For Immediate Release: September 6, 2012
Contact: Joanna Hawkins or Leni Fortson
Phone: 215-861-5101 or 215-861-5102
Email: firstname.lastname@example.org or email@example.com
Release Number: 12-1788-PHI (ebsa 12-105)
US Labor Department sues Plymouth Meeting, Pa., brokerage
firm to give up more than a half-million dollars in illegal profits
PLYMOUTH MEETING, Pa. – The U.S. Department of Labor has filed a lawsuit against defendants Dietrich & Associates Inc., an insurance brokerage firm in Plymouth Meeting, and its chief executive officer and sole shareholder, Kurt E. Dietrich, to disgorge $522,047 plus interest gained from illegal activities related to the company’s role as fiduciary to a hospital pension plan. The department’s suit is based on an investigation conducted by its Employee Benefits Security Administration that found violations of the Employee Retirement Income Security Act.
In or before 2003, Memorial Hospital-West Volusia Inc. in Deland, Fla., was merged into the Adventist HealthCare system. As part of that consolidation, the hospital terminated its defined benefit pension plan and sought the purchase of a single-premium group annuity to ensure the payment of vested benefits. Dietrich & Associates entered into an agreement with Memorial Hospital to act as the pension plan’s fiduciary in securing the annuity.
Filed in the U.S. District Court for the Eastern District of Pennsylvania, the suit alleges that the defendants violated their fiduciary duties by receiving undisclosed and impermissible compensation totaling $522,047 from Hartford Life Insurance Co. in connection with the annuity purchase, exceeding the $50,000 that Memorial Hospital agreed would be paid for the defendants’ services. This payment violated the contractual provision barring the defendants from receiving compensation from any insurer for the pension plan’s annuity. Additionally, the suit alleges that Dietrich & Associates deceived the pension plan and its fiduciaries by falsifying the final bids of Hartford’s competitors so that Hartford would appear to have the lowest bid. This action prevented the pension plan from knowing the true cost of the defendants’ services and deprived the pension plan of the opportunity to negotiate the amount of any insurer-paid commission or other payment as an element of the total cost of its annuity.
“The defendants clearly abused their authority by receiving this illegal compensation,” said Marc Machiz, EBSA’s regional director in Philadelphia. “This action underscores our commitment to hold fiduciaries accountable when they fail to meet their legal responsibilities.”
In addition to giving up the illegal profits, the department’s suit seeks to permanently enjoin the defendants from serving as fiduciaries to any ERISA-covered plans.
This case was investigated by EBSA’s Philadelphia Regional Office, and the suit was filed by the department’s Office of the Solicitor in Washington, D.C. Employers and workers can contact EBSA’s Philadelphia office at 215-861-5300 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit www.dol.gov/ebsa.
Solis v. Dietrich & Associates Inc. et al.
Civil Action Number: 12-4910 (Mclaughlin, J)
U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.