Former Vice President at Rhode Island Insurer Acquitted

May 24, 2010

A former executive at Rhode Island’s dominant workers’ compensation insurer was acquitted Friday on a charge that he deceived state regulators about companies that were receiving discounted premiums.

Superior Court Judge Edwin Gale acquitted David Clark, a former vice president of underwriting at Beacon Mutual Insurance Co., after prosecutors rested their case in Washington County Superior Court. He said prosecutors failed to show that Clark had committed a crime.

“Mr. Clark is very pleased and relieved that this ordeal is over,” said defense lawyer Thomas Briody.

Prosecutors alleged that Beacon Mutual gave select companies discounted insurance premiums and maintained a so-called “VIP list” of businesses that were afforded preferential treatment.

Clark was accused of withholding that list from the Department of Business Regulation, but his lawyers maintained the agency never asked for the information so there was no legal obligation to provide it.

The acquittal came after the judge earlier in the week limited the testimony of an expert prosecution witness, who had planned to testify about the pricing of policy premiums. Prosecutors said the ruling, made before jury selection, hampered their case. Attorney General Patrick Lynch said he was disappointed and disagreed with the judge’s ruling.

“The favoritism suggested by the defendant’s actions to prioritize some companies for benefits over others, was well worth fighting for,” Lynch said in a written statement.

The acquittal is a blow to Lynch, a Democratic candidate for governor, who has repeatedly touted the indictment of Clark as an example of his efforts to fight corruption.

Clark’s indictment followed the release of a scathing audit in April 2006 that found Beacon gave certain well-connected clients preferential treatment and price breaks. He was fired from the company and charged that October with insurance fraud, improperly accessing a computer and other offenses.

Those charges were significantly reduced in a second indictment in December 2008 that prosecutors said streamlined the allegations against him.

Beacon Mutual is a nonprofit independent corporation created by the state in 1991 to provide workers’ compensation insurance to employers.

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