Court orders owner Harvey’s medical institution to return $90,000 to company’s 401(k) plan for failing to remit plan contributions

date of action: May 25, 2023

Action type: Retirement Income Security Act Consent Orders and Judgments

Company/Owner: Chicago Metropolitan Gynecologist, Inc.

Dr. Ernest Hayes

Chicago Metropolitan Obstetrics and Gynecology, Inc. 401(k) Plan

Background: On May 25, 2023, Judge Charles P. Kokolas of the United States District Court for the Northern District of Illinois issued a Consent Order and Judgment on Business, Ownership and Plans.

The secretary of labor said the Harvey, Ill., company and Hays hadn’t transferred more than $80,000 of employee voluntary payroll contributions to the company’s 401(k) plans since January, according to the department’s employee benefits. Following the Department’s accreditation, the lawsuit was filed on October 28, 2021. During the same period, the Company and Hays were unable to timely remit employee contributions, nor were they able to remit employer contributions owed to employees.

Resolution: On April 17, Hayes restored $10,000 to the plan. The consent decree seeks Hays to recover $80,000 in monthly payments for the next 30 months. After paying the full amount, the judgment ruled against Hayes, Fined $18,000 to the government for his breach of fiduciary duty.

The ruling also bars Hays and the company from future violations of ERISA and from acting as a fiduciary or service provider for future ERISA-covered employee benefits plans. The court appointed AMI Benefit Plan Administrators Inc. as the plan’s independent trustee to restore funds to the accounts of injured plan participants. Hayes must pay her AMI for that service.

Employers and workers can contact EBSA toll-free at 866-444-3272 for assistance with private sector retirement and health insurance issues. Learn more about EBSA here.

Quote“Failure to remit required contributions to employee retirement plans undermines employee confidence and robs employees of the opportunity to earn interest on their investments and prepare for the future.” said Ruben R. Chapa, regional director of the Office of Employee Benefits and Security in Chicago.

Reference number: Case number 1:21-cv-05774

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