Connecticut employee benefit plan administrator and officers agree to distribute more than $337,000 to health plan clients to resolve U.S. Labor Department lawsuit

Archived News Release — Caution: Information may be out of date.

Hamden, Connecticut – Associated Plan Administrators Inc. (APA) of Hamden and two company officers have agreed to distribute more than $337,000 to certain employee welfare benefit plan clients to settle a lawsuit filed by the U.S. Department of Labor. A consent judgment resolves allegations that the defendants used welfare plan assets for their own benefit, and the company failed to sufficiently disclose all of its rebate arrangements and other compensation to clients.

APA is a third party administrator of self-insured welfare benefit plans set up by various employers to provide health benefits to 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.

Named as defendants in the suit, filed in the U.S. District Court for the District of Connecticut, were APA, president Lewis Panzo and officer Dennis Erne. The defendants allegedly violated the Employee Retirement Income Security Act (ERISA), the federal law that protects private sector employee benefit plans, participants and beneficiaries. They allegedly retained for their own use money from checks issued to health care service providers that went uncashed, rebates received from a pharmacy benefit manager and payments they received from the pharmacy benefit manager. The last payments in this list were based on the number of pharmacy benefit claims and the value of pharmacy benefits provided to participants in the health plans administered by APA. The suit alleged that none of these payments were disclosed to APA’s client benefit plans.

“The law prohibits those entrusted with the assets of employee benefit plans from misusing those funds,” said Bradford P. Campbell, assistant secretary of the Labor Department’s Employee Benefits Security Administration (EBSA). “Our legal action will ensure that APA reimburses the plans of client employers so funds are available to pay the health claims of workers and their families in the future.”

In addition to the restitution, the judgment orders the defendants to “fully, fairly and plainly disclose” all fees to be charged in connection with services provided to any employee welfare benefit plan, disclose all other sources of income received in connection with those services and pay a civil penalty of $33,763 to the department.

This case was investigated by the Boston Regional Office of EBSA. Employers and workers can contact the Boston office at 617.565.9600 or toll-free at 1.866.444.EBSA (3272) for help with any problems relating to private sector pension and health plans. In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Chao v. Associated Plan Administrators
Civil Action Number: 3:07-CV-1479-PCD

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