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Florida Insurance Commissioner Nelson Seeks Millions Allegedly Looted From Insurer

TALLAHASSEE, Fla., Sept. 4 /PRNewswire/ -- Florida Treasurer and Insurance Commissioner Bill Nelson has taken steps toward holding a number of individuals -- including a prominent business executive, two lawyers and an accountant -- responsible for the collapse of an insurer that provided workers comp. coverage for some 3,400 companies.

In filing a lawsuit recently, Nelson contended the actions of those who managed or represented the defunct Florida Employers Safety Association Insurance Fund (FESA) contributed to its collapse and left claims losses of between $60 million and $80 million.

Among those named as defendants in the 120-page lawsuit are Broward County businessman David Sanz and Sanz's business, Gulf Atlantic Management Group Inc. Also named are an Orlando-area accountant who was hired by FESA and two Jacksonville lawyers who represented the insurer.

Sanz and Gulf Atlantic, the lawsuit contends, were responsible for managing FESA's day-to-day affairs and received $3.5 million in fees early last year -- at a time when the money should have remained in FESA for payment of claims. All told, the lawsuit alleges, at least $10 million was wrongfully taken from FESA -- a company that was based in Broward County and covered policyholders all across Florida for on-the-job injuries.

Sanz and Gulf Atlantic wrongfully, illegally, fraudulently and negligently used trickery on the FESA Board of Trustees to loot the insurer at a time when it was in financial trouble, the lawsuit contends.

The last of the defendants named in the Aug. 15 lawsuit received notice last week. It was last October when Nelson took initial legal action in the FESA case.

At that time, the insurance commissioner obtained a court order appointing the Florida Department of Insurance as Receiver for FESA. The fund had been providing workers compensation coverage for a self-insure group of about 3,400 employers. FESA had filed a financial statement reflecting a $7.4 million deficit, prompting Nelson to conduct an investigation that found the deficit was closer to $40 million. He then filed the petition in Leon County circuit court asking a judge there to allow the insurance department to take over the fund.

All of FESA's policies had expired six months before that, and already had been rewritten by other insurance companies, with the bulk of them going to Clarendon National Insurance Company. About 1,500 outstanding claims of injured workers remained the responsibility of FESA, however. Those claims are covered by a special safety-net fund set up by the Legislature, known as the Florida Self-Insurance Fund Guaranty Association.

"Indirectly," Nelson said today, "taxpayers and policyholders must foot the bill for funding the guaranty association. That's why we'll vigorously pursue all avenues to recover any money we believe was wrongfully removed from FESA, plus funds to cover injured workers claims."

SOURCE Florida Department of Insurance
 -0- 9/4/97

/CONTACT: Don Pride or Dan McLaughlin, 904-413-2842, both of the Florida Department of Insurance/

CO: Florida Department of Insurance; Florida Employers Safety Association

Insurance Fund; Gulf Atlantic Management Group Inc.; Florida Self-

Insurance Fund Guaranty Association ST: Florida IN: SU:

LD-VP -- FLTH011 -- 7089 09/04/97 13:11 EDT
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Publication:PR Newswire
Date:Sep 4, 1997
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