SAI MED Health Plan Officials Barred From Serving ERISA Plans

Archived News Release — Caution: Information may be out of date.

Philadelphia, Pennsylvania - Two officers of a Rockville, Maryland-based claims-processing firm that failed to pay more than $1.6 million in claims before going out of business last year will never again serve as fiduciaries to any employee benefit plan covered by the federal law that protects workers’ pensions and benefits, under terms of a consent judgment obtained December 21 by the U.S. Department of Labor.

SAI MED Health Plan, LLC and Samuel Kreiter and Martin Sonnenberg also were barred for 15 years from serving ERISA plans in any service provider capacity.

The judgment confirmed that $400,000 will be paid to the independent fiduciary, David Silverman of the New York firm of Granik, Silverman, Campbell & Hekker, who has been managing the organization since a temporary restraining order removed Kreiter and Sonnenberg as plan officials in February. The restitution will be combined with other assets collected by Silverman and used to help pay outstanding health claims.

At the time the temporary restraining order was issued, SAI MED, Kreiter and Sonnenberg were alleged to have owed at least $1.6 million in outstanding health claims to participants in several states including Maryland, Virginia and West Virginia.

Prior to 1999, SAI MED was a multiple employer welfare arrangement marketing its services to employers. The company pooled the premiums of client employers to cover all claims. In 1999, SAI MED began to sell a self-insured welfare plan to employers, designed to include the purchase of stop-loss insurance to pay employees’ health claims in excess of the attachment point. The company collected health benefit premiums and processed claims of an estimated 4,000 employees of 200 sponsoring employers at various times.

SAI MED set its own compensation and paid its bills, including salaries of Kreiter and Sonnenberg, while claims remain unpaid. At the end of 2000, SAI MED had approximately $276,000 in its accounts. SAI MED ceased operations on February 1, 2001, without prior notification to plan clients. At the time, the company had processed and was holding at least $1.6 million worth of claims checks in its offices for unpaid claims dating back to as early as November 1999.

The judgment, entered in the federal district court in Greenbelt, Maryland, resulted from an investigation conducted by the Washington District Office of the department’s Pension and Welfare Benefits Administration into alleged violations of the Employee Retirement Income Security Act (ERISA).

(Chao v. SAI MED Health Plan
Civil Action No. 01-CV-325)

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