Penn. Medical Center Accused of Diverting 401(k) Assets

May 7, 2012 ( - Two former employees of Saint Catherine Medical Center Fountain Springs are suing the bankrupt hospital's former presidents, and the sponsor of two benefit programs.

Maryann Shadler, Pottsville, alleged that Daniel A. Colon and Merlyn Knapp allowed the hospital to use money intended for her 401(k) plan for other purposes in violation of their duties as trustees of that plan, the Republican & Herald reports. “Knapp and Colon took no steps to prevent, discourage or report (the hospital’s) misappropriation of funds,” the lawsuit alleges, according to the newspaper.  

Shadler and Janet Stavinski also are suing Specialty Health LLC for allegedly allowing the hospital to divert money from their short-term disability and medical/dental/vision insurance benefit plans toward other unspecified uses.  

The former employees asked the court to order a complete accounting of the plans and their assets, restitution of all losses, an injunction to require the defendants to correct their improper actions and payment of costs, expenses and attorney fees.  

They are also seeking class-action certification on behalf of all former hospital employees who participated in the plans, which they say is more than 100 people.