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Release Date: 08/02/2004
Release Number: 04-1471-ATL
Contact Name: Gloria Della
Phone Number: 202.693.8664
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Memphis, Tennessee - The U.S. Department of
Labor has obtained a consent order permanently barring the former
president of Memphis-based International Staff Management Inc., (ISM) from
dealing with employee benefit plans in the future and requiring him to
make restitution to the Section 125 cafeteria health plan if he meets the
income requirements of the order. |
The
department sued Don Starkey in April 2004 for violating the Employee
Retirement Income Security Act when he failed to set adequate contribution
rates and 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. |
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. The firm
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. |
Tips
on health benefits for small employers may be found at EBSA’s Web site
at http://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. |