Missouri Attorney General Jay Nixon has filed suit against a group of companies that sold $900,000 in workers’ compensation insurance policies to small businesses in Missouri, but which reportedly failed to provide the coverage.
Nixon said the actions of Farmington-based Quick Labor Inc. and several affiliated companies left many businesses without insurance for periods of up to a year and could result in injured employees of those businesses not being compensated for their injuries.
“Quick Labor put at risk the financial well-being of workers who erroneously believed they would be covered by workers’ compensation if they had a job-related injury,” Nixon said. “Quick Labor now needs to back up the coverage it sold by putting up appropriate and adequate financial resources to cover any claims that might arise.”
Nixon alleges Quick Labor violated Missouri’s Merchandising Practices Act through misrepresentation, omission of facts, and by engaging in unfair practices. The lawsuit seeks a court order requiring Quick Labor and other defendants to post a bond to cover potential injury claims.
The Attorney General filed suit in St. Francois County Circuit Court against Quick Labor Inc., Quick Labor National Inc., Quick Labor Management Inc., Career Management Services Inc. and National Career Management Services Inc., all located in Farmington.
The lawsuit also names the officers of the Quick Labor companies — Matthew Kearns, Jeffrey Kearns, George McNabb and Teresa Bollinger — as defendants. American Insurance Managers Inc., American Insurance Management Group Inc. and Atlanta Insurance Marketing Inc. (AIM), insurance management and marketing companies in Atlanta, Ga., and AIM officers and/or employees Bruce Holley, David Dennett-Smith and Brian Imperiale are also named as defendants.
The Quick Labor companies claim to be professional employer organizations that provide employment, payroll and other administrative services to businesses in Missouri. Businesses contract with Quick Labor to handle obtaining workers’ compensation and unemployment coverage; making payroll deposits including unemployment, federal taxes and Social Security; handling workers’ compensation and unemployment claims and hearings; and processing Missouri withholding payments and reports.
The suit states that prior to 2003, Quick Labor bought workers’ comp insurance for its clients from Travelers and other licensed insurance providers. Around Jan. 1, 2003, Quick Labor transferred much of its client base from Travelers and other insurance providers to a program operated by AIM. In most cases, Nixon said, Quick Labor did not notify client businesses at the time of the transfer of the change in workers’ compensation insurance providers.
AIM was not reportedly a licensed insurer or insurance agent in Missouri in 2003 and was not authorized to issue workers’ comp insurance in the state. However, AIM issued certificates of insurance to some of Quick Labor’s clients, listing Realm National Insurance Co. as the provider. The certificates were not signed by anyone affiliated with Realm, a New York company.
The lawsuit alleges that AIM was planning to purchase Realm and acted prematurely by issuing the insurance certificates before the purchase was completed. In the end, the purchase did not go through.
Nixon’s investigation revealed that Missouri businesses paid hundreds of thousands of dollars to Quick Labor. Some businesses that paid Quick Labor to obtain workers’ comp insurance coverage were not reportedly covered for periods ranging from Jan. 1, 2003, to Jan. 1, 2004. At least 14 workers’ comp injury claims are pending from this time period.
The lawsuit alleges that Quick Labor did not disclose to its clients that the rate charged to the businesses to obtain workers’ comp insurance was far in excess of the price charged by AIM to obtain purported coverage. Nixon alleges Quick Labor used some of the excess to attempt to purchase a partial ownership interest in Realm.
Nixon is asking the court to order the defendants to post a prejudgment bond to cover workers’ comp injury claims for the period of time businesses were without insurance coverage. In a petition for preliminary and permanent injunctions, Nixon asks that the defendants be ordered to provide restitution to consumers, to pay a penalty to the state and to be prohibited from future violations of Missouri consumer protection laws.
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