Plymouth Meeting-based insurance brokerage firm Dietrich & Associates, Inc. is being sued by the U.S. Department of Labor, after the firm allegedly gained more than $500,000 in illegal profits from its role as fiduciary to a hospital pension plan, says a DOL press release. Kurt E. Dietrich, the firm's president and sole shareholder, has also been named as a defendant.
According to the release, Memorial Hospital-West Volusia, of Delrand Fla., hired the firm in 2003 after merging with the Adventist Healthcare System. The hospital planned to transition from a defined benefit pension plan to a single-premium group annuity to ensure payment of benefits, and agreed to pay $50,000 to Dietrich & Associates to find such an annuity.
However, the DOL alleges that Dietrich & Associates then falsified bids it received from several potential annuities, so that the Hartford Life Insurance Company appeared to have the lowest bid. The suit also claims that Dietrich & Associates received $522,047 in "undisclosed and impermissible" income from Hartford in connection with the annuity purchase, violating a provision that barred the firm from receiving any compensation from an annuity provider.
"The defendants clearly abused their authority by receiving this illegal compensation," said Marc Machiz, Philadelphia regional director for the DOL's Employee Benefits Security Administration, which conducted the investigation. "This action underscores our commitment to hold fiduciaries accountable when they fail to meet their legal responsibilities."
In addition to returning the allegedly illegal profit, plus interest, the lawsuit seeks to permanently ban Dietrich & Associates from handling any plans covered by the Employee Retirement Income Security Act.
The case was filed in the U.S. District Court for the Eastern District on Pennsylvania.