Flying Food Group will reimburse health plan participants more than $134K for diagnostic deductibles, tobacco surcharges, after federal investigation

CHICAGO – A Chicago food service provider for major airlines has agreed to reimburse $134,222 to participants in the company’s employee health plan after federal investigators found the employer improperly charged employees deductibles for certain diagnostic tests and wrongly imposed tobacco surcharges.

On Sept. 13, 2023, U.S. District Court Judge Edmond E. Chang in the Northern District of Illinois’ Eastern Division entered a consent order and judgment requiring Flying Food Group to reimburse affected Flying Food Group LLC Welfare Benefit Plan participants within 110 days. The court’s action follows a lawsuit filed by the Department of Labor’s Office of the Solicitor in Chicago on Aug. 30, 2023.

The court also ordered the company to pay a penalty of $13,422 for violating the Employee Retirement Income Security Act by failing to comply with the health plan’s governing documents and federal regulations. 

An investigation by the department’s Employee Benefits Security Administration found Flying Food Group owed the affected employees $117,562 after the company incorrectly imposed deductibles on certain diagnostic claims, including those for non-routine mammograms. The health plan’s governing documents did not allow those deductibles to be imposed. 

EBSA determined the company also violated federal regulations when it made plan participants pay a premium surcharge when they disclosed their tobacco use on health benefit enrollment forms. The company did not inform the plan participants that a reasonable alternative existed that would allow them to avoid paying the surcharge. The court judgment requires Flying Food Group to pay $16,660 to those affected participants.

EBSA’s investigation of the plan’s improper handling of certain outpatient diagnostic services and mammograms spanned from Jan. 7, 2013 through Dec. 31, 2017. The review also included the company’s imposition of tobacco surcharges from Jan. 1, 2011 through April 30, 2018. 

“Flying Food Group’s actions unfairly penalized participants who disclosed tobacco usage and imposed higher deductibles for those in need of certain outpatient diagnostic tests, including non-routine mammograms. Our investigators found these actions did not align with health plan information provided to participants,” explained Regional Director Ruben R. Chapa in Chicago.

Before agreeing on the consent order and judgment, Flying Food Group LLC reimbursed its health plan participants an additional $79,780 for tobacco surcharge payments and $5,164 for outpatient diagnostic and non-routine mammogram charges. 

“Fiduciaries are responsible to ensure plan participants’ benefits are administered properly,” Chapa added. “The Department of Labor is committed to making sure that participants in employee benefit plans receive their medical benefits.”

“The Department of Labor will take all necessary legal action to ensure fiduciaries and service providers comply with the standards of the Employee Retirement Income Security Act,” said Regional Solicitor of Labor Christine Heri in Chicago.

Founded in 1983, Flying Food Group is a privately owned catering service provider for leading U.S. and international airlines. The company generates $420 million in annual revenue and provides services at 15 metropolitan U.S. airports. 

Su v. Flying Food Group LLC 

U.S. District Court for the Northern District of Illinois, Eastern Division

Civil Action No: 1:23-cv-06583