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Release Date: 01/04/2002
Release Number: III-2-01-04-004-MD
Contact Name: Sharon Morrissey
Phone Number: 202.693.8668
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Philadelphia, Pennsylvania - Two officers of a
Rockville, Maryland-based claims-processing firm that failed to pay more
than $1.6 million in claims before going out of business last year will
never again serve as fiduciaries to any employee benefit plan covered by
the federal law that protects workers’ pensions and benefits, under
terms of a consent judgment obtained December 21 by the U.S. Department of
Labor. |
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SAI MED Health Plan, LLC and Samuel Kreiter and Martin
Sonnenberg also were barred for 15 years from serving ERISA plans in any
service provider capacity. |
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The judgment confirmed that $400,000 will be paid to
the independent fiduciary, David Silverman of the New York firm of Granik,
Silverman, Campbell & Hekker, who has been managing the organization
since a temporary restraining order removed Kreiter and Sonnenberg as plan
officials in February. The restitution will be combined with other assets
collected by Silverman and used to help pay outstanding health claims. |
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At the time the temporary restraining order was issued,
SAI MED, Kreiter and Sonnenberg were alleged to have owed at least $1.6
million in outstanding health claims to participants in several states
including Maryland, Virginia and West Virginia. |
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Prior to 1999, SAI MED was a multiple employer welfare
arrangement marketing its services to employers. The company pooled the
premiums of client employers to cover all claims. In 1999, SAI MED began
to sell a self-insured welfare plan to employers, designed to include the
purchase of stop-loss insurance to pay employees’ health claims in
excess of the attachment point. The company collected health benefit
premiums and processed claims of an estimated 4,000 employees of 200
sponsoring employers at various times. |
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SAI MED set its own compensation and paid its bills,
including salaries of Kreiter and Sonnenberg, while claims remain unpaid.
At the end of 2000, SAI MED had approximately $276,000 in its accounts.
SAI MED ceased operations on February 1, 2001, without prior notification
to plan clients. At the time, the company had processed and was holding at
least $1.6 million worth of claims checks in its offices for unpaid claims
dating back to as early as November 1999. |
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The judgment, entered in the federal district court in
Greenbelt, Maryland, resulted from an investigation conducted by the
Washington District Office of the department’s Pension and Welfare
Benefits Administration into alleged violations of the Employee Retirement
Income Security Act (ERISA). |
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(Chao v. SAI MED Health Plan
Civil Action No. 01-CV-325) |
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U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7775. |
