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Scott Farrell, president of All Cape Health Care,
Inc., All Cape Health Care Certified, Inc., and Larkin Management Corporation,
of Bourne, Massachusetts, was sentenced today in Falmouth District Court to six
months in the house of correction, suspended for two years, in a criminal case
involving non payment of wages, failing to pay unemployment insurance taxes,
failing to provide workers’ compensation coverage, and converting for his
own use health insurance premiums deducted from employee paychecks.
According to James Benages, New England Regional
Director for the U.S. Labor Department’s Pension & Welfare Benefits
Administration (PWBA), the Massachusetts Attorney General’s Office pursued
criminal charges against Farrell as a direct result of PWBA’s
investigation into allegations that Farrell and his companies had withheld
health insurance premium deductions from the paychecks of employees, and –
instead of forwarding those premiums to the insurance company – had
converted that money to their own use. Such actions are violations of the
federal law governing the administration of private pension and employee
benefit plans. They are also violations of Massachusetts state criminal larceny
statutes, under which this case was prosecuted.
Around 37 employees were affected by
Farrell’s illegal activities. All Cape Health Care, Inc., and All Cape
Health Care Certified, Inc., provided home health care services to nursing
homes and individuals based on contracts with Medicare, Medicaid and private
payers. Both corporations employed home health care aides to care for elderly
patients and clients. Larkin Management Corporation employed five staff members
who provided administrative and financial support for the two corporations,
including bookkeeper, office manager and company officers.
As part of a plea bargain, Farrell pled guilty to
one count of petty larceny in connection with the misappropriation of the
employee health insurance premiums, one count of failure to provide
workers’ compensation , 37 counts of failure to pay wages, and one count
of failure to pay unemployment taxes. He is required to repay to employees and
health plan participants a total of $48,532.64 in health premiums, dental
premiums, wages and unpaid medical claims. He is also required to pay $75,000
in unemployment taxes to the Commonwealth of Massachusetts. Should he fail to
make these payments or in any other way violate his two year probation, Farrell
will be incarcerated.
Said Benages, “This should be a warning to
employers that when we discover them misusing employee benefit plan funds of
any kind, we will pursue them to the bitter end. If, as in this case, we are
not able to prosecute them under federal law, we will cooperate with state law
enforcement officials to prosecute them under state law. The message is that no
employer has the right to deduct money from an employee’s paycheck for
insurance or pension purposes and then turn around and use that money for their
own purposes.”
The case was prosecuted by Massachusetts Assistant
Attorney General Daniel Field under the direction of Attorney General Tom
Reilly. The U.S. Labor Department’s Pension and Welfare Benefits
Administration enforces the federal Employee Retirement Income Security Act
(ERISA) and other laws which govern the administration of private pension and
employee benefit plans, including health insurance plans. |
