By JEFF MAPES
of The Oregonian staff
SALEM - Two Democratic legislators on Thursday called for an audit of a workers' compensation program that has produced about $2.3 million in payments from the state-owned Saif Corp. to Associated Oregon Industries in the past four years.
Officials of Saif and Associated Oregon Industries, the state's largest business lobby, defended the arrangement, which they said has helped to reduce workers' compensation costs for about 16,000 small businesses in the state.
But Reps. Judy Uherbelau of Ashland and Dan Gardner of Portland said in a letter that the payments seemed out of line with the benefits provided by Associated Oregon Industries to the small businesses. The two charged that the payments could be "simply well-disguised kickbacks."
That outraged AOI President Richard Butrick, who called the letter a "politically motivated hit piece."
Since 1991, AOI has served as the sponsor of group workers' compensation insurance to several thousand of the state's smallest businesses. Employers in AOI'S "Compwise" program still have their claims and premiums handled and set by Saif, a publicly owned nonprofit corporation that is the state's largest workers' compensation insurer.
For its part, AOI employs a full-time lobbyist on this issue, has produced videos on workplace safety and sends the small businesses a bi-monthly magazine that includes information about workers' compensation.
In exchange, Saif pays AOI about 160,000 a year in fees. In addition, AOI gets a bonus equivalent to 2.5 percent of the value of any dividends the small businesses receive for having low claim costs, according to a contract the two lawmakers obtained.
Since 1995, that has produced more than $780,000 in bonuses for AOI. The association also has recieved nearly $900,000 in fees from Saif Corp. for another group workers' insurance plan that covers 1,500 to 1,600 larger businesses, according to the legislators.
No evidence offered
Uherbelau and Gardner offered no evidence of illegality, and they didn't say why they characterized the payments as possible kickbacks. But Gardner said he didn't think AOI did much to deserve the money. He argued that workers' comp costs have declined because the Legislature has greatly tightened eligibility standards, not because of anything AOI did.
Butrick and Tom Towslee, a spokesman for Saif Corp., said the figures presented by the legislators were roughly accurate. But they said the Compwise Program has been good for the small businesses, which have been able to lower workers' compensation costs by much more than anyone would have predicted a decade ago.
"To suggest there is something wrong with this relationship without having any facts is disingenuous at best and dishonest at worst," Towslee said.
Request for audit
State Auditor John Lattimer said the legislators' request for an audit might be passed on to the private firm that audits Saif Corp. every year for the state. But he said he did not anticipate having a special audit of the arrangement.
Joe Gilliam, a lobbyist for the National Federation of Independent Business who often has been critical of Saif, said he did not see any violations in the arrangement between Saif and AOI.
Still, he said he thought one benefit of the deal is that AOI has bea come Saif s political ally in the legislative infighting surrounding the workers' compensation issue.
Uherbelau, for example, is sponsoring legislation that calls for a study of whether Saif s legal status should be changed. Some people want it once again to be a state agency directly answerable to the Legislature, and some have wanted to sell Saif to the private sector.