Sec'y of Labor v. Doyle, No. 10-3598 (3d Cir. 2012)Annotate this Case
In 2005, the Secretary of Labor filed suit for breach of fiduciary duty, alleging that defendants had established a health benefit plan that was a multi-employer welfare arrangement governed by the Employee Retirement Income Security Act. Defendants had retained, as compensation, a substantial portion of payments made by businesses to enroll their employees. The complaint alleged improper diversion of funds and that defendants were required by ERISA to use the assets only for the defraying reasonable plan expenses for the benefit of plan participants. The district court ruled in favor of defendants. The Third Circuit vacated, characterizing the scheme appearing to be "an aggressively marketed, but inadequately funded health benefit plan masquerading as an ERISA-exempt plan in order to evade the solvency controls imposed by state insurance regulation."