PLYMOUTH MEETING, Pa. (Legal Newsline) - The U.S. Department of Labor has filed a lawsuit against Dietrich & Associates, an insurance brokerage firm, and its chief executive officer and sole shareholder, Kurt E. Dietrich, accusing them of violations of the Employee Retirement Income Security Act.
DOL's Employee Benefits Security Administration says it found illegal activities related to the company's role as fiduciary to a hospital pension plan. Memorial Hospital-West Volusia Inc. in Deland, Fla., was merged into the Adventist HealthCare system. The hospital terminated its defined benefit pension plan and sought the purchase of a single-premium group annuity to ensure the payment of vested benefit.
Dietrich & Associates entered into an agreement with Memorial Hospital to act as the pension plan's fiduciary in securing the annuity.
The defendants, allegedly, violated their fiduciary duties by receiving compensation totaling $522,047 from Hartford Life Insurance Co. in connection with the annuity purchase. This payment violated the contractual provision barring compensation from any insurer for the pension plan's annuity, the SEC said.
Additionally, the suit alleges that Dietrich & Associates deceived the pension plan and its fiduciaries by falsifying the final bids of Hartford's competitors so that Hartford would appear to have the lowest bid. This prevented the pension plan from knowing the true cost of the defendants' services and deprived the pension plan of the opportunity to negotiate the amount of any insurer-paid commission or other payment as an element of the total cost of its annuity, the SEC said.
"The defendants clearly abused their authority by receiving this illegal compensation," said Marc Machiz, EBSA's regional director in Philadelphia. "This action underscores our commitment to hold fiduciaries accountable when they fail to meet their legal responsibilities."