never intended the DMV to focus only on companies that operate within Connecticut. She has since repeated her order to review all truckers including those operating interstate.

The July 29 crash, which killed four people, was triggered by an out-of-control dump truck that barreled down Route 44. Police have not yet determined the cause.

“This is an all-out, long-term effort to get dangerous vehicles off of state roads, and I will not relent,” Rell said.

For the majority of intrastate trucking companies that were reviewed, company vehicles were taken out of service until repairs and re-inspections were performed. If a truck that has been taken out of service is discovered out on the roads, the driver’s commercial driver’s license can be revoked, the driver can be fined $2,500 and the carrier can be fined $10,000.

RHODE ISLAND

Drunk Driving Laws Fail to Pass: Rhode Island has some of the weakest drunken driving laws in the nation, and was the only state to receive a “poor” rating in a survey of legislation to reduce drunken driving, according to a national highway safety organization.

The Insurance Institute for Highway Safety gave Rhode Island the mark after comparing states’ laws with four measures it contends research shows has reduced drunken driving. One such measure is an administrative license-revocation law requiring at least a 30-day license revocation for violations. This provision means an immediate revocation for drivers whose breath-test results show an illegal level of alcohol in their blood or who refuse to take the test. Rhode Island has no such provision.

State officials and interest groups say the General Assembly has failed to enact tougher legislation, despite their calls for action. “There’s definitely room for improvement,” said Bernard Frezza, legislative liaison for the state Department of Transportation.

But House Judiciary Committee chairman Robert Flaherty (D-Warwick), said the state’s laws are adequate, and disputed the institute’s ratings system. “I think we clearly have a mechanism to control drunk driving,” Flaherty said. The chairman added he was concerned that drunken driving laws could infringe on the constitutional rights of drivers.

VERMONT

Doctors Protest Workers’ Comp Payments: Doctors are protesting the state’s attempt to freeze their workers’ compensation payments at 1995 levels. The Vermont Medical Society maintains that the low rates are hurting doctors-and making it difficult for them to take on workers’ compensation injury cases.

Steve Larose, a spokesman for the group, said workers’ compensation cases are near the low end of reimbursements doctors receive from various forms of insurance. Larose said a recent study by a consultant to the Labor Department found Vermont second only to Massachusetts for the lowest workers’ compensation doctor reimbursements among five northeastern states studied.

Labor Commissioner Patricia McDonald said the department had not yet made its new rules containing the final rates, and is taking into account the medical society’s comments.

NEW YORK

Construction Firm Settles Bonds Dispute: The U.S. Justice Department said that New York, N.Y.-based Turner Construction will pay the government $6.6 million to settle allegations that it submitted false claims. The company cooperated in an investigation into information that Turner had received credits for bonds on dozens of federal contracts without passing the credits along to the federal government.

The contracts in question include one for the construction of the Veteran Administration’s Boston Medical Center in Massachusetts, one with the General Services Adminsitration for the construction of a courthouse in Islip, N.Y., numerous Navy contracts, and several other construction contracts or subcontracts with these and other agencies.

Turner was required by its contracts to reduce the amount it sought for bond payments or to refund to the government the credits it received from its bonding company, AON Risk Services. As part of the settlement, Turner will also forfeit claims valued at $2.8 million under contracts with the Department of Veterans Affairs and the Department of the Navy.

Drunk Driver Medical Exclusion Upheld: Gov. George Pataki vetoed a bill that would have required insurance carriers to pay the medical bills of people injured while driving drunk. Pataki’s action keeps in place the state’s “alcohol exclusion law,” enacted in the late 1940s in part to save insurance companies money.

The National Association of Insurance Commissioners and Mothers Against Drunk Driving had argued that the current law discourages doctors from testing injured drivers for alcohol because insurance companies won’t have to pay for the treatment.

Pataki said he vetoed the bill because sponsors had not determined how many people and cases would be affected by a change, and because the bill’s language could be interpreted to require payment for procedures outside emergency room services.

Agents Back Financial Notification: Businesses must notify New Yorkers when their financial and personal information has been compromised, under a measure that has become law in New York.

The Information Security Breach and Notification Act, which takes effect in December, will require businesses that maintain computerized customer records to notify consumers whose information has been violated.

The bill has had the support of the Independent Insurance Agents & Brokers of New York Inc. since its introduction by State Sen. Charles J. Fuschillo Jr. (R-Freeport) and Assemblyman James F. Brennan (D-Kings).

According to the bill’s language, “unauthorized acquisition of computerized data which compromises the security of personal information maintained by a state entity, person or business” will require that customers be notified through a variety of methods, including in writing and electronically.

The law allows businesses to determine the extent of the violation, but would also hold them accountable for not following the necessary steps of victim notification. Failure to inform consumers whose information has been breached is punishable by a fine of up to $150,000.

NEW JERSEY

Flood Protection Rules Hit: Despite three major Delaware River floods in the past 13 months, the Department of Environmental Protection is reneging on promises to revise rules that would make it tougher for developers to build in flood-prone areas, environmental groups charged.

Representatives of the Sierra Club and New Jersey PEER (Public Employees for Environmental Responsibility) accused the DEP of intentionally stalling new building restrictions to give developers more time to build.

