Opinion ID: 626153
Heading Depth: 4
Heading Rank: 2

Heading: Holloway's Management of the Fund and Subsequent Resignation

Text: We also find relevant some additional details concerning Holloway's management of the Fund. It appears from the record that Holloway first learned of problems with the management of the Fund in a meeting in April 2002 with the Fund's claims administrator at that time, Oak Tree Administrators, and the Fund's trustees. The meeting minutes, prepared by Holloway, report that: It was discussed that several boxes of unpaid claims had been shipped from Union Privilege and that Oak Tree was inputting all the claims to determine the magnitude of requirements. It was noted that many claims were very old and dated back to mid 2001 with no claims reflecting payment since November 2001. Cindy Holloway requested a date for the all [sic] claims to be entered into the data base. Oak Tree advised that this would be completed by the following Tuesday, April 30. The Fund's actuary reported that he had not been paid by UPC and was owed $10,000; the trustees authorized payment of the bill. The trustees also learned in the meeting that two new health benefit plans i.e., new types of coverage with different pricing schemeshad been added to the Fund by PCI/NP without their approval. One of the trustees, Dante Georeno, observed that he didn't see a problem with the plans, although the premium rates were very low, because the plans have limited coverage. The plans were already in use and the [summary plan descriptions] already in the hands of the membership. It was therefore determined the plans would be continued. Additionally, Oak Tree noted that enrollment applications submitted by PCI/NP were not complete. A week after this meeting, Holloway and the other trustees agreed to appoint Weinstein, the owner and operator of UPC and PCI/NP, as a trustee of the Fund. [25] The trustees held another meeting on May 30, 2002. A draft of the minutes from the meeting prepared by the Fund's attorney indicates that Weinstein resigned at that meeting and was replaced by Garnett, who succeeded him as owner and operator of PCI/NP. The Fund's accountant informed the trustees that he could not prepare a financial statement for the Fund because certain financial information he had requested from UPC had not yet been provided. The Fund's actuary reported to the trustees that he had received some information from Weinstein but was still missing necessary information about the number of claims for prescription benefits submitted by plan participants and the number of participants enrolled per plan per month. Without this data, he was unable to offer an opinion as to whether the Fund's reserves were adequate to meet its ongoing needs. Oak Tree also reported that it was awaiting additional information from Weinstein and UPC. Weinstein then joined the trustees' meeting and they developed a list of information that Weinstein would provide; the trustees directed UPC and Oak Tree to provide all necessary data to the Fund's accountant and actuary within two weeks. According to Holloway, the Fund's attorney sent Weinstein a letter after the meeting to confirm the request for information. On September 20, 2002, Holloway learned from the Fund's latest claims administrator, Brokerage Concepts, that it was having problems paying claims because PCI/NP had stopped making contributions to the Plan and that necessary information and paperwork from PCI/NorthPoint was lacking. The District Court found that (1) Holloway instructed the Fund's attorney to bring some accountability to the Fund, but he asked [Holloway] to talk to the trustees about that, and (2) Holloway took steps to try to get membership information from PCI. It is not clear from the record whether Holloway followed up on these requests before submitting her resignation letter on September 27, 2002. [26] Holloway's resignation letter enumerated 15 specific reasons for resigning, which she explained were examples and are not representative of all the issues related to my resignation. Many of these reasons related to disagreements with other trustees about their approach to Fund management. For example, she strongly disagreed with the other trustees' dismissal of Oak Tree Administrators without consulting her. Her reasons for resigning also included: e. Lack of continuity or communication by the Union representatives. f. No financial accountability for contributions to the Health and Welfare Fund by other membership. Employers Depot [Holloway's company] provided monthly audits and accountability since the inception of the program. g. Lack of proper follow through to ensure that Union Privilege provided required financial records to the accountants and actuary that determined the financial solvency of the fund. h. Establishment of two additional plans without the consent of the Trustees. i. Contribution rates established for two additional plans without the expressed consent of the Trustees or approval by actuary. j. Vulnerability of the fund due to actions taken by membership that has created insolvency of the fund. k. The consensual approach by the PITWU to allow staff of certain membership to make decisions, develop programs and direct the outcome of contracts and TPA activity. l. Cease and desist orders in multiple states based on the representation by other membership/Trustees that PITWU is an insurance program. m. Legal issues with the Department of Insurance in multiple states due to the representation by other membership that PITWU is an insurance program. n. Lack of follow through by responsible parties to ensure the structure, insurance programs and related requirements are managed timely and effectively. Holloway expressed concern about the chaotic state of affairs of the Fund, which had brought undue damage in multiple states, created credit damage to the membership due to claims that are in excess of 9 months old and generally has ruined the credibility of the Union and its associated fiduciaries. Holloway did not find another person to replace her as trustee before resigning, nor was she immediately replaced. [27]