U.S. Labor Department bars Raymond Palombo from running federally-regulated health plans

San Francisco — The U.S. Department of Labor has obtained a court order permanently barring Raymond Palombo of Riverside, California, from serving in a fiduciary or service provider capacity to any employee benefit plan governed by the Employee Retirement Income Security Act (ERISA). Palombo and other defendants were sued by the department when they left thousands of workers and their families in Arizona, Georgia, Illinois, Texas and other states with unpaid health claims.

The order, entered in federal district court in Atlanta, requires Palombo to give the Labor Department the names and current addresses of any person or entity he used to solicit participants for the Manufacturing and Industrial Workers Union (MIWU) Benefit Fund in Bryan, Texas; furnish a copy of the court order to those persons and entities; and post a copy of the order on his Web site.

“Workers have been unjustly saddled with unpaid health claims,” said Phyllis Borzi, assistant secretary of the Labor Department’s Employee Benefits Security Administration (EBSA). “The department is pursuing every legal means to prevent this defendant from misusing plan assets in the future.”

On June 13, 2008, the department sued Palombo, Mitchel Coneley, Leonard Steinberg, the Contractors and Merchants Association, and Small and Independent Business Associates (SIBA) for violating ERISA. The defendants allegedly transferred participants and their unpaid health claims to the MIWU fund despite knowing that the fund was not financially solvent. On June 9, 2009, the court granted a default judgment against all of the defendants except Palombo that found them liable for all claims against them and barred them from future involvement with ERISA-covered plans.

The court ruled on October 26, 2009, that all of the defendants are liable for $2,958,681.36 in losses incurred by the MIWU fund.

EBSA’s Los Angeles Regional Office investigated the case. Employers and workers can reach that office at 626.229.1000 or toll-free at 866.444.3272 for help with problems relating to private sector retirement and health plans. Copies of the legal documents will be available in the near future on EBSA’s Web site at www.dol.gov/ebsa. Tips on purchasing health benefits may be found at www.dol.gov/ebsa/newsroom/fshlthinstips.html.

Solis v. Palombo
Civil Action Number 1:089-CV-2017

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