After a three-week trial in federal court in Seattle, a jury has awarded more than $19.3 million to recover unpaid workers’ compensation insurance premiums and expenses from four defendants to the plaintiff, the Insurance Commissioner as Receiver for Cascade National Insurance Company. The jury found Midwest Merger Management, Anthony Huff, Sheri Huff and Danny Pixler liable for negligent misrepresentation, fraud, civil conspiracy, violations of the Consumer Protection Act and the Criminal Profiteering Act, and misappropriation. Other claims, including enhanced damages and recovery of costs and reasonable attorneys fees, remain for the court to determine. The case and a companion case against the Cascade’s former president were filed on behalf of the Insurance Commissioner by Gordon Thomas Honeywell in 2006. The companion case settled in 2007 with a recovery of $1.5 million for the receivership.

In 2003, due to its financial woes, Cascade became a target for takeover and control by the defendants in order to give them a captive insurer licensed to provide workers’ compensation coverage to business clients of their own professional employer organization. The defendants positioned themselves to collect all the workers’ compensation premiums from their approximately 140 business clients for coverage of nearly 15,000 workers. Those premiums were then funneled into the defendants’ own separate entity to conceal them and place them out of reach of Cascade. At the same time, the defendants refused to pay premiums to Cascade or to pay reserves and other fees due Cascade for the insurance coverage. Regardless of not having received premiums, reserves or fees due, Cascade was and remains obligated to pay all covered claims to injured workers, resulting in astronomical financial losses.

Insurance Commissioner Kriedler assumed receivership of Cascade National in 2004. Sums recovered in the lawsuit will benefit claimants, Cascade’s creditors and the general public. In a press release, Kriedler said, “When insurers collapse, the ripple effects can hurt policyholders, other insurers and taxpayers. Recovering this money helps protect them. I’d particularly like to thank our attorneys on this case, including Don Cohen.”