BY ERIC BOWEN The Dominion Post
Delegate Alex Shook said Friday that his lawsuit against Brick-Street Insurance does not present a conflict of interest with his responsibilities as a delegate.
The class-action suit, filed in September on behalf of Aero-Fab Inc., seeks a refund of agent commissions paid by companies who buy workers compensation insurance directly from BrickStreet. Shook said fees are included as part of the workers compensation premiums, even for companies that do not use an agent.
BrickStreet was formed in 2006 when the state privatized the workers compensation system. Until July 1, it is the only insurance carrier that can offer workers compensation insurance in the state.
Since BrickStreet is a private company, Shook said he doesn't think it affects his role as a member of the state Legislature. He is a member of a committee that was reviewing legislation that would have affected oversight of the state Insurance Commission. But he said that his regular job is separate from what he does as a lawmaker.
"If someone feels that way, they can certainly bring that up with the appropriate authorities," Shook said. "I don't see any conflict. I'm suing a private company."
Andy Wessels, director of corporate affairs for BrickStreet, said he could not discuss the lawsuit specifically.
Wessels said the agent commissions were included in the administrative fees that all of BrickStreet's clients pay, and is not a separate fee. BrickStreet started using agents to sell insurance in mid-2006, and gave them a commission to handle policies.
"Agents receive commission, as they do with every other line of insurance that you can think of," Wessels said.
The issue of Shock's possible conflict was first raised by former Delegate Cindy Frich in a January column in The Dominion Post. Frich is now running for office and is no longer a columnist.
She wrote that Shook was involved in discussing a bill now under consideration in the Legislature that would have provided Legislative oversight of the Insurance Commission, which is part of the executive branch of government, and not under legislative oversight.
The bill under consideration would require the commission to report back to the Legislature about new regulations. An earlier version had stronger wording that would have allowed the Legislature to subpoena records of companies.
Shook took part in discussions of the bill while serving on a subcommittee of the House Judiciary Committee. The subcommittee was charged with looking at providing greater oversight of state agencies by the Legislature.
Shook didn't vote on the bill when it came out of the Judiciary Committee, because he was not present at the meeting. The bill was then changed before it was introduced in the House.
Carrie Webster, chairwoman of the House Judiciary Committee, said that she doesn't think that voting on the bill would be a conflict of interest for Shook because he would not personally benefit from the bill. She said that the bill has to do with overseeing the state's Insurance Commission, not BrickStreet.
Shook said that if the bill came up for a vote, he would have the House make an ethics determination to ensure that there was no conflict of interest.
As the state's insurance regulatory agency, the West Virginia Insurance Commission approved the rates that BrickStreet policy holders pay, said Insurance Commissioner Jane Cline.
Cline said that BrickStreet is treated like any other private insurer in the state. BrickStreet has to give the Commission a rate filing that lists different costs, and make a request to increase rates.
Cline said that the agent commission is part of the BrickStreet's administrative expenses. If a company is working with an agent, BrickStreet pays the agent to handle tasks such as answering questions, completing applications, reporting payroll, etc.
"Because an employer does not come through an agent to Brick-Street does not mean that there are still not the same types of administrative expenses associated with servicing that policy," Cline said. "The services that the agent is providing now would be having to be provided by an employee that is housed in BrickStreet."
Shook said that he thinks that the agent commissions should not be paid by companies that don't use an agent. He said that companies without an agent are doing most of the work that an agent would provide.
He said that privatizing workers compensation was supposed to reduce rates, but many companies are paying more than they were before.
"The reasoning behind privatizing workers comp to my understanding was to, one, bail out an old and troubled system workers compensation system; but the more important issue I thought was to be able to lower premiums," Shook said. "I was hearing a lot of employers say that their premiums had gone up under BrickStreet. That's what kind of prompted me to start investigating some of these issues regarding the premiums."