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Firms Scramble for Health Coverage After Troubled Provider Closes

Posted December 20, 2007

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— Health insurance coverage for thousands of area workers is in jeopardy after a local human resources services company shut down amid state and federal investigations.

Evidence is piling up that Castleton Group, which handled payroll and benefits administration for about 100 area companies, didn't pass on millions of dollars in payroll taxes it collected from clients.

Castleton owner Suzanne Clifton e-mailed the companies Tuesday to inform them she was ceasing operations.

"It's very serious," said Turner Revels, who owns John Deere tractor dealer Quality Equipment in Fuquay-Varina and was a Castleton client. "We were told (Thursday) that we may not even have till the end of the week for health insurance. So, that is a big deal."

The last 401(k) contributions by Quality Equipment employees also never made it to their accounts, Revels said.

The state Department of Insurance determined recently that Castleton had no business being in business. Liabilities exceeded assets by $6 million, and at least $8 million dollars in payroll taxes were never paid to the IRS, authorities said.

"It was determined through a review of their financial statements that they appeared to be insolvent," Deputy Insurance Commissioner Tony Riddick said.

State and federal authorities said they have launched criminal investigations in the case.

Neither Clifton nor her attorney could be reached for comment Thursday.

Clients like Revels and Lane and Associates dental centers – and their employees – are scrambling for answers and for benefit services, which can take months to secure.

"They had a responsibility to their company, to their employees, but also to the 3,500 employees they had through all of their clients, and they broke that trust," Revels said. "It's just a horrible time to think you would be without health insurance."

Although the state pulled the plug on Castleton, officials have no legal authority to help the company's clients and their employees.

"The department's hands are sort of tied in what we have the authority to do," Riddick said.

14 Comments

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  • peoinsider Dec 21, 2007

    Clearly the owner, Suzanne Clifton (who also owns Executive Staffing Group) knew what was going on......and lied about it. Its not plausible that she can, initally deny they were insolvent to court- then - a few weeks later claim they were SO financially strapped- they couldnt even stay in business toll the end of the month! AND- they were stealing people's 401K money the whole time, not to mention fraudulently collecting healthcare premiums without paying the insurance company.

    Where are all Suzanne's friends now? Where is MMI Associates? They were the first to stand up and deny the company was insolvent? Did they know it was a scam as well? Here's what they said:
    "Castleton is not insolvent," said Patty Briguglio, president of MMI Associates, a public relations firm that represents the company.

  • bosoxbaby Dec 21, 2007

    The company wasn't an insurance provider but rather a brokerage/out-sourced HR type. They handled payroll, 401(K), health insurance deductions for the company...I don't think they provide the actual insurance coverage. If insurance isn't paid through the deductions, insurance coverage ceases. Not the insurance companies fault but that of the firm processing the deductions.

  • aquamama Dec 21, 2007

    That bites. Another example of how our health system is broken. I watched Sicko last night, so I'm feeling particularly socialist today.

  • mvnull Dec 21, 2007

    This is just one of the costs of unfettered capitalism. All the '-isms' (capitalism, socialism, etc) have good points, but none of them would work in their purest sense. Too much human greed for that.

  • Slip Kid Dec 20, 2007

    "Why is the goverment not doing its job protecting us from crooks like this?"

    A) They did protect us. B) Why should we depend on a big sloppy 'government' to manage what should be due diligence by most poeple with common sense?

    Really sorry this happened, could've been worse. Good luck to all affected.

  • App7689 Dec 20, 2007

    Terrible news, especially at this time of year.

    For these employees, payroll will probably be delayed a few days, but I would not worry about actually getting paid. Finding a new party to process payroll is quick and easy. When Castelton was processing this payroll, Castleton also made the insurance deductions. Therefore, there should be no issue with your employer withholding your premiums.

    The bigger issue is insurance, which is complicated and will take some time, especially for the small employers PEO's typically support. I read some affected employers have found coverage starting Jan 1, which is fortunate.

    Not sure what the previous poster meant by the "North Carolina Labor Board". If there is an issue with pay, it should be taking before the North Carolina Department of Labor.

    Wishing the best for those affected. I hope the authorities will pursue criminal charges in this case if it is warrented.

  • TheAdmiral Dec 20, 2007

    For those of you who are not getting paid via this company, I would suggest that you go to your employer, look them right in the eyes and say:

    "You, not the group, have 10 days to pay all pay and health insurance deductions to me or I am filing a complaint with the North Carolina Labor Board. Additionally, if YOU do not find an insurance company to handle the issues, then I will be part of a multi-million dollar lawsuit in order to recoup those costs. A letter will accompany this and will be copied to my lawyer."

    Turn around and walk out.

  • rainy39 Dec 20, 2007

    I work for one of the companies that was using this "group". Egads at the process we are having to go through. Nevermind our paychecks being late, no coverage on health insurance and for the next 3 weeks no direct deposit. We have to wait an extra 4 days for a check. All during the holidays, it never fails..lol

  • dpcallah Dec 20, 2007

    Heh, my wife used to work for a company whose Human Resources were done by the Castleton Group. Glad she's not there anymore.

  • rand321 Dec 20, 2007

    The PEO plans always sounded too good to be true.

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