Labor Department Settles Lawsuit With Texas Company Executives For Violating Employee Benefit Rights

Archived News Release — Caution: Information may be out of date.

The U.S. Department of Labor obtained a court judgment on Friday against Houston- based Donovan Business Systems, Inc. and a present and former company officer for allegedly firing two employees, a husband and wife, when one questioned administration of the company’s health plan. The company and the officers, without admitting liability, agreed to pay former employees a total of $30,000 in cash to settle the issues raised in the department’s lawsuit.

Under the terms of the consent order and judgment, defendant Kathleen Ross, who no longer works for Donovan, has paid $5,000 and the company and James D. Baker will pay $25,000.

Donovan Benefit Systems, Inc. was in the business of providing its clients with administrative services for the clients’ self-funded group health plans. The company served as the plan administrator of its own health plan as well.

The department alleged that the company and two corporate executives, James D. Baker and Kathleen Ross, violated rights of two employees which are protected by the Employee Retirement Income Security Act (ERISA). The law explicitly prohibits the discharge, fine, suspension, expulsion, discipline or discrimination against any participant or beneficiary for, among other things, exercising their rights under a plan.

According to its lawsuit, the Labor Department alleged that an employee and her husband were fired from the company when the employee questioned company officials about checks for medical claims issued by the company to her health care providers that were returned by the bank for insufficient funds.

The consent judgment is the result of an investigation conducted by the department’s Dallas Regional Office of the Pension and Welfare Benefits Administration, responsible for administering the federal pension law. It was entered July 7 in federal district court in Houston.

(Herman v. Donovan Benefit Systems) Civil Action H-00-0126

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Archived News Release — Caution: Information may be out of date.