Management of CompCare Out, Dissidents In

Directors of ailing Comprehensive Care Corp., including longtime chairman B. Lee Karns, have been ousted and a new board of disgruntled shareholders--two from Orange County--has been seated, the company said Monday.

In addition, Laguna Niguel management consultant James P. Carmany, a former CompCare vice president and one of the leaders of the dissident Shareholders Committee to Rejuvenate CompCare, has been named president and chairman of the company, replacing W. James Nicol.

The actions end a costly proxy battle over control of CompCare, operator of one of the nation’s largest chemical-dependency and physical-rehabilitation programs.

The new board was elected subject to formal certification of the proxies--shareholders’ written consents to have the committee cast their votes in its favor. The certification is expected to be announced Wednesday.

CompCare, which moved its offices from Irvine to St. Louis, Mo., last year, lost $61.2 million for the fiscal year ended May 31.

Carmany said Monday that the committee “is excited about this victory and about the potential that remains with the company.”

He said the new management plans to keep most employees who work directly with patients.

Any shake-up will be in the administrative ranks, “and only after we’ve had a chance to get inside and see what needs to be done,” Carmany said.

Carmany also said there are no plans at present to return the company’s headquarters to Orange County.

Although successful in its bid to change CompCare’s board and top manager, the shareholder committee failed to gain sufficient proxies for a clean sweep.

As a result, Nicol has been reelected to the new board, where he will serve as a director along with Carmany and other members of the dissident group.

One other Orange County executive, Michael K. O’Toole, executive vice president of Burlington Air Imports in Irvine--a unit of Burlington Air Express--has been elected to the new CompCare board.

The company’s huge losses prompted formation of the dissident committee, according to Norman L. Perry, an Oregon lumber-products manufacturer and member of the new CompCare board.

“We did this because we do not feel that the company has been properly managed,” Perry said.

The dissident committee was headed by Portland securities broker Les Livingston, who recently said the committee spent more than $500,000 to conduct the proxy fight. Livingston had invested more than $1 million of his firm’s cash in CompCare stock last year in anticipation of a merger that later fell through. Livingston did not seek election to the new board.

In its announcement Monday, CompCare said the shareholder group had submitted sufficient proxies “to remove the company’s current directors and to elect at least a majority of the new directors.”

The company said the old board “approved nomination of the shareholder committee nominees and (approved) their election by the company’s stockholders” pending formal certification of the proxies by an independent auditing firm.

That certification is expected to be completed Wednesday.