California State Compensation Insurance Fund

The infighting over the fast-deteriorating workers' compensation system in California took a new turn Wednesday when officials of the workers' comp insurer of last resort announced that they have sued the state Insurance Department to thwart a potential takeover.

A San Fernando Valley restaurateur earned an appointment from Gov. Pete Wilson on Thursday to the State Compensation Insurance Fund's board of directors. Kevin T. McCarney, 42, has owned and operated Poquito Mas Mexican restaurants, based in North Hollywood, since 1984. He also is an SCIF policyholder, a requirement of all board members. "He represents the restaurant industry on the board, and they clearly have the greatest need and use for SCIF," said Matt Taggart, a Wilson spokesman.

California's state-owned workers' compensation insurer Tuesday lost a round in its legal battle with Insurance Commissioner John Garamendi. A Superior Court judge in San Francisco denied a preliminary injunction that would have muzzled the state's head insurance watchdog and required him to keep his hands off the troubled carrier.

The State Compensation Insurance Fund, the scandal-plagued state-run insurance company under investigation for allegations of potential misconduct by former top executives, picked an industry veteran Wednesday as its new president. Commonly known as the State Fund, the insurer is based in San Francisco and provides workers' compensation coverage to about 220,000 California employers.

sacramento -- The troubled state-backed workers' compensation insurance company sent a status report to lawmakers Tuesday, stressing its "significant progress in getting the organization back on track." But the 10-page report from Jeanne Cain, chairwoman of the San Francisco-based State Compensation Insurance Fund, was silent when it came to detailing a criminal probe into what Department of Insurance officials say may involve more then $1 billion in misappropriated state funds.

California's troubled state-backed workers' compensation insurance company must revamp its board of directors, stop meeting in secret and modernize its corporate governance, lawmakers demanded Wednesday. The call for a sweeping overhaul of the State Compensation Insurance Fund, which is currently the target of a criminal investigation, came at a hearing of the state Senate's Banking, Finance and Insurance Committee.

A Los Angeles jury hit California's largest workers compensation insurer with a $20-million punitive verdict Friday, finding that the State Compensation Insurance Fund in effect systematically overcharged on premiums. The verdict is one of the largest such penalties in California and believed to be the first of its kind in a workers comp case here.

Two state law enforcement agencies and the San Francisco County district attorney's office announced Wednesday that they were forming a task force to investigate a state-run insurance company. The criminal investigation by the California Highway Patrol, the California Department of Insurance and the district attorney is focusing on allegations of potential misconduct by former top officials at the State Compensation Insurance Fund, commonly known as the State Fund.

Next month, a little-known state agency that doubles as a $20-billion insurance company will hold its first public board of directors meeting in 94 years. After years of secrecy, questionable behavior by board members and more recently scandal at the agency, the Legislature and Gov. Arnold Schwarzenegger ordered sweeping changes now underway.

A plan to fill last summer's $20-billion budget hole in part by selling a chunk of the state-run workers' compensation company is now so bollixed up in court that it's hampering Gov. Arnold Schwarzenegger's effort to devise new ways for reducing a similar deficit this winter. Last summer, the governor convinced state lawmakers that he could raise $1 billion by getting investors to buy some of the business of the century-old State Compensation Insurance Fund. That idea was one of a handful of creative solutions and accounting maneuvers concocted to balance the $90-billion, recession-wracked spending plan, at least on paper.