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Alert: Patriot National, Inc. and Guarantee Insurance Co. Threatened Collapse

December 4, 2017 by Catherine Montgomery

Patriot National Inc., an end-to-end insurance services business that includes third-party administrator Patriot Risk Services, recently defaulted on its debt and laid off about a third of its employees. The implosion of Patriot National is due to the insolvency of its largest client, Guarantee Insurance Co., a national work comp carrier active in 31 states.

The twin implosions accompany revelations about the questionable dealings of Steve Mariano, a central figure in both companies. Providers should be on alert when billing either Patriot Risk Services or Guarantee Insurance Co.

WorkCompCentral recently reported on  Guarantee Insurance’s delinquency and Patriot’s subsequent troubles, after Florida’s Office of Insurance Regulation found Guarantee’s funds inadequate to meet mandated levels. Worse, Florida Insurance Commissioner David Altmaier accused Guarantee of illegally diverting millions of company dollars to Guarantee’s ultimate owner, Steve Mariano.

Mariano, the subject of multiple lawsuits, is also the founder of Patriot National. Patriot and Guarantee Insurance have a history of propping each other up, with Patriot relying on Guarantee for the majority of its business, and Guarantee borrowing millions from Patriot in troubled times. With Mariano playing a central role in both, it would appear the beleaguered executive has been robbing Piglet to pay Pooh — and enriching himself at his companies’ expense.

Mariano’s house of cards is teetering. In a scathing letter to Florida’s Department of Financial Services, Altmaier described the transfer of over $15 million from Guarantee’s company coffers to Mariano’s pockets. The transfer directly imperiled the insurer for no apparent business-related purpose:

The Office finds...that GIC [Guaranteed Insurance Co] has systematically transferred funds totaling at least $15,743,000 to mr. Steve Mariano, the ultimate owner of GIC during the calendar year 2016 and through June 2017. These transfers were made with no documented business purpose and no discernible benefit to GIC and the Office has deemed them detrimental to GIC [emphasis added]. While Mr Mariano benefited individually from these transactions by receiving cash from GIC, this indebtedness diverted funds that otherwise could be used to increase the surplus of GIC and otherwise be available for the payment of policyholder claims...Further, the office has identified other transactions involving parties with known association to Mr. Mariano that have been harmful to GIC.

With the lion’s share of their revenue historically coming from Guarantee, this leaves Patriot up an extremely treacherous creek with very little by way of a paddle. In 2016, Patriot took a substantial loan from outside financiers before injecting $30 million into Guarantee, keeping the carrier afloat and cementing their long-term symbiotic relationship.

Patriot defaulted on a loan interest payment due on November 1. Subsequently, Patriot obtained a forbearance from the creditor that extends to December 3, with an option to receive additional funding from the creditor.

Mariano resigned from Patriot National in July, and is busy selling off other assets at panic-pace. But the chaos he left behind may have untold implications on Patriot’s work comp clients.

Whatever the outcome, Mariano’s behavior stands to affect countless people and entities, from users of Patriot’s insurance software to clients of TPA Patriot Risk Services. Providers would do well to stay informed as the story develops.


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DaisyBill is a trusted authority on workers’ comp billing. Thousands of work comp professionals attend our webinars and state agencies and professional organizations turn to us for our expertise. We created this blog to help everyone involved in workers’ compensation; sharing news, tips, and data of interest to the community.

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