Pension & Benefits News Defunct benefits administration company, officers must restore more than $28M to employer benefits plans
Tuesday, April 21, 2020

Defunct benefits administration company, officers must restore more than $28M to employer benefits plans

By Pension and Benefits Editorial Staff

The U.S. District Court for the District of Maryland has issued a summary judgment requiring defendants WH Administrators, its owner and chief executive officer (CEO) and chief operating officer to restore $28,650,604 to health and welfare plans sold to employers by the now defunct Bethesda, Maryland-based benefits administration company.

The action follows a U.S. Department of Labor Employee Benefits Security Administration (EBSA) investigation. EBSA found that fiduciaries WH Administrators, CEO Brenden Turner and Chief Operating Officer Susanne Sheil promoted, sold and administered self-funded welfare plans to more than 100 employers, and promised that – if the employers paid its premiums – all medical claims properly accrued under the plan would be paid, and that the employers would bear no additional responsibility. EBSA determined the defendants violated the Employee Retirement Income Security Act (ERISA) when they failed to act prudently and in the best interests of the plan participants and failed to provide proper plan funding. The defendants also failed to pay incurred medical expenses for claims filed by the plans' participants and engaged in multiple prohibited transactions when they collected fees and failed to inform the employers.

The summary judgment requires the defendants to restore $28,650,604 to the health and welfare plans, plus disgorge profits of $397,189 from impermissible commissions. The judge also entered a permanent injunction against the defendants that permanently prohibits them from acting – individually or collectively – as fiduciaries or service providers for any ERISA-covered employee benefit plan.

“The U.S. Department of Labor is committed to protecting the benefits of America's workers,” said Assistant Secretary of Labor for the Employee Benefits Security Administration Preston Rutledge. “We will continue to aggressively pursue and hold accountable those who misuse assets intended for health insurance purposes.”

“Now more than ever, employers and employees must be able to rely on promised healthcare benefits,” said Solicitor of Labor Kate S. O'Scannlain. “The U.S. Department of Labor stands prepared to hold those who offer sham healthcare arrangements accountable for the losses related to unpaid health claims.”

Source: DOL News Release, No. 20-549-PHI.

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