R.I. Judge Blocks Governor’s Firing of Beacon Mutual Directors; Sets Hearing

May 4, 2006

Rhode Island Gov. Donald Carcieri has been handed a setback in his campaign to fire two Beacon Mutual Insurance Co. board members.

Superior Court Judge Steven Forunato has issued a temporary restraining order delaying Carcieri’s decision to remove George Nee and Henry Boeniger from the embattled workers’ compensation carrier’s board of directors. He scheduled a hearing for May 12 to decide whether to hear the matter.

Carcieri, who has been pressuring to reconstitute the insurer’s board and management following an audit that revealed possible mismanagement, wasted no time in expressing his displeasure.
“This decision is bad news for Beacon Mutual, its policyholders, and the people of Rhode Island,” he claimed.

“Beacon Mutual needs a new board of directors that is not implicated in the mismanagement that was so compellingly detailed in the Almond report. I do not believe that the people who presided over that misconduct can be trusted to make the reforms necessary to prevent it from occurring again. As a result of this decision, a cloud of mismanagement and possible criminal misconduct will continue to hang over Beacon Mutual,” the Governor maintained.

“Obviously, I do not agree with today’s decision, and I am disappointed for the policyholders that Beacon Mutual’s future has been put on hold,” he added.

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, have resisted Carcieri’s efforts to replace them on the insurer’s board.

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.

After release of the Almond report, the chief executive officer and vice president of claims were terminated.

Meanwhile, earlier this week another director resigned. John Holmes, who runs a government relations firm and is a past chairman of the state Republican Party, agreed to step down from the Beacon board, despite the fact he was not on the board during most of the period of business practices criticized in a recent audit.

Another board member, Edward Braks, resigned the day the Almond report was released. Also, 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.

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.

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