Owners Of Home Health Care Agency Resolve Suit Over Pension Plan

Archived News Release — Caution: Information may be out of date.

Dallas, Texas - The owners of defunct Texas-based Celeste Healthcare Services Inc. must waive their rights to benefits from the company’s pension plan to offset $289,524 in losses suffered as a result of prohibited loans made by the plan to the company and its affiliate, according to consent judgments obtained October 3, 2001, by the U.S. Department of Labor.

Under the judgments, defendants Michael C. Grady, Barbara Powell Grady, Celeste Healthcare Services Inc. and C&C Healthcare Services Inc. acknowledge that as fiduciaries to the pension plan they caused $289,524 in financial losses to the plan. The judgments bar the defendants from serving in positions of trust to any plan governed by the Employee Retirement Income Security Act (ERISA).

Michael Grady and his wife Barbara Grady were members of the board of directors of Celeste Healthcare Services. Both companies have gone out of business. Celeste Healthcare Services was a home health care agency operating in three locations in Texas: Bay City, Mount Bellview and Liberty. The company sponsored the employee stock ownership plan for as many as 94 participants. At the end of 1999, the plan held $238 in assets.

A suit filed February 28, 2001, alleged that the defendants violated ERISA by making $215,000 in unsecured loans from the plan to Celeste Healthcare Services and C&C Healthcare Services between 1996 and 1997. The loans were never repaid to the plan.

“The department is committed to protect the hard-earned benefits promised of workers," said Roger Hilburn, acting director of PWBA’s Dallas Regional Office. “Employers and workers can reach us at 214.767.6831 for help with any problems relating to private-sector pension and health plans.”

This lawsuit resulted from an investigation conducted by the Dallas Regional Office of the Labor Department’s Pension and Welfare Benefits Administration into alleged violations of ERISA. The judgments were entered in federal district court in Austin, Texas.

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7775.

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