110 W. New York Ave.
DeLand, FL 32720
Broker to repay Florida Hospital-DeLand pension fund
By Joe Crews
posted Aug 26, 2013 - 4:14:37pm
The U.S. Department of Labor last month obtained a federal court order requiring a Pennsylvania insurance broker to return more than $272,000 to participants and beneficiaries of a pension plan at Florida Hospital-DeLand.
In September 2012, the department filed a lawsuit against Dietrich & Associates and its owner, Kurt E. Dietrich of Plymouth Meeting, Pa. The suit alleges that Dietrich and his company illegally earned money when they were hired to help what was then called Memorial Hospital West Volusia Inc.
The West Volusia Hospital Authority sold the hospital to Memorial Hospital West Volusia Inc. in 2000, and it became a subsidiary of Florida Hospital, Hospital Authority attorney Ted Small explained.
According to the lawsuit, Memorial Hospital decided in 2003 to stop contributing to a retirement pension program for its employees. Federal law required the hospital to find an insurance company that would sell an annuity to cover the pension's future payouts, Department of Labor spokeswoman Leni Fortson said.
The hospital hired Dietrich and his company to help find an insurer, with an agreement that he would be paid $50,000 for his services. The agreement stipulated that Dietrich was not to accept compensation from an insurance company dealing with the pension plan in any way, the complaint states.
But, unbeknownst to Memorial Hospital and pension trustees, Kurt Dietrich had an agreement with Hartford Life Insurance Co. that netted him a 2-percent commission if Hartford got the business, according to the complaint.
When Dietrich got bids from six companies in December 2003, Hartford's bid was second-highest. According to the Labor Department's attorneys, Dietrich manipulated the bids so Hartford's appeared to be the lowest. Hartford was given the contract and provided an annuity for more than $26.1 million.
Dietrich's commission was $522,047, which the complaint says violated both his contract with Memorial Hospital and his fiduciary obligations under provisions of the Employee Retirement Income Security Act (ERISA), which regulates and protects certain pension plans.
In July, Dietrich entered into a consent agreement with the Department of Labor and agreed to reimburse $272,722 to the pension plan.
"The plan has been made whole," spokeswoman Fortson said. "The money goes to the plan participants and beneficiaries."
Dietrich also agreed to pay a fine of $27,273 to the Labor Department. According to the settlement, Dietrich didn't dispute the Labor Department's findings, but neither admitted nor denied "any wrongdoing or liability with respect to the allegations."
Hartford Insurance didn't escape scrutiny, Fortson said. The attorneys general in New York and Connecticut looked into the issue of the company providing undisclosed commissions.
That investigation resulted in a settlement with those states to require Hartford to repay overpayments by pension plans, including the one at the heart of the Dietrich case, Fortson said.
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