U.S. Department Of Labor Files Complaint to Protect Participants And Beneficiaries of Failing Medova MEWA Operating in 38 States

KANSAS CITY, MO – The U.S. Department of Labor filed a complaint in U.S. District Court for the District of Kansas against Wichita, Kansas-based Medova Healthcare Financial Group LLC, its president and CEO Daniel L. Whitney, chief operating officer Michelle Willson and Midlands Casualty Insurance Co. Inc. concerning the Medova Multiple Employer Welfare Arrangement (MEWA) and the employer-sponsored employee benefit plans participating in the MEWA that are covered by the Employee Retirement Income Security Act (ERISA).

An investigation by the Department’s Employee Benefits Security Administration (EBSA) alleges that the defendants’ misuse of the Medova MEWA’s funds has created a critical funding deficiency for Lifestyle Health Plans, which EBSA previously determined to exceed $18 million.

As of Nov. 6, 2020, the Medova MEWA provided benefits and held assets for at least 2,600 participating health plans serving more than 35,000 employees in 38 different states.

“The critical funding deficiency leaves thousands of Medova Multiple Employer Welfare Arrangement participants and beneficiaries without the health benefits they were promised when they made contributions to the plan,” said Acting Assistant Secretary of Labor for the Employee Benefits Security Administration Jeanne Klinefelter Wilson. “The alleged violations of the Employee Retirement Income Security Act by the Medova defendants have caused significant harm to the plans and participants. The U.S. Department of Labor is committed to protecting employee’s benefits and ensuring fiduciaries comply with federal law.”

The complaint alleges that the Medova defendants – acting as fiduciaries for the underlying ERISA-covered plans – violated several provisions of ERISA. Specifically, the Medova defendants allegedly commingled funds, diverted funds to corporate accounts and other companies they controlled, and used funds belonging to one plan to pay the claims of another. The Department alleges the defendants made material omissions to current and prospective participating employers regarding the MEWA’s failure and its ability to pay claims, as well as the overall financially hazardous condition of the MEWA. Lastly, the complaint alleges that the Medova defendants failed to file the Form M-1 on an annual basis for the Medova MEWA, as required under ERISA. The Form M-1 provides custodial and financial information on MEWAs as well as information on ERISA compliance.

The complaint seeks to have the Medova defendants removed and barred from serving as fiduciaries or service providers to the individual employer plans that participate in the Medova MEWA, established by the defendants and the appointment of an independent fiduciary to oversee the MEWA’s operations, marshal and control the assets of the plans as it relates to the underlying participant plans, perform an accounting of the MEWA’s financial position, determine the MEWA’s ability to pay outstanding participant health claims and work to negotiate and pay outstanding health claims and provide sufficient notice of the MEWA’s termination, if such termination is deemed appropriate. By doing so, participating employers and employees will have an opportunity to obtain new health, dental, vision and prescription drug coverage that the Medova MEWA had offered.

The complaint also asks the court to require the defendants to disgorge to the Medova MEWA all profits and fees and other monies earned in connection with their violations.

Medova MEWA and Lifestyles Health Plan participants with unpaid medical claims may contact EBSA at 866-444-3272.

EBSA’s mission is to assure the security of the retirement, health and other workplace related benefits of America’s workers and their families. EBSA accomplishes this by developing effective regulations; assisting and educating workers, plan sponsors, fiduciaries and service providers; and vigorously enforcing the law.

The mission of the Department of Labor is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.

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Scalia V. Daniel L. Whitney; Michelle Willson; Medova Healthcare Financial Group LLC; Midlands Casualty Insurance Company Inc.; et. al.

Civil Case No. 2:20-cv-02624-TC-ADM