I am heading to the American Association of State Compensation Insurance Funds (AASCIF) 2014 annual conference in Washington, DC next week. As regular readers know I am a big fan of this conference – I am an enormous AASCIFFER. I am not sure what to expect this year, as I have spent a significant amount of time flailing away on the nefarious actions at Oregon’s state carrier, SAIF, over the improper termination of former CEO John Plotkin. What remains to be seen for me is how people at other funds view the very public flogging of one of their siblings.
AASCIF always has very nice functions, and in past years my wife and I have thoroughly enjoyed the offerings produced by the sponsoring funds. We often wind up spending the final dinner reception with one group or another, enjoying the pleasant company and conversation. I’ve advised my wife that this year there is a chance we may be seated by ourselves at a folding card table. I certainly suspect we will not be invited to the SAIF Hospitality Suite for milk and cookies.
And I'd have the cookies tested first if we were.
I wrote about the importance of State Funds shortly after the entire SAIF/Plotkin saga unraveled across the national stage. Funds play a vital role in the workers' compensation industry. Some of them are behemoths in their particular state, dominating the market and serving as a vital tool for the economic well being of their jurisdiction. And most of them are pretty well run enterprises. Left to their own devices, state funds are generally competent and skilled operations, serving the needs they were established to fulfill.
As long, of course, as they are left to their own devices.
I've had a little time to think about the issues that have arisen at state funds over the years, and I have identified what I believe to be a common thread that could pose potential problems for all of them at one time or another. For most of these operations, if potential problems lurk, it will be at this crucial pivot point; the fragile firewall that exists separating the “public corporation”, designed to run independently, and the state politicians and bureaucrats that oversee and influence that operation. It strikes me that for many of these companies, this is a critical juncture where problems can and do occur.
By all accounts, the operations of Oregon's insurer SAIF are top notch, with a well trained and respected workforce that serves its employers and workers well. Yet, due to the actions of a politically appointed Board of Directors that company has been thrown into complete turmoil. I should also note that most of the parties identified as being part of the Plotkin termination all had state government careers prior to joining SAIF. They are either career government people or political appointees.
Sandy Blunt, former Director of North Dakota's Workforce Safety and Insurance, is another example of what can happen when politically motivated actions interfere with supposedly independent operations. Many feel Blunt, who was criminally prosecuted for allowing his agency to buy small motivational gifts for WSI employees, was caught in a politically motivated power play, and became the sacrificial lamb in that struggle.
Of course, the breakdown between political desires and corporate integrity does not have to result in a personal victim. Colorado's Pinnacol Assurance spent a good deal of energy and effort a few years ago defending its reserves from an attempted cash grab by that state's politicians. It turns out that politicians just hate seeing money “sitting around” when they could spend it on their special projects and political pork. Pinnacol, by the legislatures estimation, had at least half a billion dollars that would be much better utilized being spent on things other than the injured workers it was set aside for. Pinnacol was successful in protecting that money, but it served as a huge distraction from what the company should be doing – serving employers and injured workers of Colorado.
These companies and their executives must essentially live and work in two divergent worlds. The challenge, both for the professional insurance people who run the daily operations and the government appointees that tie them to the state, is to make sure that political gamesmanship does not interfere with the primary mission for which the companies were established. I suspect that the executives on the corporate side understand this; I am less optimistic about those on the political or government side.
Several times their actions have proven that it is a concept they do not comprehend.
So, this next week I am off to DC. I have secured my Kevlar undies and am prepared to attend and participate. This year the conference has scheduled a nationally known figure, journalist Bob Woodward of Watergate fame. He will, ironically, be talking about “Presidential Leadership and the Price of Politics”. It will be appropriate for the audience, who all too often can be reminded of that political price.
As for SAIF, it seems they will have a very light attendance at AASCIF this year. According to the last registration list I saw, only Interim CEO John Gilkey and Director of Marketing Christy Witzke are scheduled to attend. Perhaps we will all be together for Sunday's Segway Monuments Tour. I'll try to get a quote from one of them – although I am not sure what I can do with the comment “You're an asshole”.
I'll have to wordsmith it a bit. After all, that is what I do.