Bureau of National Affairs
ERISA Labor Department Files Suit In Rhode Island To
Remove Trustees of Laborers' Legal Plan
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."