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LOS ANGELES - The U.S. Department of Labor
announced that a settlement agreement and consent decree was entered April 20,
1999, in the U.S. District Court for the Central District of California,
settling the department’s lawsuit against Health Care Delivery Services,
Inc. and seven individual members of its board of directors who served as
fiduciaries of the company’s pension plan. A total of $208,564 in losses
resulting from violations of the Employee Retirement Income Security Act
(ERISA) has already been restored to the pension plan.
According to David Ganz, regional director of the
Pension and Welfare Benefits Administration (PWBA) here, today’s action
resolves allegations raised in the department’s lawsuit which was filed
Aug. 7, 1998.
The settlement agreement and consent decree was
entered into by the department and Health Care Delivery Services, Inc.;
Clemente Sainten, who served as Health Care Delivery Services’ president
and chairman and as trustee of the organization’s pension plan; and Roy
Rodriguez, David T. Feinberg, M.D., Elliott H. Goldstein, Ph.D., Thomas D.
Leary, Arthur W. Weiss and V. Charles Charuvastra, M.D., all of whom served as
members of the board and pension plan fiduciaries.
Health Care Delivery Services, a California
non-profit organization, operated Pride House, an adolescent residential group
home in Van Nuys, and the West Los Angeles Treatment Center, an outpatient drug
treatment facility, Ganz said.
The department alleged that because of financial
difficulties faced by Health Care Delivery Services starting in July 1995,
Sainten ordered the transfer of pension plan assets totaling $157,200 into
Health Care Delivery Services’ accounts in order to pay business-related
expenses, including the organization’s payroll.
By engaging in these prohibited transactions,
Sainten allegedly breached his fiduciary responsibilities under ERISA,
including his duty to act solely in the interests of the retirement plan’s
participants and beneficiaries, and caused the pension plan to suffer losses,
said Ganz.
The board members named in the settlement
agreement and consent decree allegedly violated ERISA by failing to monitor
Sainten’s actions and by failing to take reasonable action to remedy
Sainten’s breaches of fiduciary duty, Ganz added.
Under the terms of today’s settlement
agreement and consent decree, all of the board members are permanently enjoined
from violating any provisions of ERISA when serving as a fiduciary or service
provider to any employee benefit plan covered by the Act. Also, defendant
Clemente Sainten is permanently barred from serving as a fiduciary or service
provider to any employee benefit plan covered by ERISA. Finally, defendant Roy
Rodriguez, for a period of three years from the date of entry of the consent
decree, is prohibited from participating in any discussions, deliberations,
votes or other activities associated with the administration of any employee
benefit plan covered by ERISA.
Today’s settlement is a result of an
investigation conducted by the Los Angeles regional office of PWBA headed by
Ganz.
Note to editors: Civil Action File No. 98-CV-6460
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