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News Release

Marlborough, Connecticut, Companies Agree to Refund Over $900,000 to Health Benefit Plan Clients to Settle U.S. Labor Department Lawsuit

Archived News Release — Caution: Information may be out of date.

Boston, Massachusetts - Two Marlborough, Connecticut, companies that administer self-insured health plans for other employers have agreed, along with their owner, to refund more than $900,000 to the health plans. The agreement settles a lawsuit filed February 20 by the U.S. Department of Labor alleging the companies and their owner, Robert H. Soleau, violated the federal Employee Retirement Income Security Act (ERISA) by using funds intended for the health plans for their own interests.

“The law clearly prohibits those entrusted with the assets of an employee benefit plan from intentionally mishandling those funds,” said U.S. Secretary of Labor Elaine L. Chao. “The Department of Labor will vigorously pursue such violations to restore the funds to their rightful use.”

James Benages, Boston regional director for the Labor Department’s Employee Benefits Security Administration (EBSA), said both the lawsuit and a consent judgment were filed with the U.S. District Court for the District of Connecticut. Named in the suit were Soleau and his companies: Diversified Group Brokerage Corp. and Diversified Administration Corp., both of 21 Austin Dr., Marlborough.

According to the lawsuit, the companies provided third-party administrative services to self-insured, ERISA-covered health plans. Employee contributions were the main source of funding for the plans. Diversified Group Brokerage Corp. (DGBC) and Diversified Administration Corp. (DAC) collected and had custody of the contributions received from the health plan clients and used the money to pay medical claims.

A portion of the funds, however, included uncashed medical claim checks and refunds received from medical providers. The suit alleged the defendants accumulated these funds and, instead of returning this money to the client health plans, used the money to pay for DGBC and DAC corporate expenses and investments. The funds totaled $905,228.

The consent judgment, agreed to by the parties and signed by U.S. District Judge Janet Bond Arterton on February 24, prohibits the defendants from future violations of ERISA, requires them to refund to their client health plans the entire $905,228.54 and to provide proof to EBSA that they have done so. Further, it requires the defendants to set up and maintain procedures for ensuring the prompt return to client plans of uncashed claim checks and medical provider refunds.

This case was investigated by the EBSA’s Boston regional office. Employers and workers can contact the regional office at 617.565.9600 or the agency’s toll-free number, 1.866.444.EBSA, for help with problems relating to private-sector pension and health plans.

(Chao v. Diversified Group Brokerage Corp, Diversified Administration Corp. and Robert H. Soleau
Civil Action No. 303CV00305-JBA)

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

Employee Benefits Security Administration
March 12, 2003
Release Number
BOS 2003-047