Between January and April 2009, the employer withheld over $55,000 in premiums from employee paychecks that the employer was supposed to remit to a third party to provide employee and dependent health coverage. Instead of remitting the premiums, the employer used the money to pay fiduciary expenses and other creditors as the company was experiencing financial difficulties. The District Court of Minnesota found that the employee payroll deductions became ERISA plan assets on the dates that the employees’ wages were otherwise paid. Additionally, the court considered the president of the company a plan fiduciary because he controlled the finances of the company and directed the finance department with respect to diverting the funds. The court found that the president had had breached his duty of loyalty as a fiduciary and was ordered to personally pay approximately $55,000 in restitution plus prejudgment interest. This case serves as a reminder that fiduciaries of ERISA pension and health and welfare plans are personally liable for fiduciary breaches of loyalty and prudence. The fact that the contract to remit contributions was between two corporate entities did not shield the president from personal liability for his actions with respect to the health plan.
Perez v. Harris, No. 12-3136 (D. Minn. Nov. 9, 2015).