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Head of NY State Insurance Fund Steps Down Amid Alledged Mismanagement

Source: Times Union

Posted on 06 Mar 2009

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On Thursday, David Wehner, the head of the State Insurance Fund, stepped down from his position amid scrutiny by various state agencies checking into his alleged mismanagement. The allegations were initially triggered by a story that appeared in the "Times Union" newspaper in February saying that Wehner allowed an employee to make $94,000 annually without working.

The departure of Wehner came Thursday after the newspaper began inquiring into the unusual history of his compensation package and was preparing an article that questioned why he was paid $185,400 annually when the statutory salary for his post is $120,800.

Wehner said last night that he chose to end his 14-year career in state government for personal reasons involving family and friends.

"I'm hopeful that the whole story on the issues comes out," said Wehner, 44, of Guilderland.

Gov. David Paterson's office called for Wehner to step down late Thursday and Wehner tendered his resignation shortly thereafter, said Morgan Hook, a spokesman for the governor.

Wehner said he submitted his resignation to Insurance Fund Chairman Robert Hurlbut because the board of commissioners has appointing authority, not the governor, but declined a detailed explanation.

Wehner stepped down after the "Times Union" began questioning his pay. He was appointed executive director on Jan. 1, 2006, the top officer of a state insurance pool that covers all state agencies with workers compensation and sells policies to private businesses as well. Top posts come with nine-year terms.

Despite a 2006 news release from his commissioners, which quotes Wehner saying that he had become executive director, he was paid for 10 months as "deputy director of the fund," a position that is free of the $120,800 legal cap on the executive director's job.

As a result, instead of starting at the pay level of executive director, Wehner at first received $170,000 a year. That pay rose to $180,000 in May 2006 and on the same day rose again to $185,400 where it remained until October of 2006 when it fell to $120,800 and his payroll status was changed to executive director. For the 10 months of 2006 that the payroll listed him as the highly paid deputy director, Wehner issued news releases using the title executive director.

Hurlbut, the insurance fund's chairman, said commissioners intended to hire Wehner on a trial basis to see if he could handle running a fast-growing insurance agency and that news releases naming Wehner as executive director were a mistake, including the initial one in which Wehner said he was honored to take the title and thanked Gov. George Pataki for supporting him. He said Wehner had worked out pay with a previous chairman, Terry Morris, who died shortly after the deal was struck.

Wehner said the negotiation that brought him from the Workers Compensation Board, where he had served as the $120,800-per-year chairman, involved him taking the line of his predecessor, Ken Ross. Ross was a deputy director who ascended to the top job when his boss had resigned. Ross was being paid $170,000 as the top officer of the fund but was holding the deputy director title on the books, Wehner said. He said he knew that at some point he would become the official executive director and his pay would retreat by $65,000.

Thursday's resignation comes amid investigations by the Inspector General's Office, the Civil Service Department and the Division of Human Rights. The probes were touched off after the Times Union featured Randall Hinton, a 27-year state employee with the title of director of investigations at the Insurance Fund. Hinton said he does no work and spends his days counting cars he watches from his office window while listening to music and collected a nearly $94,000 salary.