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Employee Benefits Security Administration

News Release

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Release Date: March 22, 2007
Release Number: 07-414-ATL (054)
Contact Name: Gloria Della/Peter Hong
Phone Number: 202.693.8664/202.693.4676

U.S. Labor Department sues Georgia health provider and affiliates over mismanagement of plan assets

Atlanta - The U.S. Department of Labor has sued fiduciaries of the Georgia Plumbers Trade Association (GPTA) health plan in Griffin, Georgia, affiliated firms and their owners for mismanagement of the health plan sponsored by the association. The department alleges that the defendants failed to pay benefits when due, paid illegal fees and commissions, and diverted plan assets for personal use. As a result, $646,875 in health claims were never processed or paid when the plan was terminated in April 2004.

The association is a non-profit organization that provided education and resources to assist Georgia plumbers in complying with building code changes. The health plan was a multiple employer welfare arrangement that provided medical coverage to approximately 500 participants in Georgia.

“Workers and their families have been saddled with nearly $650,000 in health claims because of the improper actions of the defendants in the Georgia Plumbers case,” said Bradford P. Campbell, acting assistant secretary for the Labor Department’s Employee Benefits Security Administration (EBSA). “This legal action seeks to have all lost assets restored to pay the health claims of these workers.”

The suit alleges that GPTA Benefits Group Inc., Employers OneSource Inc., Marc Meixner, Leslie E. Smith and David Sherman violated the Employee Retirement Income Security Act (ERISA). The defendants allegedly failed to properly evaluate and underwrite benefits, failed to adjust rates and benefits to pay promised benefits, failed to adequately fund claims owed by the plan, and paid excessive fees for services provided to the health plan. Meixner, Smith, Sherman and the affiliated firms also improperly dealt with the plan’s assets and received compensation for their personal benefit.

The suit seeks a court order to require that the defendants restore all plan losses with interest and return any illegal profits. In addition, the suit seeks to permanently bar the defendants from serving any employee benefit plan governed by ERISA in the future and to appoint an independent fiduciary to manage the plan and its assets.

The suit, filed in federal district court in Atlanta, Georgia, resulted from an investigation conducted by EBSA’s Atlanta Regional Office. Employers and workers needing help with problems relating to private sector retirement and health plans can reach the Atlanta office at 404.562.2156 or EBSA’s toll-free line at 1.866.444.EBSA (3272). For tips on health benefits for small employers, visit EBSA’s Web site.

Chao v. Georgia Plumbers Trade Association Health Plan
Civil Action No. 1:07-CV-0595

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