US Labor Department files suit against Pro Systems Corp. Group Health Plan for Failing to Disclose Use of Health Care Fees Charged to its Clients

Pro Systems Corp. Group Health Plan

Date of Action: April 29, 2014

Type of Action: Complaint

Names of Defendant: Pro Systems Corp., Pro Resources Corp., MICROPRO Inc., James Piche, Michael Brodsho, Pro Systems Corporation Group Health Plan 

Allegations: Pro Systems, PRO Resources and MICROPRO violated the Employee Retirement Income Security Act by failing to disclose to clients that some fees collected for insurance costs for the Pro Systems Corporation Group Health Plan were used for non-health plan purposes. The Pro Systems Corp. Group Health Plan provided health care services for clients of Pro Systems, PRO Resources and MICROPRO, a trio of professional employer organizations based in Detroit Lakes, which administer benefit programs for the employees of client companies. 

An investigation by the Employee Benefits Security Administration found that Pro Systems Corp., which was the plan administrator of the Pro Systems Corp. Group Health Plan, its Chief Operating Officer James Piche and Chief Executive Officer Michael Brodsho, directed the collection of an “other insurance costs” fee, ranging between $80 to $160 monthly per participating employee, from its client companies between Jan. 1, 2006, and Dec. 31, 2011. The companies, Pro Systems, PRO Resources and MICROPRO, retained those fees in the company’s general operating funds.

Additionally, both Pische and Brodsho improperly directed the transfer of a total of $245,000 in funds from the health plan assets to the accounts of PRO Resources and Pro Systems. Additionally, on May 24, 2006, Piche transferred $25,000 in health plan assets to himself.

Resolution: The lawsuit seeks an accounting by Pro Systems, PRO Resources and MICROPRO, Piche and Brodsho of all transactions and losses to the Pro Systems Corp. Group Health Plan, including all unjust enrichment or profits resulting from their fiduciary breaches and to require the defendants to make good on those losses and repay any profits received. The suit also seeks to enjoin each defendant from serving as a fiduciary to any ERISA covered benefit plan in the future and to require the companies to disclose in detail to former, current and future clients information concerning the amounts retained for “other insurance costs” and fees.

Court: United States District Court for Minnesota

Docket Number: 14-cv-1326

U.S. Department of Labor materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling (202) 693-7828 or TTY (202) 693-7755.