Federal District Court Orders Audit Of Three Akron Employee Benefit Association Health Funds

Archived News Release — Caution: Information may be out of date.

A consent order and judgment obtained by the U.S. Department of Labor resolves a lawsuit filed by the department under the Employee Retirement Income Security Act.

The department’s lawsuit, which was filed Sept. 21 in federal district court in Cleveland, charged the fiduciaries of three Akron-based medical trusts, namely the Builders and Contractors Employee Benefit Association (BCEBA) Medical Trust, the Manufacturers Employee Benefit Association (MEBA) Medical Trust and the Wholesale and Retail Employee Benefit Association (WREBA) Medical Trust, with multiple violations of ERISA including:

• retention of excessive percentages of employer premium payments
• rent-free use of a medical trust’s property to house an association’s apprenticeship program
• medical trust disbursements to their respective associations
• medical trust disbursements to two companies and an unincorporated business owned by William John Stottler, a fiduciary to the medical trusts
• medical trust disbursements to each other’s accounts
• failure to keep or maintain accurate records of the amount premium payments forward to the associations and thereafter distributed to the medical trusts

As of January 1996, the three medical trusts provided health care insurance to approximately 4,500 employees of participating employers throughout the state of Ohio.

Under the consent order and judgment, the defendants’ restoration of $2,292,820.38 in medical trust losses incurred as a result of the violations alleged in the department’s complaint is acknowledged. In addition, the consent judgment and order requires that an independent audit of the defendants’ books and records be completed by no later than Sept. 30, 2000, and further requires the defendants to restore all additional losses to the medical trusts as determined by the audit.

Defendants included BCEBA, MEBA and WREBA, their associated medical trusts, Stottler and Congress Insurance Agency (CIA). CIA is an unincorporated insurance agency wholly owned by Stottler, which solicited employers for membership in the associations.

"This court order not only represents the restoration of assets to the medical trusts and their participants who otherwise may have been shortchanged, but also should serve as an incentive for plan fiduciaries to perform effectively and in a manner that will not adversely impact on plan participants,” said Joseph R. Menez, Cincinnati Regional Director for the Pension and Welfare Benefit Administration of the Labor Department. “PWBA’s enforcement and regulatory arrangement under ERISA forms the federal safety net for employee benefit plan participants so that working people across America can have confidence in the financial viability and management of their employee benefit plans."

The consent order and judgment entered in the court on Sept. 27 resulted from an investigation by PWBA’s Cincinnati Regional Office into alleged violations of ERISA.

Herman v. Builders and Contractors Employee Benefit Association, et al
Civil Action 5:00CV 2413

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