In a settlement resolving a civil contempt
petition filed by the Secretary of Labor in federal district court in
Vicksburg, Miss., Larry Lefoldt of Lefoldt & Associates of Jackson, Miss.,
was named as a substitute independent trustee to take control of and manage two
pension plans of the Vicksburg-based Home Care Services, Inc. and its
subsidiaries.
Company chief operating officer Ida J. Haworth, a
fiduciary of the plans, was removed from her plan positions and permanently
barred from serving any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974 (ERISA).
Simultaneously, the Labor Department petitioned
the court for adjudication in civil contempt for the defendants failure
to honor a previously agreed-upon settlement on March 7, 1997, and a modifying
settlement on April 11, 1997, in which the home health care agency and its
principal Ida J. Haworth were to pay more than $2.1 million to the
agencys money purchase plan. Known at the time as Haworth Home Health
Care Agency, Inc., and operating nine agencies in Mississippi and Louisiana,
the companys plan had 191 employees participating in the plan in December
1994 and its assets were $1.8 million, solely from employer contributions based
upon employees actual salaries.
The departments petition claimed that
defendants failed to comply with the original and modified settlements because
they did not make timely restitution to the money purchase plan and that
Haworth failed to comply in her administration of that plan as well as the Home
Care Services 401(k) plan.
Some time between the April, 1997 modified consent
order and the filing of this petition, Haworth Home Health Agency, Inc.,
changed its name to Home Care Services, with three operating subsidiaries:
Haworth Home Health Agencies of Vicksburg, Winnfield, La. and Minden. La. Home
Care also provided management services to Hospice Care Foundation, Inc.
On July 26, 2000, the three operating subsidiaries
filed for Chapter 11 bankruptcy reorganization and claims were filed against
each of these for their obligations to fund Home Cares restitution to the
money purchase plan. The departments lawsuit recognized that Home Care
could not make the promised restitution without funds provided by the three
operating subsidiaries. Thus, this order contains provisions if one or more of
the subsidiaries cannot comply with a payment schedule.
Haworth agreed to forfeit that part in her own
account with the companys money purchase plan to be applied to reduce the
remaining pre-1995 interest owed to the plan from the previous modified order
(that amount is $170,862).
In addition, the court ordered the defendants to
pay $1,511,000.63 in employer contributions, plus interest set at 7.5 percent
per annum, owed by Home Care, with specific amounts assigned to the Vicksburg,
Winnfield and Minden entities. All are to be paid in accordance with the
bankruptcy reorganization plans. The order also stipulated that if complete
repayment is not made in the context of the Chapter 11 bankruptcies, the
remaining balance shall become immediately payable to the money purchase plan
by the defendants.
Also, defendants were ordered to remit employee
contributions withheld from the payroll to the companys 401(k) plans in a
timely manner. It was alleged in the civil contempt order, that the defendants
failed to forward approximately $42,051 in withheld employee contributions to
the plan.
Also, Hospice was ordered to pay an additional
$72,833.58, including interest, to the plan, whose participants are employees
providing management services to the Hospice. The order also ordered that
Hospice pay in full within 180 days of the order all existing
claims under the companys medical plan, estimated at the time of this
order to be $91,277.26, which were not included in any repayment schedule or
reorganization plan set up in the Vicksburg, Minden or Winnfield bankruptcies.
Further, if the medical plan is converted to a fully-insured plan, defendants
were ordered to make timely remissions of premium payments to the insurer, and,
if the plan remains self-insured, defendants were ordered to retain a
third-party administrator to process and adjudicate claims.
The settlement agreement and consent order
regarding the Secretary of Labors petition for adjudication in civil
contempt is the result of an investigation conducted by the departments
Atlanta Regional Office of the Pension and Welfare Benefits Administration,
which has oversight of federal pension law. It was entered Dec. 20 in the
federal district court in Vicksburg.
(Herman v. Home Care Services, Inc.) Civil
Action # 5:97CV 18BRS |