Judgment Brought Against Execs who Pilfered from Health Plan

January 5, 2005 (PLANSPONSOR.com) - A federal district court has ordered an Indiana marketing firm to restore losses in the firm's health plan and pay unpaid health claims after executives they illegally diverted funds to pay for overseas trips and office decorations.

>TRG Marketing and two executives, William Crouse and Carmelo Zanfei, have been removed from their positions with the TRG health plan, and are permanently barred from serving as a plan fiduciary under the Employee Retirement Income Security Act (ERISA), according to a Labor Department (DoL) news release. The court found that the defendants used health premiums collected from employers to pay for commissions to TRGs enrollment brokers, trips overseas, personal expenses, charitable contributions, corporate lines of credit, and expensive glassware.

>The case, brought by the DoL, alleged that the marketing firm also failed to charge adequate premiums and did not establish appropriate underwriting procedures to ensure sufficient assets to pay claims. This left millions with unpaid health bills, according to the news release.

“This court decision is a first and very welcome step toward making financially whole those workers and their families who were harmed by the tragic mismanagement of the TRG health plan” said Secretary of Labor Elaine Chao in the news release.

A future trial will determine the amount to be repaid, according to the announcement.