Firms Scramble for Health Coverage After Troubled Provider Closes

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.