U.S. Department of Labor sues closed Seatoma Convalescent Center to give 401(k) participants access to almost $14,000 in retirement funds

Seattle – The U.S. Department of Labor has sued Seatoma Convalescent Center of Des Moines, Washington, to give workers access to nearly $14,000 in profit-sharing trust assets. The nursing home facility allegedly failed to fulfill its fiduciary duties to participants covered by the plan.

The lawsuit, filed in the U.S. District Court for the Western District of Washington, alleges that the company failed to take sufficient steps to provide for the prudent and complete termination of its 401(k) plan after the company ceased operations.

The suit asks the court to appoint an independent fiduciary to administer the plan in order to complete the termination and distribution of plan assets to participants and beneficiaries.

“Abandoning the plan results in abandoning the workers who invested in it,” said Billy Beaver, regional director in San Francisco for the Labor Department’s Employee Benefits Security Administration (EBSA), whose Seattle District Office investigated the case. “We took this legal action so the plan participants can access their retirement funds.”

The Labor Department has issued rules to facilitate a voluntary, safe and efficient process for terminating businesses of abandoned plans. The rules allow financial institutions holding assets of abandoned plans to take responsibility and distribute the assets to affected workers and their families. In cases where the involved financial institutions decline that role, an independent fiduciary can be appointed to finalize the plan’s business. The department estimates that 1,650 such plans are abandoned each year. Information about the rules is available under the Abandoned Plan Program section of EBSA’s Web site at www.dol.gov/ebsa.

Employers and workers can contact the agency’s Seattle office at 206.553.4244 or EBSA’s toll-free number, 866.444.3272, for help with problems relating to private sector pension and health plans.

In fiscal year 2008, EBSA achieved monetary results of $1.2 billion related to the pension, 401(k), health and other benefits for millions of American workers and their families.

Secretary of Labor v. Seatoma Convalescent Center Inc.
Civil Action Number 2:09-CV-00227-JLR

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