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Will PERMA Adjust

 State: NY


SWCB Grants TPA License to End PERMA Dispute


By Michael Whiteley, Eastern Bureau Chief


The New York State Workers' Compensation Board on Tuesday voted unanimously to renew the license of the third-party administrator for the Public Employer Risk Management Association following a series of pledges by the self-insurance pool to revamp its corporate structure, limit its large-deductible program and conduct claims-level reviews of its operations.


Rachel McEneny, the board's spokeswoman, said the board voted 13-0 at its monthly meeting to approve a one-year license for Northeast Association Management Inc. The board voted 11-1 in April to deny NEAMI's application for a license renewal based on its handling of a workers' compensation claim filed by an employee of the Village of Scotia and because of corporate ties with PERMA.


At the time, PERMA shared corporate officers and headquarters in Latham, N.Y. State Workers' Compensation Board member David Dudley told the board in April that NEAMI had failed to resolve questions about PERMA's operations that were raised by a three-member panel appointed to review the license application.


"The lack of internal controls and supervision is symptomatic of a larger problem and is contrary to qualifications and character required of an entity licensed by the board," Dudley told the board on April 16.


The board's decision to reverse its earlier ruling and grant the license followed negotiations between staffers for the State Workers' Compensation Board, PERMA and the government relations law firm of Wilson Elser Moskowtiz Edelman & Dicker, which PERMA hired to work out its licensing problems with the board.


The vote also followed PERMA's announcement on May 30 that John Nielsen, PERMA's president, has resigned. Nielsen also served as an officer of NEAMI.


Nielsen was named president of PERMA in December 2010 to head the self-insurance pool, which provides workers' compensation for municipalities, school districts and library districts in New York.


NEAMI President Brent Wilkes, the former president of PERMA, declined to be interviewed on Tuesday. He said in an email, "Please refer to the WCB directly for what they have said, or done."


But Wilkes, NEAMI's qualifying officer, Paul Jahn, and PERMA's new Chairman and President Stephen Altieri said in a letter sent to SWCB Executive Director Jeffrey Fenster on June 10 that the  companies planned nine "corrective actions" following "productive and constructive" discussions with the board.


SWCB released the letter to WorkCompCentral in response to a request filed with the board Tuesday morning under the New York Freedom of Information Law.

The ninth action, which references a change in SWCB assessments mandated by New York Gov.


Andrew Cuomo's 2013-2014 budget, was redacted from the letter released by the board. Wilkes did not respond to a request from WorkCompCentral to release further details of the letter.


Patrick J. Cremo, associate general counsel and records access officer for the board, said in an email that release of the ninth corrective action would "result in substantial competitive harm to NEAMI."


NEAMI told the board:

• It has implemented additional internal controls relative to the supervision and review of retained counsel and has removed the firm of Walsh and Hacker from its list of approved attorneys. A three-member panel appointed by the board to review the Village of Scotia case concluded that Peter Walsh, a partner in the firm, acted inappropriately when questioning an administrative law judge's ruling in the case.

• PERMA and NEAMI have reorganized to ensure that the companies no longer share officers and that no person with a financial stake in NEAMI serves as an officer of PERMA. On May 22, PERMA's governing board appointed Stephen Altieri as board chairman and president, elected Beth Hunt as vice chairwoman, and elected Robert Beedon to serve as secretary and treasurer.

• PERMA hired Robert Spolzino, an attorney with the firm of Wilson Elser, to serve as independent counsel.

• PERMA has agreed to hire an independent financial adviser to analyze and perform claims level review of members and of the group as a whole. NEAMI said that, while the focus of past reviews has been on PERMA's overall operations, future reviews will analyze individual claims to ensure pricing adequacy.

• The large-deductible program operated by PERMA won't be expanded beyond current participating members and three prospective members that have applied to participate.

• Following review by SWCB, PERMA will add language in its membership agreements to explain the relationship between PERMA and NEAMI and the ultimate liability of each member.

• PERMA's information technology unit is working on an online program that will allow members to view their contributions, incurred losses and allocated loss-development at any time.

• PERMA has agreed to hire "an independent resource" to oversee the agreement between NEAMI and PERMA.


The self-insurance pool reported a $21.7 million deficit in its 2010 annual report. PERMA officials at

the time blamed New York auditing standards that require the pool to report future claims liabilities as actual expenses.


PERMA reported last year it is "on track to return to profitability, certainly in fiscal year 2014."


Walsh and a workers' compensation committee of the New York State Bar Association have been critical of a board plan to streamline the hearings process by allowing judges to issue proposed "desk orders" without holding hearings as part of a process called the Managed Adjudication Path. Parties would then be allowed to challenge the desk orders and request hearings.


According to board records, Walsh objected to a judge's desk order in the Village of Scotia case that scheduled medical depositions without a hearing.


Walsh declined comment on the June 10 letter on Tuesday, but said previously the board's original license denial for NEAMI "smacks of retaliation" because of past objections to MAP by Walsh and the Bar Association.


In response to a copy of the June 10 letter provided by WorkCompCentral, Walsh and Hacker said in a follow-up press release, "We have reviewed the letter and we are making judgments accordingly.


"We are not in the position to comment on the multiple conditions outlined with respect to the financial health and operations of PERMA going forward," the law firm said. "We are hopeful that NEAMI and PERMA will resolve these conditions in a favorable manner."


Robert Grey, chairman of the New York Workers' Compensation Alliance, a claimants' attorneys' group, applauded the board's scrutiny of NEAMI and PERMA on Monday.


Grey has criticized reports by the Workers' Compensation Policy Institute, a nonprofit think tank formed by PERMA, that the New York workers' compensation system is among the most expensive in the nation.


"It appears that the board is trying to get some control over a potentially rogue operation, and that's good," Grey said.


An archived webcast of the board's monthly meeting ishere.

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