New York Seeks to Revoke CRM Holdings’ License

April 21, 2008

The New York Workers’ Compensation Board plans to yank the license of CRM Holdings Ltd. to provide third party administrative services to self-insured workers’ compensation pools in the state as early as next month, according to documents sent to the company.

The move – a first in recent memory for a workers’ comp administrator – stems from a laundry list of charges that includes ailing to pay claims in a timely manner, file proper reports with the state, adequately reserve enough cash for claim payments and file accurate information about its clients with the state.

In a statement, the CRM Holdings acknowledged that New York Attorney General’s office has also begun a probe into the company’s business practices in connection with the decision by the Workers’ Compensation Board.

The Bermuda-based company, which has a significant presence in Poughkeepsie, said it plans to contest the charges, which it believes are “substantially without merit.”

“For more than eight years, the company’s subsidiary Compensation Risk Managers LLC has been an administrator of group self-insurance to the people of New York,” the statement said. “In this capacity, CRM has created significant employment opportunities and remains one of Poughkeepsie’s largest job providers. For obvious reasons, CRM is disappointed by the Workers’ Compensation Board and state Attorney General’s inquiries. However, we would like to affirm to all of our associates that (we) are continuing to conduct business in (our) customary manner.”

CRM and its subsidiaries provide primary workers’ compensation insurance to employers in California, Arizona, Florida, Nevada, New Jersey, New York, and other states and provide fee-based management services to self-insured groups in California and New York.

According to documents obtained by Insurance Journal, CRM allegedly failed to cooperate with auditors in connection with a review of seven group self-insurance trusts scattered throughout the state. An auditor from PriceWaterhouseCoopers was allegedly denied access to documents after discovering CRM’s data showed it had failed to strengthen reserves and aggressively close claims.

Administrative infighting over the nature and scope of the audits added “significant delay and additional expense(s) to the trusts,” according to the Workers’ Compensation Board.

The hearing to revoke CRM’s license is scheduled for May 20.

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