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Release Date: December 20, 2007
Release Number: 07-1152-NEW/BOS 2007-384
Contact Name: John M. Chavez
Phone Number: 617.565.2075

Long Island employer agrees to personally restore almost $19,000 to employee health benefits plan group to resolve U.S. Labor Department lawsuit

New York – A Garden City, New York employer has agreed to restore nearly $19,000 to participants in the health benefits plan of his defunct company to resolve a lawsuit filed by the U.S. Department of Labor alleging violations of the Employee Retirement Income Security Act (ERISA).

Kevin Wallis, who was the chairman and chief executive officer of Meridian MSO Inc., a health care services management company, was named as the sole defendant in the suit recently filed in the U.S. District Court for the Eastern District of New York. The company sponsored the Meridian MSO Inc. Health Plan to provide health benefits for the company’s employees.

The suit alleged that, during the period from March through June 2002, contributions to the plan were withheld from employees’ paychecks. Wallis had control over those contributions but failed to forward them to the plan. Instead, he allowed them to be used for other purposes.

“Employee benefit plan assets are to be used solely for the benefit of plan participants,” said Jonathan Kay, regional director for the Labor Department’s Employee Benefits Security Administration (EBSA) in New York City. “The actions and inactions of the defendant amounted to the company using plan assets for its own benefit, which is a serious violation of the law.”

A consent judgment to which the defendant agreed provides for the restoration of $18,859.79 to plan participants. Defendant Kevin Wallis neither admits nor denies the allegations in the department’s lawsuit.

Employers with similar problems who are not yet subjects of investigation by EBSA may be eligible to participate in the department’s Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to correct any violations but allows them to avoid EBSA enforcement actions and civil penalties as well as any applicable excise taxes. For more information, see www.dol.gov/ebsa.

The suit settled resulted from an investigation by EBSA’s New York Regional Office. Employers and workers can reach EBSA at 212.607.8600 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private sector retirement and health plans. In fiscal year 2006, EBSA achieved record monetary results of $1.4 billion related to the pension, 401(k), health and other benefits for millions of American workers and their families.

Chao v. Kevin Wallis
Civil Action Number: 2:07-CV-04881-ADS-AKT

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