Labor Department Sues Alabama Association And Plan Official For $4.15 Million In Fees, Commissions And Loans

Archived News Release — Caution: Information may be out of date.

Atlanta, Georgia - The U.S. Department of Labor has sued Decatur, Alabama-based Employers Underwriters, Inc. (EUI), the Southeastern Lumberman’s Association, Inc. (SLA) and its owner for improperly receiving at least $4.15 million in commissions, fees, expenses and loans from plans they administered.

The five plans, labeled Southeastern Lumberman’s Association Benefit Plan and Trust Number 1, 2, 3, 4 and 5 and identical except for the geographic areas they cover, provided benefits for work-related injury, illness or death to employees and eligible employee dependents of participating employers. Defendant Roel B. Nabors founded SLA to market insurance coverage to employers in high-risk industries. He also works as an insurance agent selling accident, death and dismemberment (AD&D) policies to the plans. Employers gained access to the plans by joining SLA and paying EUI to cover AD&D; insurance premiums, insurance commissions to EUI and Nabors and fees and expenses charged to be plans the EUI and Nabors.

The department alleges in its lawsuit that Nabors and EUI received at least $3 million in insurance commissions from plan contributions made by employers since March 1, 1995 as well as $656,000 in fees and expenses that EUI and Nabors charged the plans. The complaint also alleges that EUI and Nabors arranged for plan loans in the amount of $890,618 between January 1993 and July 1997. As of July, 1999, $500,000 of the loans had not been repaid to the plans. EUI and Nabors also allegedly caused the plans to transfer additional plan assets between plans as loans.

The department is asking the court to remove EUI and Nabors from their positions as fiduciaries, to bar them from serving as fiduciaries to any employee benefit plan subject to ERISA and to appoint an independent fiduciary to take over the operation of the five plans. The lawsuit also seeks to have Nabors, EUI and SLA restore all losses to the plans, including interest, for their fiduciary breaches.

“Our goal is to assure that consumers know the department is only a phone call away to help protect the benefits promised by employers,” said Howard Marsh, director of the Atlanta Regional Office of the department’s Pension and Welfare Benefits Administration, which conducted the investigation. “Employers and workers can reach us in Atlanta at 404.562.2156 for help with any problems relating to pension and health plans provided in the private sector.”

The complaint was filed September 27 in the federal district court in Decatur, Alabama.

(Chao v. Employers Underwriters, Inc., Roel B. Nabors, and Southeastern Lumberman’s Association, Inc.
Civil Action No. 5:01cv02435)

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