Restaurant owners across Tenesee may have to pay thousands to shore up a workers’ compensation fund that the state says was mismanaged.
The Tennessee Department of Commerce and Insurance is suing Ronnie Hart, the president and chief executive of the Tennessee Restaurant Association. Among other things, the suit claims Hart received excessive fees for running the group’s workers’ compensation fund.
Frank Grisanti, a Memphis restaurant owner and a trustee with the insurance fund, might have to pay $60,000 as his portion of the trust’s shortfall.
Grisanti said he knew Hart was making a profit while running the trust, but he didn’t see it as a conflict.
“I guess it turns out that it was poor judgment, if what everybody says is true,” Grisanti said. “Everything we were presented showed us the trust was operating soundly. … I think we’re better restaurateurs than we are insurance people.”
The state liquidated the group’s workers’ compensation fund two years ago and is asking about 500 restaurant owners to come up with a $4.8 million shortfall to pay injured workers.
The owners have asked to delay a hearing scheduled for next week to determine whether they will have to pay.
The state’s suit against Hart alleges he relied on the board’s trust in him to “induce them to approve otherwise excessive fees” in the nearly 10 years his company, Hospitality Management Plus, ran the fund.
For example, in 2004 the company received $642,000 — more than double the $315,000 a year in its contract, the suit states.
Hart, who makes roughly $102,000 a year as the restaurant association’s top lobbyist, said he followed all laws and regulations when he ran the fund.
“Everything that occurred during that period of time was disclosed,” Hart said. “We tried to do things the right way.”
Even if the state wins its suit against Hart, it may not recover much money from him. He recently declared bankruptcy and a court filing shows he owes about $500,000 to creditors, including the Internal Revenue Service and banks that lent money to Hospitality Management Plus.
“I’m as mad as I’ve ever been in my life,” Nashville restaurant owner Randy Rayburn said. “In hindsight, what does a lobbyist know about running an insurance company?”
Information from: The Tennessean, www.tennessean.com
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