DOL Litigation Update:

As the U.S. Department of Labor (“DOL”) continues its enforcement activity, here is a list of several of its ERISA cases that were recently decided:

• Perez v. Rose (U.S. Bankruptcy Court for the Eastern District of Michigan): The defendant, a plan fiduciary to a 401(k) plan, a health plan, and a dental plan, failed to remit participants’ contributions to the plans. He also allowed those contributions to remain part of the plan sponsor’s general assets and thereby used them to pay for business expenses. On May 23, the court ruled that the amount of those contributions (plus lost earnings) is not dischargeable in bankruptcy. Thus, despite his bankruptcy filing, the defendant is still liable for those amounts.
• Perez v. PBI Bank, Inc. (U.S. District Court for the Southern District of Indiana): On May 24, the DOL reached a settlement agreement in this case. Under the agreement, the defendants (plan fiduciaries) admit no wrongdoing but will restore $3.47 million to an employee stock ownership plan. That will compensate the plan for losses associated with the plan’s 2009 purchase of overpriced company stock. Investigators with the DOL’s Cincinnati Regional Office conducted the investigation that led to this lawsuit.
• Perez v. Hicks (U.S. District Court for the District of Maryland): The defendants failed to remit loan repayments and employee contributions to a 401(k) plan for which they served as fiduciaries. Additionally, they failed to terminate the plan and distribute its assets in accordance with governing plan documents. On May 31, the court ordered the defendants to pay $18,588.34 to the plan for unremitted loan repayments and employee contributions, as well as an additional $1,572.40 in monetary damages. The defendants were also removed as plan fiduciaries and permanently barred from serving as a fiduciary, trustee, agent, representative or service provider to any ERISA plan. The court also ordered the appointment of an independent fiduciary (at the defendants’ expense) to terminate the plan and distribute its assets to participants and beneficiaries.
• Perez v. The Children’s Place Inc. (U.S. District Court for the Middle District of Florida): This case involved the defendant plan sponsor’s and administrator’s welfare benefit plan. In the lawsuit, the DOL alleged that the defendants withheld approximately $20,000.00 in employee premium contributions from employees’ pay, and then failed to forward the withholdings to the plan or its insurance carriers. Also, participants and their dependents incurred expenses of $13,979 for unpaid medical and prescription drug charges after their insurance coverage lapsed because of the nonpayment of premiums. On March 30, the court entered a default judgment ordering the defendant plan sponsor to pay restitution of $37,778 to the plan, plus post-judgment interest. On June 1, the court entered a consent judgment against the defendant plan administrator. Under that judgment, such defendant must pay $20,000.00 in restitution to the plan on or before Oct. 31, 2016. Also under that judgment, the court permanently enjoined this individual defendant from acting as a fiduciary, trustee, agent, or representative in any capacity to any ERISA plan.