MacArthur Accused of Sleazy Insurance Practices
For Immediate Release – April 30, 2014
Contact: Tim Kelly * 570.335.8765 * firstname.lastname@example.org
LAVALLETTE, NJ - Insurance salesman and liberal candidate for Congress, Tom MacArthur, must respond to a devastating newspaper exposé that broke this morning detailing his shady business practices that earned him millions on the backs of policyholders and their families.
“Tom MacArthur’s sleazy insurance practices have been blatantly exposed by this devastating story,” said Lonegan campaign manager, Chris Santora. “The article speaks directly to the character of Tom MacArthur, his shady business practices, and his true lack of compassion for his fellow man.”
Continues Santora, “Tom MacArthur made his millions with his own unique brand of insurance salesman double-talk and deception of unsuspecting, hardworking, God-fearing men and women across America.
“This story clearly leaves liberal Tom MacArthur’s campaign, character, and image in shambles.”
Very important: Please read the full story below.
This article originally appeared in the Daily Mail.
Revealed: Millionaire New Jersey GOP congressional hopeful ran insurance company accused of cheating hurricane and wildfire victims
- Tom MacArthur ran York Risk Services Group, a unit of AIG insurance, when the company allegedly skimped on a series of high-risk claims
- York paid half of a $285,000 fine following government claims that it underpaid policyholders by $10.8 million after a massive California wildfire
- A Christian college in Houston and the Port of Galveston, Texas sued York and other insurers for skirting multimillion-dollar claims after Hurricane Ike
- The GOP establishment favorite is fighting a pitched battle with tea-party candidate Steve Lonegan for a chance at a U.S. House seat in November
By DAVID MARTOSKO, U.S. POLITICAL EDITOR
Tom MacArthur, a multi-millionaire former mayor who leads a prominent tea party challenger for the Republican congressional nomination in a New Jersey district, ran an insurance company accused of cheating disaster victims, MailOnline can reveal.
From 2002 until late 2010, MacArthur was chairman of the board of York Risk Services Group, a unit of the global insurer American International Group. He was also the company’s president and CEO from 1999 to 2009 and a major shareholder until at least 2006.
York boasts on its website that ‘We re-price 500,000 medical bills per year and save clients an average of 61% on each bill.’ That cost-cutting focus caught up with the company in 2008 after Hurricane Ike devastated the U.S. Gulf coast and a massive wildfire laid waste to hundreds of homes in Sylmar, California.
It ended up settling two Ike-related lawsuits and paying a sizable fine to the state of California in connection with allegations of underpaying claims from the fire’s victims.
York isn’t a traditional insurer, but its clients are. It helps them save money by carefully vetting and processing their claims.
Ritchie Venier, the company’s senior vice president, told MailOnline that ‘the amount of work we do is determined by what our clients would like us to process on their behalf.’
‘However, since we are not an insurance company we do not play the role of one.’
York’s apparent hand in determining the size of claim payouts, however, has landed it in the same legal hot water as the companies it serves, facing legal accusations along with them of unfairly slow-walking, low-balling or denying claims.
MacArthur, the New Jersey congressional candidate, is not named personally in any of the legal actions described in this report, but he was both a York officer and a major shareholder.
The Port of Galveston, Texas, which suffered extensive damage following Hurricane Ike in 2008, filed a lawsuit against York and three other insurers. Both the storm and the resulting insurance claims came on MacArthur’s watch.
And York, along with another AIG unit, paid the state of California a $285,000 settlement following charges that they violated the state’s Fair Claims Settlement Practice regulations while handling damage claims following a massive November 14, 2008 fire in the town of Sylmar.
That blaze, known in the American West as the Sayre fire, burned more than 11,000 acres of forest and destroyed 600 structures and 480 mobile homes.
It also produced hundreds of ‘total loss’ homeowners claims, including those covering 370 mobile home policies held by AIG’s New Hampshire Insurance Company.
The California Department of Insurance claimed that the two companies had underpaid the devastated homeowners by 10.8 million.
York, led by MacArthur, was responsible for processing and evaluating those claims as part of New Hampshire Insurance’s outsourcing strategy. The two companies each paid half the penalty, or $142,500, according to court documents.
Both denied wrongdoing, but agreed to a settlement in August 2012 to end California’s years-long investigation into 125 separate alleged violations of the California Insurance Code.
The two suits related to Hurricane Ike, the massive 2008 storm that swept through the Gulf Coast and crippled coastal Texas, were settled with undisclosed terms.
One, filed by Houston Baptist University, alleged that York low-balled its settlement offer after the hurricane laid waste to its main administration building and student center.
