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Arrow Trucking carried a backlog of millions of dollars in unpaid civil damages and medical claims, which left some injured workers without money for treatment or additional care, the Tulsa World has learned.
The company closed its operations in December, sending workers home and stranding scores of truck drivers across the nation three days before Christmas.
Arrow Trucking has since filed for Chapter 7 bankruptcy in U.S. Bankruptcy Court for the Northern District of Oklahoma.
The Tulsa World interviewed former claims workers for the company who said Arrow Trucking executives routinely denied claims without cause and allowed unpaid claims to pile up.
"There was a closet that had a waist-high stack of bills and claims in it," said one former employee, who asked to remain anonymous. "We worked for several days to add up the amount and came up with $650,000. We were told to not put all the claims on the books at once because it would not look good."
Jay McAtee, the attorney for the state Workers' Compensation Court administrator, said the court reported that Arrow could owe $2.25 million to $5 million in outstanding claims.
The company has a $2.35 million bond that is being used to resume claims payments to injured workers, McAtee said.
"I don't think we are going to have enough to pay all the claims, but we will see how it goes," he said.
The former employee said that because of Arrow's dire financial straits, the company was placed on a cash-only basis by some doctors and hospitals who treated the company's employees for workers compensation injuries.
Joseph Mowry, Arrow's former executive vice president, confirmed that the company had to pay when services were rendered by some health-care providers. Mowry has been named in a fraud and racketeering lawsuit in U.S. District Court in Tulsa related to the company's demise.
Scott Ash, a lawyer who represents several former Arrow employees, said that the company appeared to take little action on injury claims durings its final days.
"It did not surprise me that they went belly up," he said.
"Toward the end, they were not doing much of anything. One of my clients' checks bounced, and they were really not authorizing surgeries or taking action on claims."
Mowry said Arrow Trucking was self-insured and handled its workers compensation claims in-house.
The company also processed claims for liability and cargo damage and had unpaid claims in these areas, sources said.
Mowry said Arrow had an estimated $1.5 million in liability claims and about $750,000 in workers comp claims over a five policy-year period.
Mowry said he oversaw approval and payment of workers compensation and liability claims based on cash flow available through Arrow's Finance Department. He said he would authorize the amount of money that could be used to pay off the most pressing claims.
One former employee said: "I would tell (Mowry) that we have $650,000 on the books in claims, and he would say: 'You can have $90,000. Pay the ones that scream the loudest,' and walk off.
"If we went to (former Arrow CEO) Doug Pielsticker, he always denied claims," the source said. "Literally nothing would get paid if he was involved."
The federal lawsuit also accuses Pielsticker of fraud and racketeering. Attempts to get in touch with Pielsticker have not been successful.
Mowry said: "I don't recall saying, 'Pay the one that screams the loudest.' The claims were a matter of cash flow based on the amount of cash available from the Finance Department. We paid those we had funds for."
Sources interviewed by the Tulsa World alleged that workers compensation funds and other claims money were used to pay legal expenses for Pielsticker and to hire a private detective to surveil Pielsticker's ex-wife.
"I called the Workers' Compensation office and told them this, and they said, 'It's their money; they can spend it how they want,' " said one source, a former employee.
Mowry declared: "To my knowledge, no claims money was used to pay for personal expenses of Doug or anyone."
The administrator of the Oklahoma Workers' Compensation Court, Marcia Davis, said that since Arrow's collapse into bankruptcy in December, numerous former Arrow employees have been calling the court, trying to get answers about bounced claims checks and other concerns.
Jason Chastain, 31, a former Arrow truck driver, said he received a bounced check for a workers compensation claim.
Ash said he had since settled the case for $36,000 in workers compensation court.
Chastain said he worked for Arrow in 2008 before he broke his elbows in a fall from his trailer.
When the World interviewed him before his settlement, Chastain said he was living in a hotel room, hoping that his checks would resume.
"I have nerve damage in a shoulder and elbow. I need surgery," he said.
Arrow's bankruptcy filing describes the company's assets as between $100 million and $500 million with liabilities in the same range.
Arrow Trucking Co.'s bankruptcy filing is incomplete, and it could take weeks to find the assets and creditors and determine whether money is left to distribute to them.
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By Omer Gillham