Judge orders Pro Systems Corp. Group Health Plan to repay more than $200,000 to clients for failing to disclose use of health care fees

MINNEAPOLIS — A consent judgment entered in the U.S. District Court for the District of Minnesota has returned a total of $203,212 to clients of the Pro Systems Corp. Group Health Plan. The company provided health care services for clients of Detroit Lakes-based Pro Systems, PRO Resources and MICROPRO. The judgment resolves a lawsuit filed by the U.S. Department of Labor alleging violations of the Employee Retirement Income Security Act for failing to disclose to clients that some fees collected for insurance costs were used for nonhealth plan purposes.

"The law requires that health plan fiduciaries use all monies collected for health plan premiums for the exclusive purpose of providing benefits to plan participants," said James Purcell, regional director for the Employee Benefits Security Administration in Kansas City, Mo., whose office conducted the investigation. "By ignoring the best interests of those participants, the defendants didn't simply break the law; they violated the faith of employer clients and their workers who trusted them to manage their health care plans."

An investigation by the department's EBSA found that Pro Systems Corp., and 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 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 their general operating funds.

In addition to restoring the funds, Pro Systems, PRO Resources, MICROPRO, Piche and Brodsho are each enjoined from serving as a fiduciary or service provider to any self-funded ERISA-covered employee benefit plan in the future. An independent fiduciary will be appointed to distribute the settlement amount to the client employers.

The case was litigated by the department's Regional Office of the Solicitor in Chicago following an investigation by the EBSA Kansas City, Mo., office. Employers and workers can contact EBSA's Kansas City office at 816-285-1800 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit http://www.dol.gov/ebsa/.

###

Perez v. Pro Systems Corp., PRO Resources Inc., MICROPRO, James Piche, Michael Brodsho, Pro Systems Corp. Group Health Plan Civil Action Number: 14-cv-01326-ADM-LIB