“Every day of delay for fixing these rules means hundreds of permits go out for developers to build in areas that flood, and they shouldn’t be allowed to build,” said Jeff Tittel, executive director of the New Jersey Sierra Club.

The DEP has proposed readopting its existing Flood Hazard and Stream Encroachment Rules while it works on revising the guidelines. The DEP’s Vincent Mazzei Jr. said the agency was unable to finish drafting new guidelines before the old ones were to expire and was reissuing the existing rules as a stopgap measure. It hopes to have more stringent standards published before the end of the year, Mazzei said.

Flooding in the past 13 months has caused millions of dollars in property losses. Damage to private and public property from the floods in early April topped $50 million.

PENNSYLVANIA

High Court Upholds DUI Roadblocks: Catching drunken drivers at police roadblocks may cost more money and result in fewer arrests than roving patrols, but that is no reason they should be declared illegal, the state’s highest court recently ruled.

While acknowledging that “sobriety checkpoints” must be carefully planned and executed to avoid conflicts with constitutional protections against unreasonable searches and seizures, a majority of the state Supreme Court said roadblocks remain a vital law-enforcement tool.

In a 4-2 ruling, the court upheld the 2003 driving-under-the-influence conviction of Gary Beaman, of Pittsburgh, who was stopped by Pittsburgh police at a roadblock and arrested in 2001. Beaman appealed, asserting that roadblocks should be declared unconstitutional if there is a more efficient way to enforce the state’s DUI law.

In upholding the Superior Court, the justices acknowledged that Pennsylvania Department of Transportation statistics show the percentage of DUI arrests among drivers who are pulled over-7.7 percent-is more than 10 times higher than the percentage arrested for DUI at roadblocks. The statistics, from 1999 to 2001, also show each arrest at a roadblock required more man-hours than conventional roving patrols.

But “this alone does not mean they (roadblocks) are ineffectual,” Justice Thomas Saylor wrote in the majority opinion. “The statistics may be somewhat misleading,” Saylor said. “Because every vehicle that passes through a roadblock is stopped, at least briefly, and a roving patrol only stops an automobile exhibiting signs of impaired driving, it is to be expected that a higher percentage of stopped vehicles will lead to arrests in a roving-patrol scenario.”

MARYLAND

Med-Mal Payouts Dropping: Payouts in medical malpractice awards in Maryland dropped last year after several years of big increases, prompting the state’s largest insurance carrier to keep the rates it charges doctors level in 2006. The announcement by the Medical Mutual Liability Insurance Society of Maryland was made in a letter to policyholders, according to The Washington Post.

The reduction comes after an emergency session of the General Assembly and dire warnings from Gov. Robert Ehrlich that doctors would be driven out of the state because of high insurance costs.

Some trial lawyers who saw the legislative action as an attempt to cap damage awards greeted the news with skepticism.

“The truth of the matter is there never was a crisis in medical malpractice in Maryland, and this is the framed exhibit,” said Dennis O’Brien, public relations chairman for the Maryland Trial Lawyers Association.

But one doctors’ organization cautioned against ascribing too much meaning to the figures, saying it is unclear why the malpractice awards have fallen.

“There’s clearly been a change,” said T. Michael Preston, executive director of the Maryland State Medical Society, the doctors’ lobby. “The big questions are, ‘Of what duration?’ and ‘Why?’-and no one knows.”

Medical Mutual, which insures more than three-quarters of the state’s private practice physicians, raised rates by an average of 28 percent and 33 percent in the preceding two years. In the letter, the insurer said payouts in malpractice cases rose from $47 million in 2000 to $93 million in 2003.

Medical Mutual said despite the sharp increase a few years ago, last year’s payouts dropped to $78.5 million. This year’s figures are keeping the same pace, the insurer said. In the letter, D. Ted Lewers, chairman of Medical Mutual’s board, said “some degree of normalcy” was returning to its claims numbers. Lowers said rates would not increase in 2006.

Ehrlich called lawmakers back to Annapolis last year, trying to convince them to pass limits on jury awards. The legislature established a tax on HMOs to help mitigate rising doctor insurance fees. But the Democrat-controlled body rejected Ehrlich’s cap proposal.

DISTRICT OF COLUMBIA

Mirel Stepping Down as Regulator: Lawrence H. Mirel, insurance commissioner for the District of Columbia, is stepping down from the post he has held for the past six years, the office of D.C. Mayor Anthony Williams has confirmed.

Vincent Morris, a spokesman for the mayor, said no successor has yet been named. Mirel is leaving Sept. 30.

Mayor Williams appointed Mirel as Commissioner of Insurance and Securities Regulation in July of 1999. In March of 2004, banking regulation was added to his responsibilities. DISB has a budget of more than $11 million a year and a staff of approximately 125.

During his tenure, Mirel has been instrumental in establishing D.C. as a center for captive insurers.

Before becoming commissioner, Mirel was a lawyer in private practice and was the founder and executive director of the District of Columbia Insurance Federation (DCIF), a state insurance trade association.

Topics Carriers New York Legislation Workers' Compensation Flood Massachusetts Maryland Connecticut Construction Pollution