State Treasurer Nappier Acknowledges Her Office Erred In $225,000 Settlement

The Office of State Treasurer Denise Nappier improperly issued a $225,000 workers compensation survivor’s-benefit check last year to the husband of an injured woman who was not dead, the state’s Auditors of Public Accounts say in a new report.

The $225,000 settlement check to the husband — from the treasurer’s office-administered Second Injury Fund, under a “stipulated agreement” — was improper because such benefits should only be paid to surviving dependents of someone who died, auditors John Geragosian and Robert Ward said in the report issued this week.

Nappier acknowledged in an interview Thursday that her office had erred in issuing the check. She said that mistake occurred after the state Workers Compensation Commission also had erred in approving the settlement with the injured woman’s husband.

The auditors said that the $225,000 check to the husband represented half of a $450,000 settlement of a claim approved by the Workers Compensation Commission.  The auditors said that it would have been proper if the whole $450,000 had been paid to the woman – but they added that the law didn’t authorize splitting the settlement into two equal checks, one for the husband, and one for the wife.

The law says that “compensation shall be paid to dependents on account of death resulting from an accident …. in the course of employment,” the auditors said, but in this case “the husband was not due any payments since the wife was still alive.”

The splitting of the checks apparently was intended to settle any future claims filed by the husband if his wife were to die, Nappier said, and amounted to two separate “stipulated agreements.”  The auditors said the $225,000 for the husband was, in effect, a “settlement with a potential surviving spouse.”

House Republican Leader Lawrence Cafero brought the issue into the public political arena Thursday by issuing a press release saying:  ”I don’t know what a ‘potential surviving spouse’ is, but it is troubling  in this day and age when we are struggling to make government more accountable to taxpayers, watch every penny and balance the books that we have this sort of failed fiscal oversight on our bureaucratic front lines.’’

He added: “The headlines have been filled recently with news of improper food stamp payments and social services checks being cashed by dead people. The auditors have come up with more examples of where more oversight is needed.’’

Cafero quoted a memo from the auditors as saying: “The (Second Injury) fund’s internal control procedures were circumvented to allow settlement funds to be paid to an individual that did not have a valid claim on such funds.’’

Nappier said she’d had no contact with the matter before the auditors’ report revealed it on Wednesday. She said it had been a complicated issue – “it was not a black-and-white situation.” But she added that now she he has he has told Maria Greenslade, the administrator of the Second Injury Fund in her office, that such settlements should not be approved if they are “contrary to a strict reading of the statute.” If there’s any doubt, legal advice should be sought, Nappier said.

Greenslade is in the process of drafting new, clearer procedures for handling such cases, Nappier said. She added that since the Second Injury Fund was notified a few months ago of the problem, it has placed a moratorium on approving such settlements.

“I agree with the auditors,” Nappier said.  Asked what can be done to address the apparent illegality of the payment in this case –  such as to possibly try to recover the husband’s half of the settlement that’s been called improper – Nappier said she doesn’t know yet, and will be looking into it.

In an email to The Courant after she talked on the phone,  Nappier said that her office’s “decision to award two stipulated agreements was neither arbitrary nor unilateral.  The Worker’s Compensation Commission ordered this agreement upon request of the claimant’s attorney.”

She said that a draft of new procedures, now being worked on, would require that the state Office of the Attorney General, or OAG, “sign off on all stipulated agreements and attend the Commission’s pre-formal and formal hearing,where any objections to the Commission’s pending order could be challenged by the OAG, if necessary.  The OAG was not present at the pre-formal hearing of the stipulated agreement in question, and from my perspective it would have been advisable for my staff to request a stay of the Commission’s decision pending review by OAG.  For your information, in accordance with our state law, the OAG has negotiation powers and can settle matters in the best interest of the state.”

She said that she has asked her staff to seek an attorney general’s opinion “on its authority to settle, specifically as it pertains to a potential surviving spouse.”