October 7, 2005
Farmington, Mo. — Attorney General Jay Nixon has obtained a judgment against a group of companies that collected $900,000 in premiums to provide workers' compensation insurance coverage to small businesses in Missouri, and then failed to implement the coverage.
The consent judgment, filed in St. Francois County Circuit Court, resolves a lawsuit filed by Nixon in July 2004 against Quick Labor Inc., Quick Labor National Inc., Quick Labor Management Inc., Career Management Services Inc. and National Career Management Services Inc., all located at 536 Maple Valley Drive, Farmington. The lawsuit also named corporate officers Matthew E. Kearns and Jeffrey L. Kearns.
"Through its actions, Quick Labor put numerous businesses and its workers in financial peril by accepting monies for the purchase of workers' compensation insurance, and then failing to obtain the promised coverage," Nixon said. "Through this judgment, businesses that contracted with Quick Labor can rest easy knowing they are covered, and workers injured on the job will have their claims paid."
The original lawsuit states that prior to 2003, Quick Labor bought workers' compensation insurance for its clients from Travelers and other licensed insurance providers. But in January 2003, the company switched much of its client base to a group of Atlanta, Ga., companies: American Insurance Managers Inc., American Insurance Management Group Inc., and Atlanta Insurance Marketing Inc. Quick Labor did not notify its clients of the change, nor were the Atlanta-based companies ever licensed to issue workers' compensation insurance in Missouri.
The lawsuit alleged that the Atlanta companies issued certificates of insurance to some of Quick Labor's clients, listing Realm National Insurance Company, of New York, as the provider. No one affiliated with Realm signed the certificates. Nixon said the Atlanta-based group, which was attempting to purchase Realm, acted prematurely by issuing the certificates before the purchase was completed. In the end the purchase did not go through, leaving dozens of businesses without workers' compensation insurance from January 2003 to January 2004. The lawsuit against American Insurance Management Group and affiliated companies is still pending.
At least 14 workers' compensation injury claims are pending from that time period, Nixon said.
"This is a situation that could have been tragic for these small businesses and their employees," Nixon said.
The judgment holds Quick Labor responsible for paying all claims, awards, settlements or workers' compensation benefits arising from the time period when insurance coverage was not in force. As part of the consent judgment, Quick Labor has supplied Nixon's office with a letter of credit for $301,480 as security to ensure their obligations under the state's Workers' Compensation Law will be met. The company must also pay a penalty of $75,000 to the state.