A Phoenix Corporation of Johnston, Rhode
Island (formerly known as MEACO Products Corporation), and company
president Lisa Adams have been ordered to repay health insurance premiums which
the defendants had withheld from employee paychecks but never forwarded to the
health insurance company, the U.S. Department of Labor announced today.
According to James Benages, northeast Regional
Director for the departments Pension and Welfare Benefits Administration
(PWBA), the defendants and the Department have agreed to entry of a consent
judgment in the U.S. District Court for Rhode Island which resolves a lawsuit
filed by the Department against the company and Adams. The judgment, signed by
U.S. District Judge Mary M. Lisi, prohibits Lisa Adams from acting as a
fiduciary or service provider to any employee benefit plan covered by federal
law for ten years. The order also requires the defendants to pay to 11
participants of the company health plan a total of $1,604.52 which had been
withheld from their paychecks but never paid to the health insurance
company.
Benages noted that the MEACO Products Corporation
Health Plan had been established in January 1997 pursuant to an agreement with
Blue Cross/Blue Shield of Rhode Island to provide group health insurance to
MEACO employees. Later that year, MEACO began operating under the name APhoenix
Corporation, which assumed the group health contract to provide health
insurance to its employees.
The Departments lawsuit alleged that,
between September 30, 1998 and January 27, 1999, the defendants deducted health
insurance premiums from employee paychecks but did not forward them to Blue
Cross/Blue Shield of Rhode Island. As a result, on November 9 1998, Blue
Cross/Blue Shield of Rhode Island canceled the group insurance contract for the
company retroactive to September 30, 1998. Benages stressed that, despite this
cancellation, the defendants continued to deduct insurance premiums from the
employee paychecks until January 27, 1999.
The law specifically prohibits this sort of
misuse of employee benefit plan funds by employers or plan sponsors, said
Benages, noting that his agency enforces the Employee Retirement Income
Security Act (ERISA) which protects employee pension and welfare benefit plans,
such as group health insurance. The defendants had no right to deduct
those premiums from their employees paychecks and then convert that money
to their own use.
The Departments legal action against the
defendants followed an investigation by the Boston Regional Office of the
Pension and Welfare Benefits Administration. That office is located in Room 575
of the John F. Kennedy Federal Building in Boston. The telephone number is
617-565-9600.
(Herman v APhoenix Corporation and Lisa Adams
Civil Action File Number: 00515) |