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Atlanta, Georgia - The U.S. Department of Labor has obtained
a judgment requiring the Service and Business Workers of America Local 125,
located in Juno Beach, Florida, to pay $11 million in unpaid health claims owed
to union members and their families. The judgment also bars the union from
service as a fiduciary to any employee benefit plan in the future.
"This union local was a sham organization running a scheme
that preyed on workers needing health care benefits," said Secretary of Labor
Elaine L. Chao. "Our legal action in this case will restore money owed to
the plan so that these workers and their families can count on their health
care benefits in the future."
Under the order, the union local must transfer all its assets
to the health fund. In addition, the court-appointed independent fiduciary has
authority to recover any assets available through various liability insurance
policies.
The Labor Department sued October 2, 2002, alleging the union
violated the Employee Retirement Income Security Act by mismanaging the fund,
failing to establish actuarially sound premiums and not maintaining adequate
stop-loss insurance to pay health benefits. As a result, the health plan was
left with more than $11 million in unpaid health claims.
Local 125 allegedly was a sham union that marketed health
benefits to employers. At one time, the fund covered more than 3,700 participants
in 41 states nationwide. States with the greatest volumes of unpaid claims are
Illinois, Indiana, Missouri and Louisiana.
The judgment, entered in federal district court for the southern
district of Florida, resulted from an investigation conducted by the Atlanta
regional office of the Employee Benefits Security Administration (EBSA). Employers
and workers can contact the regional office at 404.562.2156 or EBSA's toll-free
number, 1.866.444.EBSA (3272), for help with problems relating to private-sector
pension and health plans. Tips for small employers purchasing health benefits may
be found at EBSA's Web site under
http://www.dol.gov/ebsa/newsroom/fshlthinstips.html.
(Chao v. Service and Business Workers of America Local 125)
Civil Action No. 02-80945-CIV-Marra/Seltzer |
