Administration October 9, 2007

Suits Pile Up Against Nashville Benefits Firm

September 22, 2006 (PLANSPONSOR.com) - A Nashville-area benefits management firm has been slapped with a fourth client lawsuit alleging the loss of funds in employee benefit programs the firm was running.
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The Nashville Tennessean reported thatMastrapasqua Asset Management, a Nashville firm, alleged in its lawsuit filed Thursday that about $796,988 of employee money is missing and that 1Point Solutions had not made investments it had reported to Mastrapasqua employees enrolled in a 401(k) profit-sharing plan.

According to the Mastrapasqua suit, a combination of discoveries made when an employee leaving the firm tried to claim his money last week led the employer to go to court over the matter. Also contributing were a Monday conversation with 1Point CEO Barry Stokes in which he could not explain the missing funds and various media reports, according to the filing.

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Also Thursday, Metro Nashville government decided to terminate its nine-month-old contract with 1Point Solutions. Metro schools is expected to follow that lead.

Dorothy Berry, Metro’s human resources director, told the newspaper that no city money is missing, but employees were growing concerned after hearing news reports detailing the lawsuits against 1Point. “We have open enrollment starting in October, and we have employees who were already climbing the walls about this,” Berry said, according to the news report.

Meanwhile, according to the Tennessean, there also were reports of darkened corporate offices, possible layoffs and frozen accounts at the beleaguered benefits manager.

“The companies that have been victimized by 1Point … everybody involved is taking this very seriously, and from what I can tell, they are leaving no stone unturned to try to get to the bottom of it,” said Joseph Woodruff, a Nashville attorney representing Rhode Island-based Reliance Worldwide Corp. and its subsidiary Cash Acme. They are among companies that have filed suit against 1Point, saying that several million dollars in 401(k) and other employee benefit money is missing.

Elsewhere, Knox County Schools in Tennessee and Louisiana state government employees began reporting difficulties using debit cards associated with their 1Point-managed flexible spending accounts. Tommy Teague, CEO of the Louisiana Office of Group Benefits, said workers’ money was safe, though, in a fund that lets employees set aside some pre-tax pay to buy medical supplies and services such as child care.

Benefits October 8, 2007

AK Steel Announces Retiree Health Care Lawsuit Settlement

October 8, 2007 (PLANSPONSOR.com) - AK Steel has announced it has reached an agreement with a group of retirees from its Middletown (Ohio) Works to settle a lawsuit stemming from the company's initiatives in 2006 to reduce its retiree health care costs.
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According to a company Web statement , under terms of the agreement, AK Steel will transfer all of its health care (other post employment benefit or OPEB) obligations for the covered retirees to a Voluntary Employees Beneficiary Association (VEBA) trust, which will be managed solely by the retirees’ designees and will be used to fund the retirees’ covered benefits. AK Steel agreed to initially fund the VEBA trust with a contribution of $468 million and provide three subsequent annual contributions of $65 million each, for a total of $663 million.

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In exchange for the funding, AK Steel will have no further liability related to the Middletown Works retirees covered by the agreement, according to the Web statement. The company said the settlement agreement covers about 4,600 current Middletown Works retirees.

The company said it expects the initial trust contribution to occur in the first quarter of 2008. As of June 30, 2007, AK Steel’s total OPEB liability was approximately $2.1 billion, of which approximately one-half was related to the Middletown Works retirees covered by the settlement, the announcement said.

The retirees filed the lawsuit in July 2006 asking the U.S. District Court for the Southern District of Ohio to bar the company from making them pay monthly health insurance premiums, eliminating vision and dental coverage, eliminating Medicare subsidy benefits, and reducing life insurance coverage (See AK Steel Retirees Ask Court to Bar New Health Care Plan ).

AK Steel said the settlement agreement is subject to approval by the court.

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