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Employee Benefits Security Administration

News Release

For Immediate Release: March 16, 2011
Contact: Jose Carnevali
Phone: 415-625-2631
Email: Carnevali.Jose@dol.gov
Release Number: 11-243-SAN (SF-52)

US Department of Labor sues Los Angeles-based healthcare group to recover
retirement contributions and loan repayments owed to hospital workers

LOS ANGELES – The U.S. Department of Labor has sued USA Star Healthcare Group - East Los Angeles Inc. and executives of ElaStar Community Hospital for failure to remit and timely forward employee contributions and loan repayments to the hospital’s retirement plan in violation of the Employee Retirement Income Security Act. The company also operated under the name ElaStar Community Hospital.

The lawsuit alleges that from Nov. 5, 2002, through Aug. 6, 2004, defendants ElaStar, Andrea Kofl and Richard Yardley caused ElaStar Community Hospital to fail to remit to the retirement plan $412,886.63 in employee contributions and participant loan repayments withheld from employees’ paychecks. Instead, the defendants retained and comingled the money in the accounts of the hospital. The defendants also allegedly failed to timely forward contributions and loan repayments to the plan, resulting in deposits being made up to 301 days late. At the time of the violations, Kofl and Yardley were the chief executive officer and chief financial officer, respectively, of ElaStar and shareholders of Star Healthcare Group, the parent company of ElaStar.

In addition, the suit alleges that ElaStar, Kofl and Yardley violated ERISA by causing the plan to suffer losses and lost opportunity income as a result of their improper actions. The suit was filed in the U.S. District Court for the Central District of California, Western Division.

The suit seeks a court order to require that the defendants restore all losses and lost opportunity income owed to the plan and correct any transactions prohibited by law. The suit also asks the court to permanently bar Kofl and Yardley from serving in a fiduciary capacity to any plan governed by ERISA in the future, to appoint an independent fiduciary to manage the plan, to hold all assets of the plan in trust, to wind down the affairs of the plan, and to distribute assets of the plan to eligible participants and beneficiaries.

“These defendants had a legal obligation to protect workers’ contributions to the retirement plan,” said Crisanta Johnson, regional director of the Labor Department’s Employee Benefits Security Administration in Los Angeles.

The plan, which provided retirement, death or disability benefits, covered 109 participants and had $1,625,723 in assets as of Dec. 31, 2004, the latest data available.

This case is part of EBSA’s national enforcement initiative to safeguard workers’ contributions to 401(k) and health benefit plans. The case was investigated by EBSA’s Los Angeles Regional Office and litigated by the regional solicitor of labor in San Francisco. Employers and workers can contact EBSA at 626-229-1000 or toll-free at 866-444-3272 for help with problems relating to private sector pension and health plans. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. USA Star Healthcare Group-East Los Angeles Inc.
Civil Action No. SACV11-00307

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