Robert Sloan, the school’s president, told The campus Collegian newspaper that it would cost more than $21 million to repair and rebuild the structure. But ACE American Insurance Company and York, which evaluated and vetted the claim, offered about $5 million.
‘They drug [sic] their feet,’ Sloan said in 2010 of the case that began during MacArthur’s tenure.
‘They weren’t very responsive. They obviously have not paid us what they owe us under our coverage. I don’t think the insurance company has acted in good faith.’
Terms of York’s 2011 settlement with Houston Baptist University – which came only after MacArthur left – were kept sealed. But on February 22, 2011 Sloan told the school’s trustees that he ‘went to bed the other night with a big grin on my face, and when I woke up, it was still there.’
The university president was happy enough about the size of the checks York and ACE wrote to credit the Almighty with the result.
‘This is a testament to the goodness and faithfulness of God,’ he said, according to the campus paper.
Another Hurricane Ike legal action involving York came from the Port of Galveston on the Gulf of Mexico. The Texas harbor was insured for at least $55 million, with Lexington Insurance Company owing the last $15 million after other insurers had paid their part.
York was the company tasked with evaluating and processing the Galveston claim for Lexington.
‘Lexington owed us the last layer of our insurance, which was $15 million,’ Port of Galveston Director Michael Mierzwa told the Houston-based Guidry News - which reported that the port recovered the entire $15 million in a 2012 settlement without going to trial.
The pool of insurers ‘had got to $40 million and had stopped paying us; and that’s why we sued them,’ he said.
The Republican National Committee has embraced MacArthur as one of its so-called ‘young guns,’ suggesting a vigor and fearlessness usually associated with strong retail campaigners.
But according to the Newark Star-Ledger, a $2 million cash loan from MacArthur’s personal wealth makes up nearly his entire election war chest.
He is running a tight race with tea party favorite Steve Lonegan. Both men are former mayors of New Jersey towns. MacArthur’s cash-on-hand, though, reportedly dwarfs Lonegan’s by a 10-to-1 margin.
‘I’m not going to buy a congressional seat,’ Lonegan told the Star-Ledger on April 15. ‘I could put a lot more money in the race. I’m not going to because you don’t buy your seat. You earn it.’
MacArthur has insisted that he is raising money from ordinary New Jerseyans as the June 3 primary election draws near.
Russell, his campaign spokesman, emailed MailOnline an aggressive statement, lashing out at Lonegan – who he claimed was responsible for this report.
‘Another day, another embarrassment for Steve Lonegan,’ Russel wrote, complaining that the tea partier’s campaign ‘would go to such extreme and underhanded lengths to plant a hatchet job story, and then fail to get their facts straight.’
‘Under Tom MacArthur’s leadership, York handled upwards of one million insurance claims,’ Russell added. ‘From that, the best Lonegan’s crew could do was find three cases – all of which were settled after Tom had already left the company and none of which found wrongdoing by York.’
‘Two of the cases were settled out of court and dismissed, and the third was a case pressed by an ultra-liberal California Democrat politician that was also ultimately settled.’
Lonegan lost a shot at a U.S. Senate seat last year, falling in a special election to defeat then-Newark mayor Cory Booker. But in that race, he carried the 3rd Congressional District that he now wants to represent in Congress.
Three Democrats are vying to face the Republican victor, including lawyers Aimee Belgard and Howard Kleinhendler, and Lyndon Larouche devotee Bruce Todd.
The eventual winner in November will replace two-term Rep. Jon Runyan, a former pro football player who is retiring.
In a March poll sponsored by PolitickerNJ, Lonegan held a commanding lead with 41 per cent support. MacArthur ‘barely moved the needle’ with 2 per cent, the political website reported.
But that was in a three-way race: Toms River, NJ city councilman Mo HIll withdrew from the race last month and later endorsed MacArthur. Since then, MacArthur has rocketed to a stronger position over Lonegan.
The state’s Republican establishment has also coalesced around MacArthur, with GOP parties in both counties straddling the 3rd district endorsing him in late March.
His campaign website describes him as ‘a self-made businessman running for Congress to be a leader in promoting policies that spur job creation and empower people; that ensure our recovery and renewal in the wake of [Hurricane] Sandy.’
MacArthur is quoted on the site saying he believes in a small federal government that, among other things, ‘gives a hand up to those in need.’
Steve Lonegan is the true conservative in the race – DONATE TODAY to push Steve over the top against liberal Establishment candidate Tom MacArthur in the June 3rd GOP Primary!