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Employee Benefits Security Administration

News Release

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Release Date: August 16, 2007
Release Number: 07-1208-ATL
Contact Name: Gloria Della/Richard Manning
Phone Number: 202.693.8664/202/693/4676

U.S. Labor Department resolves unpaid health claims of participants covered by Mississippi State Medical Association plan

Atlanta – The U.S. Department of Labor has obtained a consent judgment and order requiring the Mississippi State Medical Association (MSMA), Ridgeland, Mississippi, to reimburse participants and beneficiaries for unpaid health claims resulting from the termination of the Mississippi State Medical Association Benefit Plan and Trust. The welfare plan, established by MSMA in the 1980s to provide health benefits to member physicians of MSMA, their employees and beneficiaries, had more than 1,800 participants prior to its termination on January 1, 2004.

“The mismanagement of this benefits plan left workers and their families on the hook for unpaid medical bills,” said U.S. Secretary of Labor Elaine L. Chao. “The department’s legal action will ensure that the plan sponsor meets its responsibility by paying the medical bills of these workers and their families.”

The judgment appoints Receivership Management Inc. as an independent fiduciary to manage the distribution of plan assets. Participants and beneficiaries may contact the company at 615.370.0051. The judgment also removes the association as a fiduciary to the health plan and protects participants from creditors’ claims by medical providers resulting from the plan’s failure to pay providers for services. Finally, MSMA is enjoined from providing health, disability or other welfare benefits through any self-funded arrangement in the future and may be liable for a civil money penalty.

The Labor Department’s lawsuit alleged that MSMA knew the plan was underfunded, did not take steps to remedy the unsound funding and failed to inform participants of the actuarially unsound financial condition of the plan. As a result, the plan had more than $5 million in outstanding claims when it was terminated.

In addition, the department alleged that MSMA failed to protect plan participants from claims by creditors that resulted from the plan’s termination. Although MSMA advised the department that it had requested its members and other medical care providers in Mississippi refrain from referring plan participants to collection agencies and consider waiving payment of claims, a survey of participants performed at the department’s direction revealed that participants continued to pay Mississippi medical care providers, had been referred to collection agencies and had suffered damage to credit as a result of the plan’s termination.

The judgment, entered in the U.S. District Court for the Southern District of Mississippi, resulted from an investigation conducted by the Atlanta Regional Office of the department’s Employee Benefits Security Administration (EBSA). EBSA’s Web site includes health benefits tips for small employers at www.dol.gov/ebsa/newsroom/fshlthinstips.html. Employers and workers can reach EBSA’s Atlanta office at 404.302.3900 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private sector retirement and health plans.

Chao v. Mississippi State Medical Association
Civil Action Number 3:07cv440 DPJ-JCS

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