Report: BWC lawyer advised firm to inflate fees

Experts disagree on whether the $1.2 million service was worth its price.
COLUMBUS (AP) -- A consulting firm analyzing the state Bureau of Workers' Compensation was advised by a bureau lawyer to inflate its hourly fees to get around a law that requires consultants to be reimbursed for expenses at the same rate as state employees, a newspaper reported Sunday.
The agency has been overhauling its financial strategy since revelations last spring that it lost more than $300 million in investments, including $13 million in rare coins and $215 million in a hedge fund.
Ennis Knupp & amp; Associates has billed the state $1.2 million dollars for its work analyzing and stabilizing the bureau's investments. The bill included $1,695 for three hours traveling, $470 for two hours copying documents and almost $1,300 for a couple of hours spent reading and writing e-mail messages, according to records analyzed by The Columbus Dispatch.
What happened
"I can send you BWC's travel reimbursement guidelines if you wish to see it, but I suspect it may raise issues for your employees," bureau lawyer Pat Smith wrote in a June 20 e-mail to the Chicago-based firm. "Therefore, if you could set your fees at a level to include expected travel, that would be easier for you from an administrative perspective."
Bureau spokesman Jeremy Jackson defended the action, saying the bureau was trying to get the firm working as quickly as possible. "It was well worth" the cost, he said.
Consultant Richard Ennis said the firm increased its hourly rates by 5 percent based on estimated expenses.
"We just did what was suggested," he said.
Ennis said the bureau knew the cost when it hired the firm and it "got a heck of a deal."
Jim Nichols, Ohio State University's treasurer who was a member of the management review team, said the work Ennis Knupp performed was worth the money, but he said it was strange the bureau asked the firm to raise its rates to include expenses and then also paid for travel time.
Debate
Consultants and lawyers from several firms investigating bureau's investment practices are charging the state thousands of dollars with limited accountability, the Dispatch reported. The investigation into the bureau's investments is expected to cost about $5 million.
Some critics question the amount being paid for the investigation.
"Could we have gotten a better deal for the state for these services? I think the answer is clearly yes," said state Sen. Eric Fingerhut, a Cleveland Democrat and a nonvoting member of the bureau's oversight commission.
The unbid contracts with the firms were signed by bureau officials, Attorney General Jim Petro and Auditor Betty Montgomery, who say quick action was needed to get high-quality professionals.
State Sen. Jay Hottinger, another nonvoting member of the oversight commission, said the fees paid to Ennis Knupp were money well spent.
"They're absolutely one of the best, and to get the best, you're going to have to pay market value," said Hottinger, a Newark Republican.
Reimbursement
The law limits reimbursement for expenses such as travel costs to $75 a night for in-state lodging, $40 a day for meals if the employee has receipts and 30 cents per mile for use of a personal vehicle.
David Tripp, an employee of Sotheby's, a New York firm hired by Montgomery to do coin valuations, billed the state $340 for an overnight stay in a Toledo hotel on May 27 during his eight-day trip to Ohio.
Montgomery spokeswoman Jen Detwiler said Sotheby's did not provide receipts. She said the expenses were "justified by the urgent nature of the situation."
Sotheby's spokesman Matthew Weigman said the firm doesn't discuss expenses.
The bureau also didn't require receipts from Development Specialists Inc., a coin-fund liquidator that has submitted nearly $60,000 in expenses over four months.