US Labor Department files lawsuit to appoint independent fiduciary to administer employee benefit plan of defunct health care company

Date of Action: April 29, 2016

Type of Action: Employee Retirement Income Security Act Lawsuit

Names of Defendants: Shirley T. Sherrod, Leroy Johnson, Shirley T. Sherrod M.D., P.C., Target Pension Plan

Allegations: An investigation by the U.S. Department of Labor’s Employee Benefits Security Administration found that Shirley T. Sherrod and Leroy Johnson violated the Employee Retirement Income Security Act by failing to properly account for funds and distribute assets to eligible participants in the Target Pension Plan who were employees of Shirley T. Sherrod, M.D., P.C. The former Southfield, Michigan -based company was dissolved on Dec. 31, 2008. Since at least 2013, the plan has been administered from an address in Waukegan, Illinois.  There are 18 participants in the plan and, as of Dec.  31, 2014, the plan reported $1,762,150 in assets.

Sherrod was the named trustee of the Target Pension Plan since its establishment in 1987. She appointed Johnson as plan administrator on May 30, 2012. Since his appointment, no plan participants or beneficiaries have been able to obtain distributions of their individual plan account balances with the exception of Sherrod.

In 2011, 2012, 2013 and 2014, Sherrod received distributions from the Target Pension Plan totaling $598,905. Neither Sherrod nor Johnson correctly accounted for the distributions in the plan’s records. Sherrod has continued to withdraw funds from the plan since Jan. 1, 2015.

Resolution: The complaint seeks a judgment:

• Removing Sherrod and Johnson from their positions as fiduciaries to the Target Pension Plan.
• Enjoining Sherrod and Johnson from serving as fiduciary or service providers to any ERISA covered plan.
• Ordering Sherrod to pay all reasonable fees and expenses incurred by the independent fiduciary in administering and terminating the plan and setting off Sherrod’s plan account for such expenses.
• Appointing an independent fiduciary to administer the plan, determine the correct value of each participant’s account, issue distributions and terminate the plan.

Court: United States District Court for the Northern District of Illinois, Eastern Division

Docket Number: 1:16-cv-04825

Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Additional information can be found at http://www.dol.gov/ebsa/.