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EBSA News Release: [10/30/2003]
Contact Name: Gloria
Della
Phone Number: (202) 693-8671
Labor
Department Sues Executives of Indiana Marketing Firm for Failure to Prudently
Manage Health Plan
CHICAGO, Ill.—The U.S. Department of Labor sued executives
of TRG Marketing, LLC in Indianapolis, Ind., on Oct. 28, for failing to
prudently manage the firm’s health plan, resulting in up to $17.5 million
in unpaid health claims owed to plan participants nationwide. The suit alleges
TRG’s executives also diverted health plan assets to pay personal expenses
for themselves and family members.
“The TRG defendants blatantly disregarded the health benefit needs
of small business employers and their workers. At a time when employers are
finding it hard to obtain health coverage, these defendants schemed to rob
small businesses and workers, leaving workers with $17.5 million in unpaid
health claims,” said U.S. Secretary of Labor Elaine L. Chao.
The suit alleges that William Paul Crouse and Carmelo Zanfei violated
the Employee Retirement Income Security Act (ERISA) when they retained assets
of the health plan with those of the marketing firm, failed to charge adequate
premiums, and did not establish appropriate underwriting procedures to ensure
sufficient assets were available to pay benefits. As a result, participants
were left with between $5 and $17.5 million in unpaid medical claims.
The defendants diverted money targeted to pay health benefits for
personal enrichment, including paying for European family vacations, personal
lines of credit, charitable contributions, brokerage commission and corporate
distribution to themselves and spouses.
The suit, which was filed in the federal district court in Indianapolis
on Oct. 28, seeks to require Crouse and Zanfei to pay all health claims filed
by participants and beneficiaries under the TRG health plan and restore any
plan losses with interest, as well as any undue profits received by them. The
suit also asks that the defendants undo any prohibited transactions with the
plan, be removed from their positions with the plan and permanently barred from
serving as fiduciaries to any ERISA-covered plan.
TRG Marketing was a Nevada limited liability company. The TRG plan
was a multiple employer welfare arrangement (MEWA) designed to protect
participants and their dependents by providing reimbursement for catastrophic
health expenses. The plan was funded by premium payments made by employers on
behalf of their employees, by employees through payroll deduction, and by
individual participants who were not associated with any employers. When
terminated in November 2001, the TRG plan had approximately 11,000 participants
nationwide.
Employers and workers can reach the Cincinnati regional office at (859)
578-4680, or EBSA’s toll-free number, 1-866-444-3272, for help with
problems relating to private-sector pension and health plans. The case was
investigated by the Cincinnati regional office of the Labor Department’s
Employee Benefits Security Administration.
(Chao v. Crouse)
Civil Action No. 1:03-CV-1585-DFH-TAB
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