Pension & Benefits News Defunct airline must pay former employees $219,716 to restore health plan losses
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Friday, November 30, 2018

Defunct airline must pay former employees $219,716 to restore health plan losses

By Pension and Benefits Editorial Staff

The U.S. District Court for the District of Nevada has approved a consent judgment between the U.S. Department of Labor and Vision Airlines Inc. that requires the now-defunct company to pay $219,716 to former employees for violations of ERISA in connection with their health plan. Vision Airlines Inc.; Vision Airlines Inc. Health and Welfare Plan; and fiduciaries William Acor and Shelley Lynne have also been assessed a civil penalty of approximately $44,000.

Following an investigation by the Department's Employee Benefits Security Administration (EBSA), the Department's Office of the Solicitor filed a complaint on April 16, 2018, alleging that fiduciaries to the Vision Airlines Inc. Health and Welfare Plan violated ERISA when they failed to forward withheld employee contributions and COBRA payments to the company's health and welfare plan. In addition, the defendants failed to pay their share of health insurance premiums and failed to provide participants with timely notice that they were at risk of losing their insurance coverage. As a result, the health insurance was retroactively canceled, leaving some employees with large, unpaid medical expenses.

"The U.S. Department of Labor is committed to protecting the benefits of America's workers," said Department's Employee Benefits Security Administration Regional Director Klaus Placke, in San Francisco. "We will not hesitate to act to hold accountable those who misuse assets intended for workers' health insurance."

The judgment orders the defendants to pay $106,182.98 in plan losses in the form of outstanding employee contributions and COBRA payments to the plan, which includes lost opportunity costs. The court has also ordered the defendants to pay $113,534.00 in plan participants' uncovered medical claims resulting from their loss of health insurance due to the nonpayment of premiums by plan fiduciaries, and permanently enjoined the defendants from engaging in any further violations of ERISA. It also permanently bars William Acor from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan, and bars Shelley Lynne from serving as a fiduciary or service provider to an ERISA-covered employee benefit plan for two years.

Under ERISA, fiduciaries are responsible for operating employee benefit plans solely in the interest of participants and beneficiaries. EBSA's mission is to assure the security of the retirement, health and other workplace related benefits of America's workers and their families.

SOURCE: www.dol.gov

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