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Report: WSI has public perception problem; interim CEO can help

BISMARCK -- North Dakota's Workforce Safety and Insurance is one of the best-run workers' compensation funds in the country and most of the criticism directed at it in the public and news media is unwarranted, a consultant told the WSI board and legislators Thursday.

Henry Neal Conolly of Conolly and Associates also said there is no conspiracy or design within WSI's staff or management to unfairly deny injured workers' claims.

But Conolly recommended WSI hire an interim executive director from inside North Dakota as soon as possible who can tackle a public's perception overhaul and heal residual hard feeling some employees have from past personnel issues. It should be someone who knows the state's culture and values.

That person could well be former Fargo Mayor Bruce Furness, said Ryan Bernstein, Gov. John Hoeven's legal counsel, after Thursday morning's presentation.

Former CEO, Sandy Blunt, was fired in December, barely a month following his return to work after being cleared of criminal charges relating to financial management and his role in an internal investigation. He had been at the agency four years.

Bernstein said Furness is open to the idea and that Conolly has already interviewed Furness at Hoeven's suggestion.

"I told them I would consider it," Furness told Forum Communications later Thursday. A retired IBM executive, he was mayor from 1994-2006. He is now working for State Bank and Trust in business development and community relations.

Asked if he thought there were management problems at the agency, Furness said, "I don't know. That's the impression you get when you read things in the media."

Furness, 68, said consultants recommended someone "to go in and make some things happen and to try to change communications" with various constituencies.

The WSI board later Thursday decided to open up the search for an interim CEO to others, as well as Furness.

The Conolly report presented Thursday comes one day after another consulting firm's report also concluded there is no conspiracy to deny injured workers' claims. Both Conolly and the other firm, Marsh USA Inc., are from New York.

The board's new chairman, Mark Gjovig, was delighted with Conolly's conclusions.

"Fantastic," he said afterward. "We were just so pleased, once again, to confirm what the board and staff have always believed--that we're doing the best job we can to take care of the injured worker and there's no conspiracy (to do otherwise)."

Sebald Vetter of Bismarck, an advocate for injured workers, said Conolly did an all right job for the areas he covered, but that he failed to interview the most aggrieved injured workers who have had five or more claims adjusters in their cases, or who feel they've been treated disrespectfully by WSI workers or who have been sent by WSI to chiropractors or inappropriately trained physicians for "independent medical examinations."

WSI's manager of provider relations, Marsha Duckwitz, testified later to legislators that no chiropractors are used for the agency's independent medical exams.

Conolly said WSI employees have been "hamstrung" by laws that bar them from discussing injured workers' claims without a signed release from the claimant. When workers advocates and other critics of the agency criticize the handling of someone's claim and the information is false or one-sided, WSI can't respond.

Some claimants' case outcomes are indeed tragic, he said, "But it's very, very unfair for the outside world to say it's WSI's fault."

At the same time, WSI's leadership needs to "recognize that outside perception (of the agency) is very important."

Other highlights of Conolly's report:

-The state Insurance Department should license and regulate WSI, just as it does any other insurance company, a proposal already put forward by Insurance Commissioner Adam Hamm. The Legislature would have to enact a law to do that.

-A more sensitive handling of hardship cases - workers whose vocational rehabilitation has failed - should be adopted. "There needs to a safety net," Conolly said.

-An oft-quoted actuarial study that concluded North Dakota has the lowest workers' compensation benefits in the country is not credible; Conolly's people interviewed the group that released that report and found they had not studied actual benefits, but only reached subjective conclusions based on comparing states' laws.

-WSI needs three more nurses on staff to help as a go-between with doctors treating injured workers, even though there are already 18 nurses on staff. "We could use more than three," one claims adjuster testified to legislators later Thursday.

-When WSI officials testify before the Legislature, they need to "be more mindful and careful" of the public perception that WSI has a powerful lobbying influence on the Legislature.

-"This is one of the most audited organizations on earth" and all the multiple reviews have been excessive, taking time away from management's ability to run the organization.

-Morale at WSI is low "due to the constant beating it takes in the press."

-There has been a problem with "shadow management" and "back-channeling" of information in the organization. That is nonproductive and must stop.

-There is low confidence in the human resources division at WSI, a lack of trust. It stems largely from a series of actions around 2006 when one of Blunt's lieutenants, Dave Spencer, summarily reassigned many employees. He left the agency in August 2006.

-There is no "dirty little secret" that there are unfair claim denials, as alleged by Internal Audit Manager Kay Grinsteinner last year and Grinsteinner should not have been going through other employees' desks after hours, which she maintains she had a right and duty to do.

-In cases where the WSI Office of Independent Review disagrees with how the agency handled a claim, those cases should be referred directly to the CEO.

-WSI needs to give the state Office of Administrative Hearings another chance to provide WSI's administrative hearing judges, with additional judges added for WSI cases.

-The executive management team should be trimmed from seven to five. The executive leadership status now enjoyed by WSI Communications Executive Mark Armstrong "should be eliminated," with his position and primary functions being supervised by an administration officer.

-WSI employees were not afraid to talk to him. "People had a lot to say and for a long time didn't have a place to say it," Conolly said.

Both reports, labeled the Conolly report and the Marsh report, are available on the WSI web site,

Forum reporter Pat Springer contributed to this story.

Janell Cole works for Forum Communications Co., which owns The Dickinson Press.