ORE. PROBE SAYS STATE COMP CARRIER IS REJECTING TOO MANY INJURY CLAIMS

ORE. PROBE SAYS STATE COMP CARRIER IS REJECTING TOO MANY INJURY CLAIMS

Too many claims by injured employees are being rejected by Oregon's state- owned workers compensation insurance carrier, according to a state probe.

However, calling it a "crackpot investigation," Stanton F. Long, the official in charge of the insurance program, defends the high rejection rate as indicative of new, aggressive fraud detection.The state program, Salem-based SAIF Corp., denies about 29 percent of disabling claims, those involving the loss of more than three days of work, according to the report by the Oregon Department of Insurance and Finance.

The leading private insurer in the state, Liberty Northwest Insurance Co., Portland, rejects about 13.3 percent, the study showed. The average for all private insurance companies combined is a rejection rate of 15.5 percent and 13.9 percent for self-insured employers, according to the report.

Gary Weeks, Oregon's director of insurance and finance, said he is drafting a letter to SAIF's board of directors urging changes in SAIF's claims-processing procedures.

"I have determined SAIF's claims practices have the effect of denying workers compensation benefits when such denials may not be justified," Mr. Weeks said.

SAIF's status under Oregon law is unusual. It is a corporation owned by the state, yet operates free of state control of its day-to-day management.

The governor appoints SAIF's board of directors, but neither the governor nor the insurance director can order specific actions by SAIF Corp.

Mr. Weeks concedes that Mr. Long's management of SAIF has restored

financial health to the formerly debt-ridden agency.

"SAIF has held itself out as a model on fraud investigations," Mr. Weeks said.

"I give the management a lot of credit for managing it much better than what it was years ago. My question now is, have they become overly aggressive in their handling of claims?"

"Ours isn't too high - theirs is too low," said SAIF's Mr. Long, referring to rejection rates. "We're not running a charitable organization here."

As a result of paying fewer claims and charging lower prices, SAIF gained $67 million in new business and its competitors have suffered, prompting complaints to the Insurance Department, Mr. Long said.

While raising many questions, the report does not issue any specific orders, notes Mr. Long, the company's president and chief executive officer.

SAIF is not planning any changes. Other insurers have observed SAIF's operations in an attempt to improve their own, he said.