Tenn. Restaurants Facing $4.8M Workers’ Comp Tab

Restaurant owners across Tennessee may have to pay as much as $4.8 million to shore up a workers’ compensation fund that the state says was mismanaged.

The Tennessee Department of Commerce and Insurance is suing Ronnie Hart, the president and chief executive of the Tennessee Restaurant Association. Among other things, the suit claims Hart received excessive fees for running the group’s workers’ compensation fund.

The state liquidated the group’s workers’ compensation fund two years ago and is asking about 500 restaurant owners to come up with a $4.8 million shortfall to pay injured workers.

The state’s suit against Hart alleges he relied on the board’s trust in him to “induce them to approve otherwise excessive fees” in the nearly 10 years his company, Hospitality Management Plus, ran the fund.

The suit states that, for example, in 2004 the company received $642,000 — more than double the $315,000 a year in its contract.

Frank Grisanti, a Memphis restaurant owner and a trustee with the insurance fund, might have to pay $60,000 as his portion of the trust’s shortfall.

Grisanti said he knew Hart was making a profit while running the trust, but he didn’t see it as a conflict.

“I guess it turns out that it was poor judgment, if what everybody says is true,” Grisanti said. “Everything we were presented showed us the trust was operating soundly. … I think we’re better restaurateurs than we are insurance people.”

Hart, who makes roughly $102,000 a year as the restaurant association’s top lobbyist, said he followed all laws and regulations when he ran the fund.

“Everything that occurred during that period of time was disclosed,” Hart said. “We tried to do things the right way.”

Even if the state wins its suit against Hart, it may not recover much money from him. He recently declared bankruptcy and a court filing shows he owes about $500,000 to creditors.