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Release Date: 06/04/2002
Release Number: BOS 2002-124
Contact Name: John M. Chavez
Phone Number: 617.565.2075
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Boston, Massachusetts - Associated Plan Administrators, Inc.
(APA) of Hamden, Connecticut, and
the company’s two officers have agreed to distribute nearly $250,000 to
certain employee welfare benefit plan clients in order to settle a lawsuit filed
by the U.S. Department of Labor charging that the company failed to sufficiently
disclose all of its service fees to its clients. |
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A consent judgment and order, signed by U.S. District Judge Robert N.
Chatigny on May 29, resolves the department’s lawsuit which alleged violations
of the Employee Retirement Income Security Act (ERISA), a law that protects the
interests of employee benefit plans and their participants and beneficiaries. |
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APA is a third party administrator of self-insured health benefit plans set
up by various employers for the benefit of their employees. In this
capacity, APA receives funds from the employers designated for these health
benefit plans and retains its own service fees from these funds. |
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According to James Benages, Boston regional director for the department’s
Pension and Welfare Benefits Administration, the department’s lawsuit alleged
that monies retained by APA as fees for access to preferred provider
organizations (PPOs) had not been fully and fairly disclosed to APA’s clients. |
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By the terms of the consent judgment filed in the U.S. District Court for the
District of Connecticut, APA, company president Lewis Panzo and company officer
Dennis Erne agree to pay a total of $247,524.75 to be distributed among certain
client companies that were charged fees for access to PPOs providing health
services networks during the period January 1, 1996 to July 31, 2001. A
separate agreement incorporated into the consent judgment provides that APA will
pay the owed money into a “settlement account” in three installments, with
the final payment due no later than November 15, 2002. |
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In the meantime, according to Benages, APA, Panzo and Erne must identify all
of the health benefit plans eligible to receive distributions under this
settlement and calculate the amount each plan is due. Finally, the
defendants must distribute the amounts due, including post-judgment interest, to
the eligible plans by December 16. |
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The judgment requires future administrative services contracts entered into
between APA and employee benefit plans to clearly disclose all fee arrangements
for services provided by APA, and requires APA to adopt billing and reporting
procedures that are consistent with these agreements and that disclose when
amounts billed include fees. The defendants agreed to the entry of the
consent judgment while neither admitting nor denying the allegations contained
in the Labor Department’s lawsuit. |
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The department’s legal action followed an investigation by the Boston
regional office of the Pension and Welfare Benefits Administration, located in
Room 575 of the John F. Kennedy Federal Building in Boston. The telephone number
is 617.565.9600. Long distance callers may reach the office through
PWBA’s Toll-Free Employee & Employer Hotline: 1.866.275.7922. |
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(Chao v. Lewis Panzo, Dennis Erne, and Associated Plan
Administrators, Inc.
Civil Action No. 3:02CV885RNC) |
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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. |
