The U.S. Department of Labor has sued the owner of
TennOhio Transportation Co., Columbus, Ohio for failure to pay $242,986.06 in
outstanding medical claims to employees of the company and its three affiliates
and instead using the plans assets to pay personal and corporate
expenses.
According to the lawsuit, TennOhio and other
employers participating in the plan withheld $100,870 from the paychecks of
employees to pay their portion of the premium for medical coverage. The
employers were to pay any benefit claims and administrative expenses in excess
of the contributions by employees from corporate general assets.
The lawsuit alleges that John Armstrong violated
the Employee Retirement Income Security Act when he:
- failed to pay $242,986.06 in outstanding benefit claims over
the period May 5, 1997 to August 25, 1997. These claims have never been paid by
the plan or participating employers;
- failed to take steps to obtain payment of outstanding medical
claims owed to employees, which resulted in personal liability for employees by
medical service providers; and
- caused the plans corporate sponsors to pay him excessive
salary, payments for lease of a building he owned and numerous personal
expenses -- for such perks as use of the corporate airplane,
yachting expense, and membership in a golf club while at the same time
the companies did not pay medical benefits of employees.
Armstrong was the president of TennOhio and a
majority owner of the three related companies. The plan, sponsored by TennOhio,
provides health, dental, vision, prescription drug, life and accidental death
and dismemberment benefits to employees of TennOhio and its affiliates Marpam
Truck and Trailer Company, Garland Transportation Company, and Commercial
Trailer Company.
The lawsuit seeks a court order to require that
Armstrong return any excessive compensation from TennOhio and its affiliates
and to appoint an independent fiduciary to pay medical claims owned by the
plan.
Joseph Menez, Director of the Cincinnati Regional
Office of the Pension and Welfare Benefits Administration (PWBA), said,
This case exemplifies our commitment to protect the hard-earned benefits
of workers. Workers can help us protect their plan benefits by contacting our
office at (859) 578-4680 if they have questions or suspect abuse of their
pension, health or other benefit plans.
The lawsuit, filed on Aug. 17 in federal district
court in Columbus, Ohio, resulted from an investigation by the Cincinnati
Regional Office of the PWBA into alleged violations of ERISA.
Herman v. Armstrong |