Home Health Care Found In Civil Contempt Of Labor Department Lawsuit, Official Removed And Independent Trustee Named

Archived News Release — Caution: Information may be out of date.

In a settlement resolving a civil contempt petition filed by the Secretary of Labor in federal district court in Vicksburg, Miss., Larry Lefoldt of Lefoldt & Associates of Jackson, Miss., was named as a substitute independent trustee to take control of and manage two pension plans of the Vicksburg-based Home Care Services, Inc. and its subsidiaries.

Company chief operating officer Ida J. Haworth, a fiduciary of the plans, was removed from her plan positions and permanently barred from serving any employee benefit plan subject to the Employee Retirement Income Security Act of 1974 (ERISA).

Simultaneously, the Labor Department petitioned the court for adjudication in civil contempt for the defendants’ failure to honor a previously agreed-upon settlement on March 7, 1997, and a modifying settlement on April 11, 1997, in which the home health care agency and its principal Ida J. Haworth were to pay more than $2.1 million to the agency’s money purchase plan. Known at the time as Haworth Home Health Care Agency, Inc., and operating nine agencies in Mississippi and Louisiana, the company’s plan had 191 employees participating in the plan in December 1994 and its assets were $1.8 million, solely from employer contributions based upon employees’ actual salaries.

The department’s petition claimed that defendants failed to comply with the original and modified settlements because they did not make timely restitution to the money purchase plan and that Haworth failed to comply in her administration of that plan as well as the Home Care Services 401(k) plan.

Some time between the April, 1997 modified consent order and the filing of this petition, Haworth Home Health Agency, Inc., changed its name to Home Care Services, with three operating subsidiaries: Haworth Home Health Agencies of Vicksburg, Winnfield, La. and Minden. La. Home Care also provided management services to Hospice Care Foundation, Inc.

On July 26, 2000, the three operating subsidiaries filed for Chapter 11 bankruptcy reorganization and claims were filed against each of these for their obligations to fund Home Care’s restitution to the money purchase plan. The department’s lawsuit recognized that Home Care could not make the promised restitution without funds provided by the three operating subsidiaries. Thus, this order contains provisions if one or more of the subsidiaries cannot comply with a payment schedule.

Haworth agreed to forfeit that part in her own account with the company’s money purchase plan to be applied to reduce the remaining pre-1995 interest owed to the plan from the previous modified order (that amount is $170,862).

In addition, the court ordered the defendants to pay $1,511,000.63 in employer contributions, plus interest set at 7.5 percent per annum, owed by Home Care, with specific amounts assigned to the Vicksburg, Winnfield and Minden entities. All are to be paid in accordance with the bankruptcy reorganization plans. The order also stipulated that if complete repayment is not made in the context of the Chapter 11 bankruptcies, the remaining balance shall become immediately payable to the money purchase plan by the defendants.

Also, defendants were ordered to remit employee contributions withheld from the payroll to the company’s 401(k) plans in a timely manner. It was alleged in the civil contempt order, that the defendants failed to forward approximately $42,051 in withheld employee contributions to the plan.

Also, Hospice was ordered to pay an additional $72,833.58, including interest, to the plan, whose participants are employees providing management services to the Hospice. The order also ordered that Hospice pay in full — within 180 days of the order — all existing claims under the company’s medical plan, estimated at the time of this order to be $91,277.26, which were not included in any repayment schedule or reorganization plan set up in the Vicksburg, Minden or Winnfield bankruptcies. Further, if the medical plan is converted to a fully-insured plan, defendants were ordered to make timely remissions of premium payments to the insurer, and, if the plan remains self-insured, defendants were ordered to retain a third-party administrator to process and adjudicate claims.

The settlement agreement and consent order regarding the Secretary of Labor’s petition for adjudication in civil contempt is the result of an investigation conducted by the department’s Atlanta Regional Office of the Pension and Welfare Benefits Administration, which has oversight of federal pension law. It was entered Dec. 20 in the federal district court in Vicksburg.

(Herman v. Home Care Services, Inc.)
Civil Action # 5:97CV 18BRS

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