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News Release

U.S. Labor Department Reaches Settlement With Health Care Delivery Services, Inc. And Its Directors; Over $208,000 Already Restored To Cover Pension Plan Losses

Archived News Release — Caution: Information may be out of date.

LOS ANGELES - The U.S. Department of Labor announced that a settlement agreement and consent decree was entered April 20, 1999, in the U.S. District Court for the Central District of California, settling the department’s lawsuit against Health Care Delivery Services, Inc. and seven individual members of its board of directors who served as fiduciaries of the company’s pension plan. A total of $208,564 in losses resulting from violations of the Employee Retirement Income Security Act (ERISA) has already been restored to the pension plan.

According to David Ganz, regional director of the Pension and Welfare Benefits Administration (PWBA) here, today’s action resolves allegations raised in the department’s lawsuit which was filed Aug. 7, 1998.

The settlement agreement and consent decree was entered into by the department and Health Care Delivery Services, Inc.; Clemente Sainten, who served as Health Care Delivery Services’ president and chairman and as trustee of the organization’s pension plan; and Roy Rodriguez, David T. Feinberg, M.D., Elliott H. Goldstein, Ph.D., Thomas D. Leary, Arthur W. Weiss and V. Charles Charuvastra, M.D., all of whom served as members of the board and pension plan fiduciaries.

Health Care Delivery Services, a California non-profit organization, operated Pride House, an adolescent residential group home in Van Nuys, and the West Los Angeles Treatment Center, an outpatient drug treatment facility, Ganz said.

The department alleged that because of financial difficulties faced by Health Care Delivery Services starting in July 1995, Sainten ordered the transfer of pension plan assets totaling $157,200 into Health Care Delivery Services’ accounts in order to pay business-related expenses, including the organization’s payroll.

By engaging in these prohibited transactions, Sainten allegedly breached his fiduciary responsibilities under ERISA, including his duty to act solely in the interests of the retirement plan’s participants and beneficiaries, and caused the pension plan to suffer losses, said Ganz.

The board members named in the settlement agreement and consent decree allegedly violated ERISA by failing to monitor Sainten’s actions and by failing to take reasonable action to remedy Sainten’s breaches of fiduciary duty, Ganz added.

Under the terms of today’s settlement agreement and consent decree, all of the board members are permanently enjoined from violating any provisions of ERISA when serving as a fiduciary or service provider to any employee benefit plan covered by the Act. Also, defendant Clemente Sainten is permanently barred from serving as a fiduciary or service provider to any employee benefit plan covered by ERISA. Finally, defendant Roy Rodriguez, for a period of three years from the date of entry of the consent decree, is prohibited from participating in any discussions, deliberations, votes or other activities associated with the administration of any employee benefit plan covered by ERISA.

Today’s settlement is a result of an investigation conducted by the Los Angeles regional office of PWBA headed by Ganz.

Note to editors: Civil Action File No. 98-CV-6460 MMM (ANx)

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 202.693.7755.

Archived News Release — Caution: Information may be out of date.

Contact Name: Mike Shimuzu
Phone Number: 206.553.7620 TDD:1-800-676-8956

Employee Benefits Security Administration
April 23, 1999
Release Number