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Release Date: 12/13/2001
Release Number: 149
Contact Name: Gloria Della
Phone Number: 202.693.8666
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San Francisco, California - The U. S. Department
of Labor obtained a temporary restraining order December 13 freezing the
assets of Carson City-based Employers Mutual, LLC, affiliated associations
and their principals for diverting more than $6 million of health plan
assets to pay excessive expenses rather than paying the benefits of
participants. The health plan provides benefits to more than 22,000
participants and beneficiaries throughout the country. |
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The court order also removes the defendants and
appoints Thomas Dillon as the independent fiduciary responsible for
managing the plans, accounting for the assets and paying benefits owed to
participants. A hearing on the department’s motion for a preliminary
injunction is scheduled for January 2, 2002. |
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A lawsuit filed simultaneously with the court order
alleges that defendants James Lee Graf, William R. Kokott, Nicholas E.
Angelos, Kari Hanson, their companies and the associations violated the
Employee Retirement Income Security Act in connection with the operations
of Employers Mutual and related associations. The suit alleges that the
defendants diverted health premiums to their personal accounts in the form
of administrative expenses paid to them. |
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From January to October 2001, the associations
allegedly collected $14 million in contributions and paid out only $3
million in health claims. The defendants also delayed processing of
claims. There are an estimated $4.5 million in unpaid claims. Kokott,
Angelos and Graf also failed to operate the plans in an actuarially sound
manner, 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 seeks a court order restoring all losses and
illegal profits received by them and to obtain a bond as security against
future plan losses. The suit also asks for removal of the defendants from
their positions with the plans and the appointment of an independent
fiduciary to manage the plans. The court actions were filed in federal
district court in Reno. |
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The case was investigated by the San Francisco Regional
Office of the Labor Department’s Pension and Welfare Benefits
Administration. |
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(Chao v. Employers Mutual) |
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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. |
