DOL Wins Suit Against Detroit Trustees

In a consent order/judgment obtained Jan. 19 by the Dep’t of Labor, involving two Detroit area unions’ pension and welfare funds, trustees agreed to restore monies to the plans and to establish new procedures for paying for the plans’ legal expenses.  Under the order, the plan trustee defendants agreed to restore a total of $30,528 to the affected plans of the Tile, Terrazzo & Marble Industry and the Int’l Union of Bricklayers & Allied Crafts Local 32 Unions, based in Troy, Mich., for paying a participant’s medical expenses not covered under the policy limits of the welfare plan, and for paying trustee travel expenses for which incomplete accounting was given. Further, plan trustees John Lanzetta, John Mason, and Robert Michielutti will resign their positions. Lanzetta and Michielutti also were barred permanently from serving in any fiduciary capacity to these plans or to any other plan covered by ERISA.

The new procedures for the paying of legal bills require that all bills include the identity of the attorney who performed the work, the hourly rate charged and a description of the work performed. In addition, for any cases involving participating employers delinquent in remitting their contributions to the plans, any law firm, which may be engaged by the plan, must prepare a monthly written report for the trustees, indicating the amount of money at issue and listing the total legal fees charged to each case. The procedures also require charges for legal work of a general research nature to be preapproved by the trustees and, where appropriate, for the plan to only pay for a portion of the expense if the research is shared with other clients of the law firm.

Joseph Menez, director of the Cincinnati Reg’l Office of DOL’s Pension & Welfare Benefits Admin., said, “We are obviously pleased to get plan assets back for both of these plans, and to institute a formal arrangement to monitor and evaluate payment of legal billings by the plan trustees to insure that the services provided justify the fees paid.”  Menez said the agency is vigilant in protecting the rights of participants and beneficiaries of private sector pension and welfare plans.

The consent order/judgment was entered in U.S. Dist. Court in Detroit on Jan. 18. The complaint was filed Dec. 15, 2000 in the same court.  As of Apr. 30, 1996, the pension plan reported 793 participants and $24,586,371 in assets, and the welfare plan had 613 participants and $909,059 in assets. [PWBA Media Release 1/19/01]