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The U.S. Department of Labor has filed a lawsuit
against two company officers of Decatur, Ill.-based Kelly Food Products, Inc.
for failing to pay $81,382 in health claims from monies forwarded for that
purpose by the stop-loss insurer.
Defendants include Donald Schumacher, former chief
executive officer and at least a 50 percent shareholder of the company, and his
wife, Susan Bolin, also a former officer and director of the company. The
company, which manufactured potato chips and other snack foods, ceased
operations on Oct. 11, 1996 and was put into bankruptcy on Oct. 21, 1996.
Kelly sponsored a self-funded health plan,
established in 1987 for the company’s employees. The plan was funded by
contributions from the participants as well as the company. The company
retained stop-loss insurance for paying individual claims in excess of $30,000
per participant per contract year.
In this case, the plan filed a notice/proof of
loss with the stop-loss insurance provider for the medical treatment of one of
the health plan’s beneficiaries, Marquita Roberts, and the insurer duly
paid the amount to the company. The lawsuit alleges the check from the insurer
was deposited to the company’s account and not forwarded to the plan. The
lawsuit alleges that a check was submitted to the service provider, a local
hospital, for the full amount, but the check was returned twice for
insufficient funds, leaving the claim unpaid.
The department is seeking an order directing
defendants Schumacher and Bolin to reimburse the plan for any losses, including
interest, and to permanently bar them from serving as fiduciaries to any plan
covered by the Employee Retirement Income Security Act.
The complaint resulted from an investigation
conducted by the Kansas City Regional Office of the department’s Pension
and Welfare Benefits Administration into alleged violations of the ERISA. It
was filed in federal district court in the Central District of Illinois in
Urbana on June 3.
(Herman v. Donald Schumacher, et al.)
Civil
Action No. CV-99-2120 |
