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Under an agreement reached with the U.S.
Department of Labor, former trustees of and service providers to the New York
Hotel Trades Council and Hotel Association of the New York City, Inc. dental
fund agreed to pay the fund $750,000 by Sept. 29. This settlement, reached
after the case was tried but before the court issued any decision, resolved the
department’s lawsuit filed against these trustees and dental service
providers for alleged violations of the Employee Retirement Income Security Act
(ERISA).
With the settlement agreement, the
department’s lawsuit was dismissed. In the Sept. 7 settlement agreement,
the defendants neither admitted or implied any liability.
The defendants that are former trustees are
Jeffrey Flowers, Albert A. Formicola, James O’Hara, Vito J. Pitta, Eva I.
Rodriguez, William T. Welsh and the estate of John Kelly. The dental service
provider defendants are PFC Facility of New York, Inc., its owner Dr. Alex
Bendersky and Dr. Robert Greenspan.
In the department’s lawsuit, the trustee
defendants were charged with causing the plan to pay unreasonably high prices
for dental services, thus violating fiduciary provisions of ERISA.
The dental service provider defendants (who were
not fiduciaries) were parties in interest of the fund under ERISA and were
charged with having obtained excessive compensation from the fund under a
renewal contract for the dental services. The defendants denied all allegations
and defended the litigation vigorously. The department filed this lawsuit in
federal district court in Manhattan in January 1989.
The court action and settlement resulted from an
investigation by the New York Regional Office of the department’s Pension
and Welfare Benefits Administration and PWBA’s Office of Enforcement.
Herman v. Flowers, et al
Civil Action #89 CIV
0224 (S.D.N.Y.) |
