Industry sources indicate that Coventry Health’s year long effort to find a leader for its’ First Health workers comp managed care entity has hit another snag.
Evidently the last candidate rejected an offer from Coventry within the last few days, leaving Coventry with an empty pipeline. The job has been open for about a year, and search firm Spencer Stuart has had the engagement for a few months.
Faithful readers will note that I reported Coventry was close to naming an exec a few weeks ago. For unknown reasons the deal could not get done. My take (based on nothing but idle speculation) is the workers comp business may well be more competitive and tougher than Coventry either knows or admits. Aetna’s Work Comp Access program appears to be gathering momentum; Concentra has not stumbled recently; and specialty managed care vendors such as MedRisk and CHOICE Medical Management are “hollowing out” First Health’s network business by taking out pieces of the network (PT and Florida respectively). First Health will be losing big chunks of business from two of its largest network customers this year.
Perhaps the candidates know they are not being asked to take over a thriving market dominator, but rather right the ship of a firm that has grown stagnant and stale.
What does this mean for you?
The right leader could return First Health to prominence in this sector. The longer this goes on, the more important it is to select – and sign – the right candidate.

It isn’t often that international auction house Sotheby’s gets involved in workers compensation cases, so the news that two of their numismatic experts pulled an all-nighter looking for coins missing from the Ohio Bureau of Workers’ Compensation is “top of the fold” stuff.
According to a report in the Akron Beacon Journal, Sotheby’s was contracted to track down and value the rare coins that were part of the BWC’s investment “strategy”. This highly unusual investment was made possible by the work of Tom Noe, a now-indicted political crony of Ohio Gov Bob Taft (R). .
Noe, who faces criminal charges for his allegedly illegal campaign contributions and other acts, had been storing the coins at several of his shops around the country, including ones in Sarasota, Maumee Ohio, and Colorado. Unfortunately, the Sotheby audit indicates that the coins they were able to locate are worth between $21 and $27 million; about half of the advertised value of BWC’s investment.
Highlights of the audit included the appearance of an Ohio State Trooper complete with badge and gun at one of Noe’s shops during the on-site audit. Evidently the Sotheby’s people were getting nowhere until the Law arrived, after which they stayed up all night looking at doubloons and double eagles (I’m guessing’).
So, the scandal that won’t fade away (much to the delight of this blogger) gets even better. Somewhat like a rare coin, it continues to appreciate the longer it is around.

Jon Coppelman at Workers’ Comp Insider has done a masterful job of researching the man behind the coingate scandal at the Ohio Bureau of Workers’ Compensation.
Jon’s diligence and professionalism allows me to be cutting and sarcastic.
Thanks Jon!

Excellent news out of the California Workers Compensation Institute (one of my favorite research outfits) that the frequency of comp claims has dropped significantly after enactment of reforms. The decrease, of 13% from 2004 to 2005, continues a decline that has seen comp injuries drop over 60% since 1990.
Self insured employers saw an even bigger decrease of 17%.
Even better news – according to Workers Comp Executive:
“n addition to frequency, claims costs have also started to decline thanks the recent reforms along with pure premium rates. CWCI points out that with claims frequency at a record low, additional rate decreases will depend on what changes state regulators, the courts or the legislature make to the current reforms.”
What does this mean for you?
A lower cost of doing business in California.

Ohio’s workers comp scandal keeps getting better and better. One of the principal figures (Tom Noe, aka “the perp”) has just been busted after a 10 month investigation that uncovered a very close relationship between the perp and the Governor’s chief of staff and a theft of over a million dollars
The perp a former investment manager for the Ohio state workers comp fund, pled not guilty to 53 charges, including stealing more than $1 million from the state’s work comp reserves.
According to the AP, the charges:
“conclude a 10-month investigation by state and federal prosecutors into the $50 million rare-coin investment Mr. Noe managed for the state insurance fund for injured workers.
The investigation led to sweeping changes at the state workers’ compensation bureau, an agreement by Gov. Bob Taft and two former aides to plead no contest to ethics charges, and pending charges against two other former Taft aides.
Mr. Noe is accused of stealing from the investment by writing checks, sometimes for hundreds of thousands of dollars each, knowing that the money was not his to use.
His lawyer has acknowledged a shortfall of up to $13 million of the money Mr. Noe invested for the Ohio Bureau of Workers’ Compensation.
One of the charges in Monday’s indictment accuses Mr. Noe of stealing at least $1 million. The state attorney general has accused him of stealing up to $6 million.
Mr. Noe, 51, already faced charges of using colleagues and associates to funnel $45,000 illegally to President Bush’s re-election campaign. The new counts include forgery, theft and money laundering.”
This has it all – lost treasure, political backroom deals, corruption in high places, theft from injured workers, and political scandal at the state and Federal level.
What does this mean for you?
Yet another reason to love the workers comp business; as if you needed one.

My friends at Workers’ Comp Insider have posted a round-up of WC news, including a summary of the recent AIG settlement. Part of AIG’s $1.6 billion settlement is to go to pay back taxes owed for workers comp premiums that were not reported to the various states as such.
States tax insurance premiums to gather revenue and to build up funds to cover any costs associated with insurers that go belly-up. The reporting of premiums is also used to determine how much of the residual market is assigned to each insurer (in states that handle the residual market this way).
Turns out AIG systematically under-reported work comp premium and engaged in a variety of other financial shenanigans to avoid taxes and assessments. And now they are paying $343 million for their sins.
What does this mean for you?
The final note, we hope, in the denoument of AIG’s reputation as a respected and feared company.

Yesssss!!!
The scandal continues! The latest news is that Thomas Noe, he of the “I know, let’s buy $50 million in rare coins with workers’ comp reserves!” fame has been caught funneling illegal campaign contributions to several Ohio judicial candidates through a third party. (thanks to Work Comp Executive newsletter for this choice bit)
Noe, who is up to his eyeballs in other legal trouble (not only was he involved in the coin scandal, he also is accused of illegally contributing $45,400 to the Bush campaign), is accused of conspiring to contribute more than the legal limit to three candidates in Ohio.
And here we thought workers comp was boring (well, ok, so it’s only peripherally related…)
Meanwhile, the scandal has blocked efforts to convert Ohio’s monopolistic WC system to something more free-market. Recent testimony before the state legislature pointed out that it probably makes sense to hold off on any drastic moves until the mess gets cleared up.