The Labor Department has filed a lawsuit accusing the former CEO of a West Virginia hospital of fiduciary breaches while operating the company's healthcare plan.
The lawsuit, filed Sept. 1 in U.S. District Court for the Southern District of West Virginia, lists the Williamson Memorial Hospital Employee Benefit Plan and Charles Hatfield as defendants.
Mr. Hatfield served as a fiduciary of the healthcare plan while CEO of Williamson (W. Va.) Memorial Hospital, according to a Sept. 2 Labor Department news release. The rural, 76-bed hospital filed for bankruptcy on Oct. 21, 2019.
From at least July 1, 2018, through Sept. 21, 2019, Mr. Hatfield withheld employee contributions from health plan participants' paychecks and failed to forward these amounts to the plan's third-party administrator, which resulted in the plan's cancellation and left participating employees with unpaid claims — and without health coverage, the Labor Department said.
"Instead of remitting these withheld employee contributions to the health plan, Hatfield retained and commingled these health plan assets within the company's general banking accounts so that these amounts could be used for purposes not related to the health plan," the lawsuit states.
The Labor Department said an investigation by its Employee Benefits Security Administration also found that Mr. Hatfield failed to notify employees that their coverage was in jeopardy, despite warnings from the plan administrator, and did not notify employees "that a significant amount of healthcare claims were unpaid, and that the provider ultimately canceled their contract and stopped processing claims on Oct. 31, 2019."
The Labor Department seeks to restore losses incurred by former Williamson Memorial Hospital employees.
Mr. Hatfield, the current mayor of the city of Williamson, told the Williamson Daily News he could not comment on the lawsuit right now.