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Firm Drops Bid for RTD Risk Pact

October 31, 1987

The RTD's investigation-battered insurance adjusting firm is abandoning its struggle to hold on to transit agency contracts worth more than $3 million a year.

Leonard J. Russo Insurance Services Inc. said Friday it is withdrawing proposals to continue administering settlements from bus accidents, rider injury and employee disability cases. The announcement comes just days before the Southern California Rapid Transit District staff was to report its recommendations on which of several competing firms should be awarded new insurance adjusting contracts.

David Crosby, a Russo spokesman, denied rumors that Russo was being pressured by RTD officials to withdraw. Crosby said the firm wants to concentrate on other business operations, including an expanded contract with Los Angeles County and the company's recent acquisition of Adjustco Inc., a nationwide insurance company.

The Los Angeles County district attorney's office is continuing an inquiry into alleged fraud in RTD injury claims processed by the Russo firm. Investigators have said payments were made to non-existent victims and estimates of the losses range from a few hundred thousand dollars to several million. Five people, including a former Russo adjuster, two attorneys and a chiropractor, have been charged in the case so far.

Top Russo management was not implicated in the scheme. But mismanagement that has cost the RTD millions and been attributed to understaffing has been reported in recent RTD audits of the firm.

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