Labor Department Settles Its Lawsuit With Minnesota Company, Official For Failing To Remit Employee Contributions To 401(K) Plan

Archived News Release — Caution: Information may be out of date.

A Fridley, Minn.-based company and its 401(k) plan official settled a lawsuit with the U.S. Department of Labor by agreeing to pay $18,933.08 in lost opportunity costs to the plan. The defendants, Med-Voc Associates, Incorporated, and Michael W. Evavold, agreed to provide proof of this action to the Secretary of Labor’s representative by Aug. 31.

Further, the defendants agreed to notify the affected participants on the day(s) the voluntary employee contributions are scheduled to be remitted to the plan if there are any delays in making the remittance(s). Finally they were permanently barred from further violating the Employee Retirement Income Security Act (ERISA) and agreed to obtain a fidelity bond in the minimum amount of 10 percent of the amount of plan funds.

Med-Voc and plan trustee Evavold had been sued by the Labor Department in April for failing to forward $97,767.57 in 401 (k) plan contributions withheld from employee paychecks. Med-Voc and Evavold had withheld voluntary employee contributions from employee compensation on an intermittent basis from May 1993 to July 1997, retained these contributions in Med-Voc’s own general assets, and failed to remit promptly the amounts to the plan’s investment account. When the defendants subsequently repaid the delinquent contributions, they failed to pay the interest which the plan participants could have earned on their investments.

The plan had 37 participants and total assets of $579,588 as of June 30, 1998. Med-Voc provides rehabilitation counseling for worker’s compensation issues and is hired by insurance companies to coordinate rehabilitation services with doctors, nurses, employers and claimants.

“Our goal is to ensure that consumers know that the Department is only a phone call away to help protect the benefits promised by employers,” said Gregory Egan, director of the Kansas City Regional Office of the Department’s Pension and Welfare Benefits Administration, which conducts investigations into alleged violations of the federal pension law. Employers and workers can reach the Kansas City office at (816) 426-5131 for help with any problems relating to private-sector pension and health plans.

The consent order and judgment was entered in the federal district court in Minneapolis on July 31.

(Herman v. Med-Voc Associates, et al )
Civil Action No.00-CV-978-ADM/AJB

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