Kentucky Bankers Association ordered to pay more than $1.5 million after investigation
The Kentucky Bankers Association has been ordered to pay more than $1.5 million after a U.S. Department of Labor investigation found spending violations.
The investigation found that the association and its for-profit, KenBanc Insurance Inc., inappropriately used plan assets to pay insurance commissions and fees that were then used to pay for employee salaries, office lease payments, reimbursements and other administrative costs, according to the labor department. The violations were found to have occurred between February of 2011 and September of 2017.
The benefits plan provides medical and dental insurance to members, including employees of participating employers, according to the complaint filed against the Kentucky Bankers Association. Before 2015, the plan also covered life insurance, disability insurance and accidental death and dismemberment benefits, according to the complaint.
The Kentucky Bankers Association, which is based in Louisville, was ordered to pay $1,489,231.50 to cover the actual losses to the benefits plan and $72,586.81 to cover the missed potential earnings on what was lost, according to the order.
The association was accused in the labor department’s complaint of inappropriately receiving commissions from the plan for services and expenses used for the plan, according to the complaint. But the association failed to track its expenses, and therefore did not ensure it was taking only what it was owed, the complaint alleged.
The order resolves the federal complaint filed in September against the Kentucky Bankers Association, as well as the participating employer committee, Association Healthcare Consortium, and the trustees of the Kentucky Bankers Association Health and Welfare Benefit Program, according to court records. The trustees named were Ballard W. Cassady Jr., who also is the association’s president and CEO; W. Fred Brashear II; Neil S. Bryan; Burt Bellamy; and Jack W. Strother Jr.
The order, which all parties agreed upon, was filed by U.S. District Court Judge Claria Horn Boom in the Western District of Kentucky. The investigation was conducted by the labor department’s Employee Benefits Security Administration, also known as EBSA.
“This settlement restores money to those plan participants and employers who were harmed by the violations,” EBSA regional director L. Joe Rivers said in a news release. “Plan trustees must work solely in the interest of plans and participants.”
This story was originally published October 19, 2020 at 3:36 PM.
