Wednesday, January 13, 2010

DOL Sues Illinois Trucking Company Over Failure To Protect Employee Pension and Health Benefits

The U.S. Department of Labor ("DOL") has sued the owners of bankrupt Mid-States Express Inc. of Aurora, Illinois for allegedly failing to protect the interests of the participants and beneficiaries in the company's 401(k) and health plans. DOL's lawsuit alleges that the owners failed to disclose to employees that their medical bills were not likely to be paid, even as the company continued to take deductions from their paychecks for medical coverage. As a result, despite the fact that $1.26 million in employee health plan contributions were withheld, $3 million in employee medical claims allegedly were not paid - a potential violation of the Employee Retirement Income Security Act ("ERISA"). DOL's lawsuit also alleges that the owners of Mid-States Express violated their fiduciary duties when they failed to remit $65,000 in contributions and loan re-payments, and to timely remit more than $1.5 million in 401(k) plan participant contributions and loan re-payments. The company allegedly retained these contributions and loan repayments for its own benefit at the expense of participants and beneficiaries. DOL's lawsuit seeks a court order to require that the defendants restore any losses, with interest, suffered by the plans or their participants and beneficiaries and to undo any prohibited transactions involving the plans. The suit also asks the court to remove the owners from their fiduciary positions to the plans and to permanently bar each of them from serving in a fiduciary capacity, or service provider, to any plan governed by ERISA. [See the DOL's website,, for more information on the case.]