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Release Date: 04/19/2004
Release Number: 04-659-ATL
Contact Name: Gloria Della
Phone Number: 202.693.8664
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Memphis, Tennessee - The U.S. Department of
Labor has sued the former president of Memphis-based International Staff
Management Inc. for mismanagement of the Section 125 cafeteria health
plan. ISM was a staff-leasing firm that operated a multiple employer
welfare arrangement that left participants with as much as $535,000 in
unpaid health claims. |
Since
1990, the department has conducted more than 700 civil and criminal
investigations of health plans affecting 1.9 million participants and
their families. These cases involve $140.5 million in identified
violations. |
The
suit alleges that Don Starkey violated the Employee Retirement Income
Security Act (ERISA) by failing to take reasonable action to ensure that
the plan had adequate reserves to pay claims. The suit also alleges he did
not ensure that the plan was covered by stop loss insurance from May 1999
until it was terminated on September 30, 2001. |
The
plan provided health benefits to approximately 94 participants under a
re-insurance arrangement that was administered by American Heartland
Health Administrators, Inc. until its insurer defaulted on benefit claims.
In May 1999, Carolina Benefit Administrators was retained by Starkey to
take over claims administration. From May 1999 until the plan was
terminated, the plan operated without stop loss insurance and contribution
rates created or approved by the defendant were not adequate to pay
claims. |
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The suit seeks a court order to require that Starkey
restore any losses with interest. In addition, the suit asks the court to
appoint an independent fiduciary to administer the plan and permanently
bar the defendant from serving any employee benefit plan governed by ERISA
in the future. |
The
suit, filed in the federal district court in Memphis, resulted from an
investigation conducted by the Atlanta regional office of the Employee
Benefits Security Administration (EBSA). |
ISM
was an employee staff leasing business that provided payroll services,
workers compensation services, tax deposits and employee benefits to
client employers. The plan provided health benefits for injury or illness
to employees of participating employers. |
Tips
on health benefits for small employers may be found at EBSA’s Web site
under at www.dol.gov/ebsa/newsroom/fshlthinstips.html. Employers and
workers can reach the Atlanta regional office at 404.562.2156 or EBSA
toll-free at 1.866.444.EBSA (3272), for help with problems relating to
private-sector retirement and health plans. |
(Chao
v. Starkey)
Civil Action No. 04-CV-2244 |
U.S.
Labor Department news releases are accessible on the Internet at
www.dol.gov. The information in this news release will be made available
in alternate format upon request (large print, Braille, audio tape or
disc) from the COAST office. Please specify which news release when
placing your request at 202.693.7765 or TTY 202.693.7755. The U.S.
Department of Labor is committed to providing America's employers and
employees with easy access to understandable information on how to comply
with its laws and regulations. For more information, please visit
www.dol.gov/compliance. |
