Former SCIF General Counsel Calls It Quits
Charles W. Savage, assistant chief counsel for large litigation at State Compensation Insurance Fund (SCIF), is retiring this month after 31 years at SCIF. Savage was a former vice president and general counsel at SCIF until he was demoted after a well-publicized scandal involving former SCIF president Jim Tudor and other management. Savage was Tudor’s right-hand man. Savage’s retirement closes another old scandal-plagued chapter at the workers’ comp carrier.
According to SCIF president Janet Frank, Savage made the decision himself.
Savage attended the University of California at Berkeley and went to law school at the New College of California SOL in San Francisco, which closed its doors in 2008. According to the college’s website:
“Since 1971, New College of California has been a San Francisco beacon for political activists, misunderstood artists, hippie freaks and students wanting to design individual educations away from the constraints of conventional institutions.” No, we’re not kidding, this is really what the website says.
One of the industry’s long-standing problems with SCIF has been SCIF’s choice of cases to litigate and appeal. It’s always been thought generally that SCIF litigated cases that cost the industry. Had it picked cases with better facts, instead of trying to beat up claimants and lawyers it was mad at, it would have had far better outcomes.
“Maybe with the infusion of new blood and a fresh perspective at the top of SCIF’s legal department, not every legal issue will deteriorate into a ‘scorched earth, take no prisoners’ approach.” – Drew Pomerance, partner with Roxborough, Pomerance & Nye, and frequent SCIF opponent
Savage was also responsible in part for choosing and using outside counsel and running up record legal bills in areas of law not concerned with workers’ comp. Industry experts find that unusual for a mono-line workers’ comp carrier. In its most notorious case, SCIF sued Insurance Commissioner John Garamendi and the California Department of Insurance over jurisdictional issues.
As head of major litigation, Savage was responsible for prosecuting some of SCIF’s biggest civil losses, notably the Palm Medical case, in which the carrier was found to have acted like a bully—violating fair procedure—toward a medical clinic it tried to exclude from its Fresno-area provider network. Schaefer Ambulance was another case where SCIF was eventually forced to settle and fork over almost $24 million. The class action revolved around the contention that SCIF was improperly reporting medical-legal expenses to the Workers’ Compensation Insurance Rating Bureau, driving up employer X-Mods.
In 2003, SCIF contended that it did not fall under the rubric of Risk-Based Capital (RBC) standards as do other carriers. It also said that the Garamendi department had no right to conserve and liquidate SCIF should it fall below RBC standards. SCIF lost that case after shelling out $1.6 million in legal fees to the law firm of Sheppard Mullin, Richter & Hampton.
Drew Pomerance, partner with Roxborough, Pomerance & Nye, and frequent SCIF opponent, had this to say:
“I wish Charles the very best in his retirement. I am hopeful that his retirement will result in a shift in how SCIF approaches legal issues, and how they treat their policyholders. Maybe with the infusion of new blood and a fresh perspective at the top of SCIF’s legal department, not every legal issue will deteriorate into a ‘scorched earth, take no prisoners’ approach, and instead SCIF will look toward solving problems in a way that is mutually beneficial for both itself and its policyholders.”
Savage did not return calls for comment.
Transparency Ethics Notice: As part of another company, Workers’ Comp Executive Publisher Dale Debber has been in litigation with SCIF, which was under Savage’s direction. The litigation is settled
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