U.S. Labor Department Resolves Unpaid Health Claims of Participants Covered by Mississippi State Medical Association Plan

Saturday, August 18, 2007 General News
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ATLANTA, Aug. 16 The U.S. Department of Laborhas obtained a consent judgment and order requiring the Mississippi StateMedical Association (MSMA), Ridgeland, Miss., to reimburse participants andbeneficiaries for unpaid health claims resulting from the termination of theMississippi State Medical Association Benefit Plan and Trust. The welfareplan, established by MSMA in the 1980s to provide health benefits to memberphysicians of MSMA, their employees and beneficiaries, had more than 1,800participants prior to its termination on Jan. 1, 2004.

"The mismanagement of this benefits plan left workers and their familieson the hook for unpaid medical bills," said U.S. Secretary of Labor Elaine L.Chao. "The department's legal action will ensure that the plan sponsor meetsits responsibility by paying the medical bills of these workers and theirfamilies."

The judgment appoints Receivership Management Inc. as an independentfiduciary to manage the distribution of plan assets. Participants andbeneficiaries may contact the company at (615) 370-3900. The judgment alsoremoves the association as a fiduciary to the health plan and protectsparticipants from creditors' claims by medical providers resulting from theplan's failure to pay providers for services. Finally, MSMA is enjoined fromproviding health, disability or other welfare benefits through any self-fundedarrangement in the future and may be liable for a civil money penalty.

The Labor Department's lawsuit alleged that MSMA knew the plan wasunderfunded, did not take steps to remedy the unsound funding and failed toinform participants of the actuarially unsound financial condition of theplan. As a result, the plan had more than $5 million in outstanding claimswhen it was terminated.

In addition, the department alleged that MSMA failed to protect planparticipants from claims by creditors that resulted from the plan'stermination. Although MSMA advised the department that it had requested itsmembers and other medical care providers in Mississippi refrain from referringplan participants to collection agencies and consider waiving payment ofclaims, a survey of participants performed at the department's directionrevealed that participants continued to pay Mississippi medical careproviders, had been referred to collection agencies and had suffered damage tocredit as a result of the plan's termination.

The judgment, entered in the U.S. District Court for the Southern Districtof Mississippi, resulted from an investigation conducted by the AtlantaRegional Office of the department's Employee Benefits Security Administration(EBSA). EBSA's Web site includes health benefits tips for small employers athttp://www.dol.gov/ebsa/newsroom/fshlthinstips.html. Employers and workerscan reach EBSA's Atlanta office at (404) 302-3900 or toll-free at(866) 444-3272 for help with problems relating to private sector retirementand health plans.

Chao v. Mississippi State Medical Association

Civil Action Number 3:07cv440 DPJ-JCS

U.S. Department of Labor releases are accessible on the Internet athttp://www.dol.gov. The information in this news release will be madeavailable in alternate format (large print, Braille, audio tape or disc) fromthe COAST office upon request. Please specify which news release when placingyour request at (202) 693-7828 or TTY (202) 693-7755. The Labor Department iscommitted to providing America's employers and employees with easy access tounderstandable information on how to comply with its laws and regulations.For more information, please visit http://www.dol.gov/compliance.

SOURCE U.S. Department of Labor

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