Insurance Fund Broke $1.6 Million Software Contract, Says Elenburg

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The State Insurance Fund broke a $1.6 million contract this year with a South Carolina computer software firm because the fir m failed to perform, Dave Elenburg, the fund's administrator, told a legislative subcommittee on Monday.

The contract with PMS, a Columbia, S.C., computer management consultant, was cancelled in May for "non-compliance" after the state had paid PMS $1.6 million, Elenburg said in response to questions from Rep. E.C. "Sandy" Sanders, chairman of the Subcommittee to Study the State Insurance Fund.

Since then, the State Insurance Fund has entered into another $2 million software contract with the public accounting firm of Main, Hurdman, Elenburg said.

The State Insurance Fund writes about 20 percent of the workers' compensation insurance in Oklahoma.

The subcommittee has been scrutinizing the fund's operations since the insurance industry requested a 41.9 percent increase in workers' compensation rates this summer.

A 25.9 percent rate increase was approved in October by the Oklahoma Board for Property and Casualty Rates.

Rep. Charlie Morgan, D-Prague, a subcommittee member, and Sen. Marvin York, D-Oklahoma City, became irate after Elenburg said the State Insurance Fund decided upon the advice of Assistant Attorney General Jim Frank not to sue PMS for non-performance or breach of contract, in an attempt to recover some or all of the $1.6 million in payments.

"That irritates the dickens out of me," Morgan said. "You order a $2 million program, pay $1.6 million and throw it away, and then turn around and order another $2 million program.

"You're spending money like it's coming from nowhere," Morgan said. "It's ridiculous. Is that good business?"

Elenburg replied:

"In that case, it was."

Elenburg said Frank, the assistant attorney general, had advised the State Insurance Fund's top management that it would be "too expensive" to pursue litigation against PMS because it was an out-of-state firm.

"I find it hard to believe," York said, "that we would kiss off $1. …

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