US Department of Labor investigation leads former owner to repay unpaid health plan claims of uninsured employees of Somerset healthcare agency

Former owner must pay $259K to IRS, pays $41K to workers overcharged for medical bills

SOMERSET, KY – For months, 11 employees at a Somerset home healthcare agency faced costly medical bills, unaware their employer had failed to remit contributions withheld from their wages to their healthcare plans, leading to a lapse in their medical insurance.

An investigation at Cumberland Behavior Group LLC by the U.S. Department of Labor’s Employee Benefits Security Administration found that from March 1, 2019, through May 1, 2019, the company’s owner and then executive director Ace R. Jones II withheld contributions from employees pay for promised healthcare benefits, and failed to pay the monthly premiums to Humana, leading the insurer to retroactively cancel employees’ coverage.  As a result, during March and April of 2019, 11 employees incurred $41,766 in unpaid claims because they believed they had coverage. 

IRS investigators also found Jones withheld $259,648 in payroll taxes – including Medicare and Social Security taxes – from employees’ paychecks and failed to deposit them with the IRS, instead diverting the funds for company and personal use.

EBSA’s and the IRS’s investigation led to the filing of Jones’ guilty plea on September 20, 2021 in the U.S. District Court for the Eastern District of Kentucky. On Jan. 12, 2022, the court sentenced him to 12 months and one day in prison, as well as 2 years of supervised release. In addition, Jones agreed to pay the IRS the taxes he withheld and a $500 special assessment to the court.  Jones had previously paid $41,766 to the 11 employees with unpaid health claims.

“Criminal acts like this hurt workers who trust their employer to do what’s right with the hard-earned wages withheld for their healthcare benefits,” said Employee Benefits Security Administration Regional Director Joe Rivers in Cincinnati. “The U.S. Department of Labor is committed to ensuring the integrity of employee benefit programs, safeguarding workers’ benefits and holding those who violate the law accountable.”

EBSA’s Cincinnati Regional Office conducted the investigation in cooperation with the Internal Revenue Service Criminal Investigations Division and the Kentucky Attorney General’s Office to support American workers. The U.S. Attorney’s Office, Eastern District of Kentucky, prosecuted the case.

Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Learn more about EBSA.

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