|
 Printer-Friendly Version
EBSA News Release: [12/03/2003]
Contact Name: Gloria
Della
Phone Number: (202) 693-8664
Labor Department Sues Owners of Houston Healthcare
Facility for Misuse of Plan Assets
HOUSTON—The owner of bankrupt Continuum Healthcare Systems,
Inc., of Houston was sued by the U. S. Department of Labor for failure to remit
contributions owed to the company’s group health and 401(k) plans and to
properly manage the plans. Losses to both the health and pension plans are in
excess of $25,000.
Steven Eischen, director of the Dallas regional office of the Employee
Benefits Security Administration that investigated the case, said, “Plan
officials have a duty to properly manage and protect employee benefit plans and
the assets. Our lawsuit is designed to restore assets that were not properly
protected for the company’s employees.”
The Labor Department suit, filed on Nov. 25 in federal district court in
Houston, alleges that Don R. Johnson violated the Employee Retirement Income
Security Act (ERISA). Johnson is a majority owner of the company and trustee of
the 401(k) plan. The suit states that he allegedly failed to remit
contributions owed to the health and 401(k) plans, did not separate plan assets
from assets of the company, used plan assets to benefit a party related to the
plan, and failed to properly administer the plans.
The department is seeking to require that Johnson restore all losses to
the plans plus interest, be removed from his position with the plans, and be
permanently barred from serving as a fiduciary to any plan governed by ERISA.
The suit also asks the court to appoint an independent fiduciary to manage the
plans.
Continuum Healthcare Systems, Inc. was placed in Chapter 7 bankruptcy on
Aug. 22, 2002. The health plan covered all full-time employees. As of April 8,
2002, the company’s 401(k) plan covered 26 employees and had $23.583 in
assets.
Employers with similar problems, who are not yet the subject of an
investigation by EBSA, may be eligible to participate in the department's
Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP
requires employers to make workers whole but allows them to avoid EBSA
enforcement actions, civil penalties and any applicable excise taxes. For more
information see www.dol.gov/ebsa.
Employers and workers can reach the Dallas regional office at (214)
767-6831 or EBSA’s toll free number, 1-866-444-EBSA (3272), for
help with problems relating to private-sector pension and health plans.
(Chao v. Johnson)
# # #
_________________________________________________________________
| 
