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Release Date: 07/12/2001
Release Number: 158
Contact Name: Gloria Della
Phone Number: 202.219.8921
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New York, New York - The U.S.
Department to Labor has obtained a temporary restraining order freezing
the assets of U.S. Alliance, Inc. of Long Island City, New York, related
companies, corporate executives and plan officials for diverting over $1
million of health plan assets to themselves. The health scheme resulted in
more than $2.8 million in unpaid medical claims for at least 1,500
participants.
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A hearing on the
department's request for a preliminary injunction is scheduled for July 20
at 2:00 p.m. in federal district court for the eastern district of New
York in Brooklyn.
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The court order also
appoints an independent fiduciary to manage the plans' assets, removes the
defendants from their positions with the plans and permanently bars them
from serving any plan governed by the Employee Retirement Income Security
Act (ERISA) David Silverman of Granik, Silverman, Campbell & Hekker,
was appointed by the court as the independent fiduciary to conduct an
accounting of plan assets.
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Named as defendants
are Mari Elena Marks, Timothy Marks, Walter Nieves, son Michael Nieves,
brother Jesus Nieves, Michele Jenkinson, U. S. Alliance, Inc.,
International Benefits Association, Inc. (IBA), Alliance Administrators,
Inc., Nexus Administration Systems, Inc., Atlantic Liability Actuarial
Company, Ltd., and People Care Management, Inc. People Care Management is
a successor to U.S. Alliance, Inc.
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U.S. Alliance and
Alliance Administrators operated numerous membership associations which
marketed health and welfare insurance to numerous employers in New York,
New Jersey, Maryland and Pennsylvania. The associations purportedly
sponsored ERISA covered plans under the names of U.S. Multiplan Alliance,
U.S. Alliance Valucare, Mannacare, U.S. Alliance Plan, U.S. Alliance
Managed Care Partners. Employers then paid contributions to purchase
benefits provided by the various association plans.
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U. S. Alliance ceased
operations in October 1999. The defendants, however, continue to establish
new employee benefit plans. One Maryland-based plan, SAI Plus Health Plan,
LLC, is now insolvent.
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The Labor Department
simultaneously filed suit on July 10 against the defendants in connection
with $4.7 million in commissions and fees diverted from payment of
benefits. The department alleges that the defendants:
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Transferred plan assets to themselves for their personal use
starting in 1997 through May 2000
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Diverted plan assets to themselves in the form of sham membership
dues and fees
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Allowed $215,293 in plan assets to be transferred to People Care
Management, Inc. and additional amounts relating to Atlantic Liability
Actuarial Company, companies owned by the individual defendants
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Caused the plans to become insolvent and subsequently abandoned the
plans, leaving participants with unpaid health claims
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Charged the plans unreasonable commissions and
consultant
fees for services, representing approximately 49% of the
contributions paid by employers and participants for health benefits
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Failed to obtain a fidelity bond for plans administered by U.S.
Alliance and to file Form 5500 annual reports with the government.
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The suit seeks a court order appointing an independent
fiduciary to marshal the plans' assets. It also seeks to require that the
defendants return all money improperly received by them, undo any
prohibited transactions, restore all losses with interest resulting from
the alleged violations and post a bond or security against past or future
losses by the plans. In addition, the suit asks the court to order various
injunctive relief, including permanently removing them from their current
positions with the plans, barring them from marketing and creating ERISA
plans, and permanently barring them from receiving compensation from plans
governed by ERISA. |
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The court actions resulted from an investigation
conducted by the New York Regional Office of the department's Pension and
Welfare Benefits Administration into alleged violations of ERISA. |
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(Chao v. Marks
Civil Action No. CV-014569) |
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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. |
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