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Crittenden Regional Hospital directors defend class actions filed by former employees

Former employees of Crittenden Regional Hospital filed two separate class actions against the hospital and more than 20 former directors and officers alleging violations of the Employee Retirement Income Security Act, the Racketeer Influenced and Corrupt Organizations Act, and the Worker Adjustment and Retraining Act after the hospital filed bankruptcy and ceased operations. On behalf of more than 400 former employees, the plaintiffs alleged that Crittenden Regional and the individual defendants improperly diverted health insurance premiums collected from employees to general operating expenses of the hospital, leaving the hospital's self-funded health insurance plan under-funded. The plaintiffs also claim that the defendants conspired with two insurance companies that served as the hospital's third party administrator to deprive employees of health insurance, and that the hospital failed to comply with the notice provisions of the WARN Act. The defendants have denied the allegations.

Waller represented the hospital's directors and officers in the matter. This complex matter involves important legal issues including distinguishing between corporate officer's corporate business roles versus their roles as ERISA fiduciaries, assignment of fiduciary responsibilities between corporate actors and third party administrators contracted to manage ERISA benefits, ERISA pre-emption, joint and several liability, indispensable parties, and directors' and officers' insurance coverage, all against the backdrop of a Chapter 7 bankruptcy.

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