Two Beacon Mutual Directors Balk at Firing by R.I. Governor

April 25, 2006

Two directors of embattled Beacon Mutual Insurance Co. have informed Rhode Island Gov. Donald Carcieri that they refuse to relinquish their positions on the board of the state’s largest workers compensation carrier without first being given a hearing.

Carcieri, who has threatened to force the termination for cause of Beacon Mutual directors George Nee and Henry Boeniger if they don’t resign, has indicated a willingness to afford them a hearing.

“The Governor’s office will be contacting them in the coming days to arrange an opportunity for them to be heard,” said Carcieri spokesman, Jeff Neal.

Nee, a labor representative, and Boeniger, a teachers’ union lobbyist and former Democratic state representative, both of whom were appointed to the board by previous governors, apparently feel they have a record they can defend.

“I feel a great deal of pride in the record and accomplishments of Beacon Mutual. We haven’t raised rates for 14 years, and we’ve returned $1 billion to the business community. I don’t believe our services have been anything but exemplary,” Nee told NBC 10 News.

Boeniger told the Westerly (R.I.) Sun that he disagrees with Gov. Carcieri. “My main concern is Beacon Mutual,” he told the local publication.

But the Carcieri Administration is impatient to overhaul the Beacon board.

“Governor Carcieri is disappointed that Mr. Nee and Mr. Boeniger continue to put their own self-interests above the needs of Beacon Mutual and its policyholders. This is exactly the type of behavior that has gotten Beacon into the mess it’s in today,” charged Neal. “Mr. Nee and Mr. Boeniger have presided over the mismanagement of Beacon Mutual for over a decade. They were either complicit in that mismanagement or they were incompetent in not discovering it. Either is a cause for termination.”

He accused Nee and Boeniger of caring more about the $20,000 stipend as directors than about the well-being of the company that insures an estimated 90 percent of the state’s employers.

Neal defended the right of the governor to remove the directors, claming the “authority and responsibility to remove them from the board of directors is clearly spelled out in Beacon Mutual’s own by-laws.”

Carcieri moved to terminate Nee and Boeniger following the release of an audit by the Almond Review Committee that alleged that the company gave favored pricing and treatment to certain policyholders, including some with ties to management and directors.

The Beacon board opted not to respond to the governor’s action, leaving it up to the individual directors to decide what to do, according to a Beacon spokesman.

The board consists of four members appointed by the governor, three representing policyholders, the director of the Department of Labor and Training, and the company’s chief executive officer.

Another board member, Edward Braks, resigned the day the Almond report was released. Braks is chief financial officer for Paul Arpin Van Lines, which the Almond report maintains received large credits and benefited from incorrect workers compensation classification despite an overall high loss ratio. He did not participate in the board meetings following release of the Almond report.

The former chairman of the board, Sheldon Sollosy, left the company late last year when an anonymous tipster raised questions about his company’s workers compensation account.

Carl I. Hayes, president of a Cranston furnace manufacturing company, took over as chairman after Sollosy’s resignation.

Carcieri is also asking a third board member, John Holmes, to meet to discuss his involvement in Beacon’s management problems. Holmes runs a government relations firm and is a past chairman of the state Republican Party. He was not a member of the board during most of the period of questioniable practices.

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