DoL Sues New Jersey Licensed Beverage Association over ERISA Violation

November 23, 2004 ( - The Department of Labor (DoL) is suing the trustees, plan administrators and other fiduciaries of the New Jersey Licensed Beverage Association health plan for failing to pay more than $6 million in health claims.

>In a press release, the DoL announced that it has filed suit in federal district court in Newark, alleging that the defendants violated the Employee Retirement Income Security Act (ERISA) by failing to maintain an appropriate funding level to pay benefits between 1998 and 2003. The suit, Chao v. New Jersey Licensed Beverage Association, alleges that there was not adequate contribution rates to support benefit payments, resulting in over $6 million in unpaid health benefits to members of the plan, which includes 3,895 employees in the bar and restaurant industry in New Jersey.

>The suit names as defendants the New Jersey Licensed Beverage Association, Inc.; plan administrator Midlantic Healthcare, Inc. and its vice president Stephan DiTomasso; former plan trustees Melvin Gitler, Robert Scerbo, Phil Citta, William Cleary, Robert Marciani, Joseph Ardire, Richard Bellshot, James Hill, Michael Marsh, Lewis Rothbart, Frank Zanotti, and Ann Smulewicz; and plan fiduciaries Randy Normand and Mary Roenick.  

The suit alleges that DiTomasso and the plan administrator did not provide information to the trustees and fiduciaries regarding the plan’s financial condition, and did not manage the plan in a sound manner. The plan fiduciaries are accused of failing to remove Midlantic and its principal, as well as failing to monitor the actions of the administrators.

In August 2003, the plan allegedly had unpaid claims amounting to $6,220,323.

The suit seeks to restore any losses with interest, as well as bar the defendants from servicing ERISA plans in the future. It also seeks to appoint an independent fiduciary to liquidate and rehabilitate the plan in order to meet its payments.