News Briefs

OHIO

Hospital Group Sues WC Bureau:

The Ohio Hospital Association and a member hospital sued the Ohio Bureau of Workers’ Compensation in September on claims the state did not follow legal processes for a $50 million cut in payments to hospitals for care given to injured workers, according to the Dayton Business Journal. The suit in Franklin County Common Pleas Court seeks a temporary restraining order to block the proposed payment cuts.

The bureau, scrutinized for investment policies and performance, rushed to cut hospital payments after a labor union claimed in July that hospitals were overpaid. Co-plaintiffs OHA and Genesis HealthCare System, Zanesville say if cuts are implemented, hospitals’ ability to take care of injured workers will be at risk. They say hospitals did not have proper recourse to challenge the cuts through the established rule-making process for state agencies.

Genesis represents the 110 hospitals statewide that could see their payments for care to injured workers cut under the state’s planned reductions. These cuts come on the heels of the Taft administration’s plans to drain another $310 million from hospitals’ Medicaid reimbursements through June 2007. A Medicaid payment freeze in the current state budget will cost hospitals $142 million while another $168 million will be cut by recalibrating rates paid for certain services. In 2004, Ohio hospitals lost $210 million in caring for Medicaid patients. The Ohio Hospital Association represents 170 hospitals and 40 health systems throughout the state.

State Joins NAIC Settlement with Marsh:

Michigan joined with over 30 state insurance regulators last month through the National Association of Insurance Commissioners (NAIC), and announced a multi-state regulatory settlement with the nation’s largest insurance broker, Marsh & McLennan Cos. Inc. (Marsh).

The settlement agreement is designed to ensure that Marsh implements extensive compensation and disclosure reforms. It adopts Marsh’s agreement made in January 2005 to pay its clients $850 million in restitution to resolve allegations of fraud and anti-competitive practices. $34,529,569 of the settlement dollars will be targeted towards Michigan commercial clients.

“Bid rigging and steering of clients without notification will not be tolerated,” said OFIS Commissioner Linda A. Watters. “I am happy to sign on to this agreement and provide restitution for Michigan clients of Marsh & McLennan.”

The investigation into broker bid-rigging was led by New York Attorney General Eliot Spitzer and New York State Insurance Superintendent Howard Mills. Marsh agreed with these officials to make restitution.

Entering into this Settlement Agreement makes the New York Agreement subject to enforcement by the Michigan Commissioner of Financial and Insurance Services (OFIS). Since the agreement contains a cease and desist order, Marsh would be subject to separate penalties here if it fails to adhere to the order. Michigan purchasers of insurance through Marsh will be compensated and Marsh has undertaken a reformation of its business to prevent the illegal practices from reoccurring.

The business reforms Marsh adopted include limiting its brokerage compensation to a single fee or commission at the time of placement, banning contingent commissions, and requiring disclosure of all forms of compensation to the clients. Michigan and other participating regulators will receive ongoing compliance reports from Marsh, have the authority to enforce reforms, and retain the ability to continue ongoing investigations with Marsh’s cooperation.

Marsh clients had until Tuesday, Sept. 27 to join the settlement pool and release Marsh from further claims. The settlement announcement was withheld until the deadline had passed to avoid the appearance of weighing in on whether eligible clients should opt-in.

“It was important to return as much money to as many commercial clients as possible, which was a key factor in my support of the settlement,” Watters said. “Marsh customers, though, are still free to not opt into the monetary settlement and take action on their own.”

INDIANA

Wells Fargo Acquires JS Crop Insurance:

Wells Fargo Insurance, Inc., a subsidiary of Wells Fargo & Company, has acquired the crop insurance business from Portland, Indiana-based JS Crop Insurance, Inc. (JS Crop), expanding Wells Fargo’s reach to farmer-customers in Indiana and Ohio. Terms of the acquisition were not disclosed.

Wells Fargo provides crop insurance services to over 6,000 farmers in Iowa, Illinois, Minnesota, Montana, North Dakota, Nebraska and South Dakota.

“We look forward to working with the team at JS Crop Insurance on a smooth transition and to bringing our combined expertise to new and existing customers,” said Dan Monson, senior vice president, Wells Fargo Insurance. “JS Crop and their team have a solid reputation for providing top quality advice and service and we will continue with that tradition.”

“Customers who have crop insurance policies with JS Crop will continue to receive the superior customer service from the dedicated staff they know,” said Jeff Smith, founder of JS Crop. “Now our customers and insurance sales representatives will have access to one of the largest insurance providers in the country, as well as Wells Fargo products and services.”

The Indiana-based team will partner with Wells Fargo agriculture bankers in Indiana and Ohio to provide customers crop insurance and risk management solutions for their operations.

JS Crop Insurance was founded in 1988 by Jeff Smith and managed by Smith and his wife, Agnes Smith, who have both joined Wells Fargo Insurance.

The company has grown to serve over 1,300 customers. The Smiths have won several awards, including the Farmers Mutual President’s Award and Statesman Award for Indiana and Ohio, as well as the Rural Community Insurance Bronze, Silver and Platinum Awards.

They are members of the National Crop Growers Association of Independent Agents, Indiana Seed Trade Organization, Indiana Plant Feed & Agricultural Chemicals Association and Professional Insurance Agents.

Wells Fargo & Company is a diversified financial services company with $435 billion in assets, providing banking, insurance, investments, mortgage and consumer finance to more than 23 million customers from more than 6,000 stores and the internet (wellsfargo.com) across North America and internationally.