US Labor Department sues owner of defunct Mass. & RI company to restore more than $6.6 million in misused funds owed to company pension plan

BOSTON – The U.S. Department of Labor has sued Fathalla M. Mashali, owner and president of the now defunct Northern Rhode Island Anesthesia Associates P.C. and its subsidiaries, for failing to forward more than $6 million in contributions plus interest owed to the company’s pension plan, in violation of the Employee Retirement Income Security Act. The company operated subsidiaries throughout Massachusetts and Rhode Island.

“The flagrant misuse of pension assets to subsidize corporate activities jeopardizes the retirement security of workers and will not be tolerated,” said Secretary of Labor Hilda L. Solis. “Our action today is designed to restore the plan assets that were not properly preserved for the company’s employees.”

The lawsuit was filed in the U.S. District Court for the District of Massachusetts following an investigation by the Labor Department’s Employee Benefits Security Administration. NRIAA was a private corporation that performed administrative and billing functions for its various subsidiary corporations, primarily anesthesia and pain treatment practices, including: Blackstone Valley Emergency Physicians Associates P.C., Anesthetics of Massachusetts P.C., Northern Rhode Island Medical Group P.C., Helios Medical Group Inc., Northern Rhode Island Endoscopy P.C., New England Pain Associates P.C., Anesthetics of Lowell P.C., Anesthetics of Brockton P.C., Anesthetics of Worcester P.C., Anesthetics of Nantucket P.C., New England Cardiac Anesthesia Associates P.C., Anesthetics of Lawrence P.C. and Anesthetics of New Hampshire P.C.

On Aug. 4, 2001, NRIAA established the Northern Rhode Island Anesthesia Associates Retirement Plan and Trust to provide retirement benefits for the employees of NRIAA and its subsidiary corporations that adopted the plan as participating employers. The company was the plan sponsor and administrator, and Mashali was the plan’s trustee.

The Labor Department’s suit alleges that Mashali failed to take appropriate measures to collect and remit all employer contributions due to the plan, and to ensure that withheld employee contributions were properly forwarded to the plan account during plan years 2006 through 2008. The suit alleges that the contributions were diverted to benefit NRIAA, its subsidiaries and Mashali. As a result, contributions totaling $6,632,047.40, plus interest, are owed to the plan. Mashali filed for bankruptcy in December 2008.

The department’s suit asks the court to permanently bar Mashali from serving as a fiduciary to this plan or any other employee benefit plan covered by ERISA, to require him to undo any transactions prohibited by law and to restore to the plan all losses with interest that resulted from breaches of his fiduciary duties. The suit also asks the court to require Mashali to appoint an independent fiduciary to administer the plan for the benefit of its participants.

This case is part of EBSA’s employee contribution project to safeguard workers’ contributions to 401(k) and health benefit plans. Employers and workers can contact the Boston EBSA office at 617-565-9600 or toll-free at 866-444-3272 for help with any problems relating to private sector pension and health plans. Additional information can be found at http://www.dol.gov/ebsa.

Solis v. Fathalla M. Mashali

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