Employee Benefit Plan Administrator Agrees To Distribute Nearly $250,000 To Health Plan Clients To Settle Labor Department Lawsuit

Archived News Release — Caution: Information may be out of date.

Boston, Massachusetts - Associated Plan Administrators, Inc. (APA) of Hamden, Connecticut, and the company’s two officers have agreed to distribute nearly $250,000 to certain employee welfare benefit plan clients in order to settle a lawsuit filed by the U.S. Department of Labor charging that the company failed to sufficiently disclose all of its service fees to its clients.
A consent judgment and order, signed by U.S. District Judge Robert N. Chatigny on May 29, resolves the department’s lawsuit which alleged violations of the Employee Retirement Income Security Act (ERISA), a law that protects the interests of employee benefit plans and their participants and beneficiaries.

APA is a third party administrator of self-insured health benefit plans set up by various employers for the benefit of their employees. In this capacity, APA receives funds from the employers designated for these health benefit plans and retains its own service fees from these funds.

According to James Benages, Boston regional director for the department’s Pension and Welfare Benefits Administration, the department’s lawsuit alleged that monies retained by APA as fees for access to preferred provider organizations (PPOs) had not been fully and fairly disclosed to APA’s clients.

By the terms of the consent judgment filed in the U.S. District Court for the District of Connecticut, APA, company president Lewis Panzo and company officer Dennis Erne agree to pay a total of $247,524.75 to be distributed among certain client companies that were charged fees for access to PPOs providing health services networks during the period January 1, 1996 to July 31, 2001. A separate agreement incorporated into the consent judgment provides that APA will pay the owed money into a “settlement account” in three installments, with the final payment due no later than November 15, 2002.

In the meantime, according to Benages, APA, Panzo and Erne must identify all of the health benefit plans eligible to receive distributions under this settlement and calculate the amount each plan is due. Finally, the defendants must distribute the amounts due, including post-judgment interest, to the eligible plans by December 16.

The judgment requires future administrative services contracts entered into between APA and employee benefit plans to clearly disclose all fee arrangements for services provided by APA, and requires APA to adopt billing and reporting procedures that are consistent with these agreements and that disclose when amounts billed include fees. The defendants agreed to the entry of the consent judgment while neither admitting nor denying the allegations contained in the Labor Department’s lawsuit.

The department’s legal action followed an investigation by the Boston regional office of the Pension and Welfare Benefits Administration, located in Room 575 of the John F. Kennedy Federal Building in Boston. The telephone number is 617.565.9600. Long distance callers may reach the office through PWBA’s Toll-Free Employee & Employer Hotline: 1.866.275.7922.

(Chao v. Lewis Panzo, Dennis Erne, and Associated Plan Administrators, Inc.
Civil Action No. 3:02CV885RNC)

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