Former Foxboro, Massachusetts Nursing Home Company and President Agree to Pay Outstanding Employee Medical Claims as the result of U.S. Labor Department Lawsuit

Archived News Release — Caution: Information may be out of date.

Boston, Massachusetts - Volonte Care, Inc. of Foxboro, Massachusetts, and company president Robert Michael Whitty have agreed to pay $35,500 in outstanding medical bills for former employees of the now-defunct nursing home and home healthcare company to settle a lawsuit filed by the U.S. Department of Labor.

According to James Benages, Boston regional director for the Labor Department’s Employee Benefits Security Administration (EBSA), both the lawsuit and a consent judgment were filed with the U.S. District Court for the District of Massachusetts on February 20. The suit alleged violations of the federal Employee Retirement Income Security Act (ERISA) that protects pension and benefit plans.

The lawsuit noted that Volonte Care, Inc., sponsored the self-funded Volonte Care, Inc. Health Care Plan from January 1 through August 31, 1999 to provide medical benefits for company employees and their beneficiaries. Whitty administered the plan, to which participants made bi-weekly contributions as premiums for medical coverage.

Benages noted that, as early as April 21, 1999, the plan experienced difficulty in paying participants’ medical claims, however, the company and its president issued two notices to participants asserting that all medical bills would be paid. The notices were issued at a time when the company and its president knew or should have known that the medical bills would not be paid. They continued to accept participant contributions although they could no longer provide the promised coverage. In the end, the vast majority of medical claims incurred by participants from January through August 1999 went unpaid and became the participants’ own financial liabilities.

“The law clearly requires those who administer employee benefit plans to do so in a careful, prudent and honest manner solely for the benefit of participants,” Benages said. “ A situation like this where promised benefits are never paid while employee contributions continue to be collected is totally unacceptable”
U.S. District Judge Edward F. Harrington signed the consent judgment on February 25, requiring the defendants to pay all covered and outstanding medical claims of plan participants and to reimburse them for out-of-pocket expenses that the plan should have paid. The defendants have established a $35,500 escrow fund for this purpose.

The judgment also prohibits future violations of ERISA by the defendants and requires them to report to the Labor Department on their progress in meeting its terms. After administration of medical claims as required by the consent judgment, Robert Michael Whitty is enjoined from serving as a fiduciary to any ERISA-covered plan.

This case was investigated by the Boston regional office of the Employee Benefits Security Administration. Employers and workers can contact the regional office at 617.565.9600 or EBSA’s toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector pension and health plans.

(Chao v. Robert Michael Whitty and Volonte Care, Inc.
Civil Action No. 03-103-31-EFH)

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