Louisiana's Worse State Agency

Thursday, August 21^st, 2008
Baton Rouge, Louisiana

THE MOST DYSFUNCTIONAL AGENCY

IN LOUISIANA

It looked like it was going to be a real horse race. Who would win the title of being the most dysfunctional political body in Louisiana? The final choices were whittled down to three. The mayors of both New Orleans and Mandeville made the final cut. But when all was and done, Louisiana Citizens Property Insurance Company won the title of being the most inefficient, corrupt and dysfunctional agency operating in Louisiana state government.

The two mayors in contention, both in the greater New Orleans area, gave it their best shot and made last-minute efforts to show how inept and out of touch both could be. New Orleans Mayor Ray Nagin, who seems to create some major blunder monthly, is back in the daily headlines by trying to justify his way out of a rehab housing scandal that involves his brother-in-law. There is plenty of evidence that private companies billed the city of New Orleans for demolition work that they did not actually performed. Nagin brushed off both the criticism and calls for investigations by saying that those who criticize are “hurting the recovery efforts.”He may soon be able to express his protests to a Grand Jury.

And there seems to be a new revelation about Mandeville Mayor Eddie Price as the sun rises each day. Price has been alibiing his DWIs and squandering of city funds for months now. And it’s hard to top his logic of misuse. When auditors raise questions about his using a city credit card to cover the cost of a cruise to Mexico and other personal travel, Price simply said that he is on duty 24 hours a day, seven days a week and (I love this part) "takes note of architecture and other things that provide a benefit to the city while he is on vacation." I've been around public life in Louisiana for almost 30 years, and I've never heard one like that.

But as disreputable as the antics of both Mayors were, they could not hold a candle to the continuing dysfunction of Louisiana's state created property insurance company. Last year, the Baton Rouge Business Report referred to Citizens as the single biggest financial disaster in the state’s history. Since those allegations were made, the scenario at the offices of this state run disaster has only gone from bad to worse.

The board of directors of Citizens was scheduled to approve a 41 % increase a few weeks ago, which was, by the way, the third such increase rubberstamped by the Louisiana Insurance Department since Katrina. The problem was that there was no board of directors to give such approval. There are presently eight vacancies on the board out of 15 members, so the company cannot even get a quorum to meet. The parameters for membership are set by the Louisiana legislature.

But several individuals who were approached for membership flatly turned the board appointment down. They pointed to the continuing scandals at Citizens and the staff’s inability to perform even the most basic financial oversight. As one potential member stated; “The Citizen’s mess is just going to get worse. There has been blatant incompetence in running this state company and I want nothing to do with it.”

Just last week, the Louisiana legislative auditor published evidence that Citizens is two years behind in filing financial audits required by law. Every other private insurance company is required by the Louisiana Department insurance to file both quarterly audited financial statements, and full annual audits. Citizens has been allowed to float without filing the required financial information for the past three years. A private insurance company so mismanaged would have been shut down long ago. Unfortunately, Citizens is the only option for thousands of homeowners in South Louisiana. But just as unfortunately, they are buying a pig in a poke with continually rising rates from a troubled company that has massive internal financial problems.

The final coup de grace that assured Citizens of becoming the state's most dysfunctional public body was the public disinterest on the part of the company's management in pursuing past wrongdoing. A federal class-action lawsuit had been filed some months ago alleging racketeering, money laundering and both wire and mail fraud on the part of board members and former executives. The judge in the case indicated that private individuals did not have standing to bring the lawsuit. The obligation would fall on those running the company.

But instead of directing their attorneys to bring legal action against those who have created massive losses in the past, the present chief executive for Citizens dismissed any corrective action simply by saying "we want to put this behind us and do something more productive." Apparently, holding accountable those who allowed major mismanagement and unlawful spending was not something that would be "productive" for Citizens. A company moves on, and the policy holders are the losers.

So after tallying up all the scores, the race was really not that close. For the third year in a row, Citizens Property Insurance Company continues to hold the title of the state’s most dysfunctional publicly run body. And in a place like Louisiana, there is always a lot of competition for such recognition. Way to go guys.

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“Once a man holds public office he is absolutely no good for honest work.”

Will Rogers

Peace and Justice.

Jim Brown

Jim Brown’s column appears weekly, and is published on a number of newspapers and websites throughout Louisiana. You can read past columns by going to Jim’s website at www.jimbrownla.com. Jim’s regular radio show on WRNO, 995fm out of New Orleans can be heard each Sunday from 11:00 am till 1:00 pm.