Former Trustees, Service Providers To Pay $750,000 To New York Hotel Trades Council's Dental Fund

Archived News Release — Caution: Information may be out of date.

Under an agreement reached with the U.S. Department of Labor, former trustees of and service providers to the New York Hotel Trades Council and Hotel Association of the New York City, Inc. dental fund agreed to pay the fund $750,000 by Sept. 29. This settlement, reached after the case was tried but before the court issued any decision, resolved the department’s lawsuit filed against these trustees and dental service providers for alleged violations of the Employee Retirement Income Security Act (ERISA).

With the settlement agreement, the department’s lawsuit was dismissed. In the Sept. 7 settlement agreement, the defendants neither admitted or implied any liability.

The defendants that are former trustees are Jeffrey Flowers, Albert A. Formicola, James O’Hara, Vito J. Pitta, Eva I. Rodriguez, William T. Welsh and the estate of John Kelly. The dental service provider defendants are PFC Facility of New York, Inc., its owner Dr. Alex Bendersky and Dr. Robert Greenspan.

In the department’s lawsuit, the trustee defendants were charged with causing the plan to pay unreasonably high prices for dental services, thus violating fiduciary provisions of ERISA.

The dental service provider defendants (who were not fiduciaries) were parties in interest of the fund under ERISA and were charged with having obtained excessive compensation from the fund under a renewal contract for the dental services. The defendants denied all allegations and defended the litigation vigorously. The department filed this lawsuit in federal district court in Manhattan in January 1989.

The court action and settlement resulted from an investigation by the New York Regional Office of the department’s Pension and Welfare Benefits Administration and PWBA’s Office of Enforcement.

Herman v. Flowers, et al
Civil Action #89 CIV 0224 (S.D.N.Y.)

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Archived News Release — Caution: Information may be out of date.