US Labor Department sues fiduciaries of Northampton, Mass., health plan for unremitted contributions, unpaid healthcare claims

Date of Action: January 23, 2015

Type of Action: Complaint

Names of Defendants: Northampton Motor Classics LLC and Andrew Feuerstein

Allegations: Northampton Motor Classics LLC, a Northampton, Massachusetts auto dealership, sponsored the Northampton Motor Classics Health Plan to provide health benefits for participating company employees. The plan was funded through amounts withheld from employee paychecks as contributions to the plan and from employer contributions. Andrew Feuerstein, the company’s owner and president, was a plan fiduciary, with responsibility for ensuring that the withheld contributions were forwarded to the plan and that health coverage premiums were paid. The company, which also functioned as a fiduciary to the plan, went out of business in or about July 2012, but still exists as a legal entity.

An investigation by the U.S. Department of Labor’s Employee Benefits Security Administration found that the defendants violated the Employee Retirement Income Security Act by failing to remit withheld employee contributions to the plan, failing to pay health premiums in order to maintain coverage for plan participants, and failing to inform participants that it had stopped paying the premiums.

Specifically, Feuerstein and the company ceased paying premiums to health carriers Health New England and Fallon Community Health Plan, causing each to terminate coverage (HNE in November 2011 and Fallon in July 2012), and did not inform plan participants of the lapses in coverage until February 2012 (HNE) and July 2012 (Fallon). During these periods, the defendants withheld a total of about $10,625.76 in contributions from at least 11 employees, diverting it to their own use; seven plan participants received health care services unaware that the plan would not cover them. The participants were subsequently billed for $13,048.85 in medical costs.

Resolution: The Labor Department is asking the court to order the defendants to undo any prohibited transactions, disgorge any profits that resulted, restore all losses plus interest to the plan. and compensate plan participants for any medical expenses that resulted from the defendants’ misrepresentation. It also seeks to permanently enjoin Feuerstein from ever again serving as a fiduciary to an ERISA-covered plan and have the court appoint an independent fiduciary to administer the plan.

Court: U.S. District Court for the District of Massachusetts.

Docket Number: 3:15-cv-30013

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