Bureau of National Affairs

 

ERISA Labor Department Files Suit In Rhode Island To Remove Trustees of Laborers' Legal Plan

 

By Martha Kessler and Brian Lockett

July 17, 2003

 

PROVIDENCE, R.I.--Federal labor officials July 14 filed suit in U.S. District Court for the District of Rhode Island seeking the removal of four trustees of the Rhode Island Laborers' Legal Services Plan for alleged violations of the Employee Retirement Income Security Act. (Chao v. Coia, D.R.I., CA 03-293, complaint filed 7/14/03).

 

The suit, filed by Labor Secretary Elaine Chao, charged the four trustees with failing to adequately oversee and monitor the services provided to plan participants by a two Rhode Island law firms, oversight required under ERISA.

 

The four trustees named as defendants in the suit are Ronald M. Coia, Edward DiRissio, Michael Gammino, and David Rampone. Coia also heads the Rhode Island Laborers District Council.

 

The Laborers' legal services plan is a collectively bargained benefit plan that provides legal assistance to members of the Laborers' union and their beneficiaries. The fund was established in 1974 by the Rhode Island chapter of the Associated General Contractors, the Rhode Island Road Builders Associations Inc., and the Rhode Island Laborers District Council, and is supported by contributions from participating employers.

 

The participating employers are Rhode Island builders and highway contractors who have signed collective bargaining agreements with the Laborers district council. The current contribution rate is 50 cents per hour worked.

 

The two law firms that have been providing legal services to plan participants under a retainer since January 1997 are the Providence law firm of Coia & Lepore and the law office of G. Chandler Beals. According to the complaint, the Coia firm and Beals each received monthly retainers of $9,000 during 1997 and $11,000 per month from Jan. 1, 1998, through on or about July 1, 2002. The complaint noted that plan participant matters handled by Beals during these periods were substantially less than those handled by the Coia firm.

 

LIUNA's New England regional office operates out of the same address as the Coia & Lepore law firm, according to on-line data for the union and the law firm. Armand E. Sabitoni, secretary-treasurer of the national Laborers' International Union, is listed as a partner in the firm.

 

Ronald M. Coia's son, Ronald R. Coia, who is an attorney, was not named in the department's complaint. Currently there are no Coia family members listed as partners or associates in the Coia & Lepore law firm, according to law firm sources.

 

Inadequate Records Alleged

 

James Benages, Boston regional director for the Labor Department's Employee Benefits Security Administration, said in a statement that the suit alleged that billing systems of the law firms failed to track the number of hours worked by staff attorneys on plan cases annually and that there were no written contracts between the plan and the firms from Jan. 1, 1997 until at least Dec. 31, 2002.

 

"The law requires those who administer employee benefit plans to make sure every dollar of plan assets is used wisely and solely for the benefit of the plan's participants and beneficiaries," Benages said.

 

The government's complaint charged the trustees with failing to adequately oversee and monitor the quality of legal services provided by the firms, as well as the number of referrals to, and hours worked by the firms. The defendants also were charged with failing to adequately monitor the cost-effectiveness of the services being provided by the law firms to ensure that the plan was receiving "appropriate value for the money provided to the firms."

 

In addition to seeking the removal of the defendants as trustees of the plan, the suit asked the court to permanently enjoin the defendants from future violations of ERISA to prevent them from acting in a fiduciary capacity with respect to any employee benefit plan covered by ERISA.

 

The suit also asked the court to appoint an independent fiduciary to administer the plan, require the defendants to fully cooperate with the independent fiduciary, and order the defendants to reimburse the plan for all losses incurred by the plan because of their violations.

 

The complaint appears to arise from a Labor Department audit of the legal services plan over the past 18 to 24 months, according to Frederick McClure, an attorney with the Providence law firm of Hinckley Allen & Snyder who is representing the trustees. McClure said July 22 that none of the trustees had been served and that he only recently had obtained a copy of the Labor Department complaint.

 

While the trustees were aware of some of the specific claims the Labor Department was likely to make, McClure said "the relief of having them removed from their positions comes as a surprise to me and to the trustees."


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