CompSource spends $100,000 to support status quo

By Patrick B. McGuigan

Published: 09-Apr-2010

CompSource Oklahoma has spent nearly $100,000 to sustain its position as the state’s workers’ compensation insurer of last resort. According to a letter from the agency’s general counsel, most of the money has gone to the Crowe & Dunley law firm and to two lobbying firms: Majority Plus and Kelley, Newport & Associates. Additionally, a little more than $13,000 was spent for a written notice to CompSource policyholders.

Details for this story come from a March 12 letter by Sherry Oden, general counsel of CompSource Oklahoma. Responding to a request from CapitolBeatOK, the letter was provided by state Rep. Dan Sullivan of Tulsa.

Oden wrote that since creation of a legislative task force to consider CompSource’s future, “CompSource has received services from the law firm of Crowe & Dunlevy.” Oden said attorneys working on the project and their hourly rates are on a list approved by the office of Attorney General Drew Edmondson. Oden said the firm provided “legal expertise on a number of topics, analysis of various pieces of legislation effecting CompSource,” and “legal assistance at Board meetings, and other tasks.”

Oden said the law firm’s services, which totaled $64,526.24 “for all of its work on behalf of CompSource” have included “analysis and communication” regarding Senate Bill 2232 and House Bill 2662. Those proposals were designed to implement legislative intent to privatize CompSource. Oden said “CompSource is not able to divide with specificity how much of the work of Crowe & Dunlevy has been devoted” to the two proposals.

Oden disclosed the information in a letter to state Sen. Cliff Aldridge and to Sullivan, co-chairmen of the task force. That group investigated privatization, mutualization (conversation of policy holder ownership) and other options for the public-private hybrid that serves as the state’s workers compensation insurer of last resort.

Oden wrote that CompSource has retained Majority Plus, LLC. Pat Hall of Majority Plus “has performed a number of tasks for CompSource some of which relate to the Task Force. Mr. Hall’s services have been particularly important over the past several months as the position of Director of Communications at CompSource has been vacant for much of that time. From the beginning of the year until now, Mr. Hall’s firm has been paid a total of $13,322.”

Oden also said CompSource had “retained Kelley, Newport & Associates, where services are provided primarily by Jim Newport. From the beginning of this year to [March 12], CompSource has paid Kelley, Newport & Associates $8,000.” Oden said her agency “is unable to divide out exactly how much of the time of either firm has been devoted” to the two key pieces of legislation effecting CompSource.

Oden also told the task force chairmen CompSource had “written a notice to its policyholders concerning the effect of S.B. 2232 and H.B. 2662. This was not a mailing lobbying for passage or defeat of particular legislation. It was, however, designed to provide notice to the policyholders that the bills would make a material and significant change in the operations of CompSource and to provide policyholders with notice of the findings which have been made by CompSource’s actuary with respect to the effect of such legislation. The cost to mail out the notices was $13,002.41.”

Oden wrote the letter in response to a request for information made at a meeting chaired by Aldridge and Sullivan. She wrote, “Because the question posed asked for ‘lobbying’ expenses with respect to S.B. 2232 and HB. 2662, the potential exists for the parties to get bogged down in determining whether various services could or should be characterized as ‘lobbying.’” To avoid delay in her response, Oden wrote the information was being provided “without getting sidetracked on the issue of how services are characterized.”

CompSource of Oklahoma has about 35.10% of the state’s workers compensation insurance market, according to the Insurance Department. The next largest market share is held by Chartis, at 12.7%. CompSource has high net losses and solvency issues, and tax advantages that private businesses do not have.

Proposals to privatize CompSource have been made, but encountered opposition this session. 

This past week, Senate Bill 1996, a measure that would (among other provisions) require CompSource to outsource claims processing, was approved 8-6, with the enacting clause stricken.