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3/25/2013 6:00:00 AM
Insurance goof will cost Mohave County
15 employees paid for policies they didn't have

Suzanne Adams-Ockrassa
Miner Staff Reporter


KINGMAN - A paperwork error that left 15 employees without life insurance, some for as long as 10 years, could cost the county around $27,000.

Mohave County Human Resource Director Ray Osuna and County Finance Director John Timko brought the paperwork error to the attention of the Board of Supervisors on Tuesday.

Interim County Administrator Mike Hendrix said that a human resource employee found the error.

The county offers employees voluntary term life insurance from Lincoln Financial Group, Osuna said. Fifteen employees signed up for the benefits and had money withdrawn from their paychecks. The county checked with Lincoln Financial and it appears that the paperwork to enroll the employees in the program was never submitted.

Timko told the Board that the county can either reinstate the policies back to their original effective date or refund the premium to the employees. He estimated that it would cost the county less than $27,000 to fix the situation.

"Where did this money go?" District 2 Supervisor Hildy Angius asked.

Timko explained that the county collects the money from an employee's paycheck and then sends a lump sum payment for all of the county's employees to Lincoln Financial.

The company sends the county an invoice each month but for some unknown reason some of the invoices weren't reconciled with the county's books, he said.

The fluctuating cost of premiums also made it hard to catch the error, Timko said. Life insurance premiums usually increase as an employee grows older. That increase in premiums hid the fact that some employees who paid for coverage weren't covered.

"How long has this been going on?" District 3 Supervisor Buster Johnson asked.

"We're not sure exactly, but we think it may go back as far as 2003," Timko said.

"So, we have no idea how long this has been going on or where the money went. We're sending employee money to an organization that obviously doesn't keep any records and just takes what we give them," Johnson said. "I think the bigger question would be, why are we in business with this company?"

"The insurance company did their job," Timko said. "We failed to get the applications to them. They sent us invoices that we could have used to detect this if we have been doing the reconciliations. The fact that we weren't doing that makes it our fault."

Johnson asked why Timko and Osuna were bringing the issue to the Board. He pointed out that the county's Employee Benefits Trust Board is in charge of employee benefits not the Board of Supervisors.

Timko agreed that the Benefits Trust Board is a separate entity from the Board of Supervisors, but he and Osuna wanted to bring the problem to the attention of the Board.

"Don't they do audits on this stuff?" Johnson asked.

"It's such a small piece of the benefits package that it doesn't get much attention," Timko said.

"The employees that didn't have insurance might think otherwise," Johnson said.



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Related Stories:
• No crime found in probe of Mohave County life insurance mistake
• Insurance investigation kept in-house by Mohave officials
• Mohave supervisors to decide if life insurance goof worth an investigation
• Supervisor favors probe of Mohave County insurance gaffe


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Reader Comments

Posted: Monday, April 1, 2013
Article comment by: Hildy, Get County Attorney to Do His Job

Hildy, your comment says Lincoln Financial kept taking this money yet did not issue any policy. It sounds to me as though Lincoln accepted money for services never provided. I think the county attorney needs to draft a letter to LF saying legal action will be taken against LF to pay all costs associated with this matter. I think a copy of that letter should be sent to the state insurance commission or agency responsible for overseeing the insurance industry.

Posted: Sunday, March 31, 2013
Article comment by: V Stokes

Boy....the more I read/hear/know about Hildy Angius and Steven Moss the happier I am. Still not sure about Ms Brotherton...she seems to be a spender, not a saver.

I'm just glad we now have 5 Supervisors!


Posted: Friday, March 29, 2013
Article comment by: Hildy Angius

Just for clarification purposes: We were told that the money was being deducted from the employee's paychecks and were sent to Lincoln Financial. The actual applications never found their way.  This Monday at the BOS meeting I have an agenda item to order an independent investigation into this Lincoln Financial issue and all employee benefit issues. The investigator will be chosen by the BOS. I want answers to the same questions you do. And I promise you we'll get them. 
To address the comment about executive sessions, behind closed door...these are legal issues that we speak about outside the public meeting because they pertain information we are not, by law, allowed to share publicly,  usually personnel issues, or legal claims we cannot discuss as they are in litigation. We always vote in public. 
And to Joe Taxpayer..you state the error was caught by an outside firm. That is not the information we received. If you have concrete information to prove that, please call me at my office, 928-758-0713.  
Anyone who wishes to speak with me or has information you think I should know, please contact me immediately. Thank you.


Posted: Thursday, March 28, 2013
Article comment by: Heads Should Roll

For 10 years - really. Sounds like the county would be better served if those in charge of this were replaced by one able to do the job correctly and thoroughly.

Posted: Tuesday, March 26, 2013
Article comment by: nice point

@anson

You have me thinking alot deeper investigation is in order. There my be a widow/widower needing that policy that never was.


Posted: Monday, March 25, 2013
Article comment by: Joe Taxpayer

So it was reported in the Board Meeting that this "clerical error" was discovered last August. What a coincidence, that was about the same time the Risk Manager and the Benefits Coordinator were asked to leave and not come back.

And hey, Board of Supervisors! If you are going to discuss how you plan to spend $27,000 of taxpayer money, how about doing it in a public meeting. Quit going behind closed doors to have your secret meetings.

I bet the county employees feel real confident with the people they have managing their benefits.

And someone needs to tell Mr Hendrix that it was not a county employee that discovered the "clerical error", it was a outside firm.


Posted: Monday, March 25, 2013
Article comment by: Anson's Nephew

Consider for a moment what this “paperwork error” would have cost the city if an employee who had paid for a $250,000 (or more) life insurance policy had died? Or did that happen?

Posted: Monday, March 25, 2013
Article comment by: just one voice

Follow the money. If the paperwork was never submitted, the insurance company wouldn't include those people in the invoice. The money wasn't being sent. It's still here somewhere. Who was "managing" those accounts for 10 years? And kudos to the HR person who caught this one.

Posted: Monday, March 25, 2013
Article comment by: Elizabeth Rodriguez

Why am I not surprised?



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