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Release Date: 02/08/2002
Release Number: 20
Contact Name: Gloria Della
Phone Number: 202.693.8666
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San Francisco, California - The assets of Carson
City-based Employers Mutual, LLC, affiliated associations and their
principals were frozen and the appointment of the independent fiduciary to
the health plans was extended under a preliminary injunction granted
February 1, 2002, by a Reno, Nevada federal court. The health plan
provides benefits to more than 22,000 participants and beneficiaries
nationwide. |
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The court order also removes the defendants from their
positions with the plans and extends the appointment of Thomas Dillon as
the independent fiduciary responsible for managing the plans, accounting
for the assets and paying benefits owed to participants. |
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On December 13, 2001, the department sued defendants
James Lee Graf, William R. Kokott, Nicholas E. Angelos, Kari Hanson, their
companies and the associations for violations of the Employee Retirement
Income Security Act (ERISA). The suit alleged that the defendants diverted
health premiums from Employers Mutual and related associations to their
personal accounts in the form of administrative expenses paid to them. |
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According to the suit, the associations collected $14
million in contributions from January to October 2001 and paid out only $3
million in health claims. The defendants also delayed processing health
claims, resulting in an estimated $4.5 million in unpaid claims. |
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Kokott, Angelos and Graf also failed to operate the
plans in an actuarially sound manner and paid excessive compensation for
services provided to the plans, and each defendant knowingly participated
in the improper actions of the others. |
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The suit asks for restoration of all losses and illegal
profits received by the defendants and that they obtain a bond as security
against future plan losses. The suit also seeks removal of the defendants
from their positions with the plans and the appointment of an independent
fiduciary to manage the plans. |
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This case was investigated by the San Francisco
Regional Office of the department’s Pension and Welfare Benefits
Administration. A copy of the Preliminary Injunction may be obtained on
the internet. |
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(Chao v. Graf
Civil Action No. CV-N-01-0698-DWH(RAM)) |
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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. |
