Beacon Mutual Refuses to Turn over Computer Records to R.I. Auditors

Beacon Mutual Insurance Co., the state’s largest workers’ compensation insurer, refused to let state auditors copy its computer records Friday, a decision which could spark a court showdown.

The state has been investigating allegations that Beacon gave price breaks to certain policy holders, including its former board chairman.

State regulators and forensic auditors reviewed records Friday at the company’s headquarters in Warwick. At the end of the day, they served Beacon with a subpoena, asking to copy files from 21 computers, including one belonging to Beacon president Joseph Solomon. Company lawyers refused to let them.

The request was “overly broad,” Michael Doyle, a lawyer representing Beacon, told The Providence Journal. Usually, a subpoena includes a list of information to be copied, he said.

A. Michael Marques, the state director of business regulation, said the subpoena was a routine part of a forensic audit and does not imply that the people who used those computers are suspected of wrongdoing.

Marques said Solomon would have allowed auditors to copy the files, but company lawyers intervened, saying they had not been given enough notice.

“Typically, you don’t give advance notice,” Marques said. “Otherwise, somebody could damage their hard drive and then it could not be copied.”

He said the state will go to court today to have the subpoena enforced.

Beacon has been the subject of controversy since last year, when Republican Gov. Don Carcieri opposed a bill that would have converted the nonprofit insurer to a private company.

Carcieri then released an internal audit that said a company owned by Beacon chairman Sheldon Sollosy, Manpower Temporary Services, had not provided auditors with records that would let them determine whether the company had received favorable rates from Beacon.

Beacon responded by hiring former New York City Mayor Rudolph Giuliani’s consulting firm to review the allegations.