The Department of Labor's Oversight of the Management of the Teamsters' Central States Pension and Health and Welfare Funds

HRD-85-73: Published: Jul 18, 1985. Publicly Released: Aug 19, 1985.

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In response to a congressional request, GAO reviewed the Department of Labor's oversight of the management of the Teamsters' Central States, Southeast and Southwest Areas Pension and Health and Welfare Funds to determine: (1) the status of a civil suit which Labor initiated against the Pension Fund's former trustees and officials; (2) the administration of a consent decree entered into between Labor and the Pension Fund; (3) the likely impact on the Pension Fund of losses incurred on loans to hotel/casinos in Las Vegas; and (4) the mechanism for processing claims for the Health and Welfare (H&W) Fund.

GAO found that the suit was delayed and, in 1984, a district court ordered dismissal of the suit as part of a proposed settlement of the two private plaintiff cases; however, Labor has appealed this ruling and the appeal is under consideration. In addition, it has been reported that the Pension Fund and its trustees are complying with the terms of the consent decree, have instituted or are instituting most of the reforms called for in the decree, and are cooperating with the operation of the outside independent asset manager. GAO found that the Pension Fund has received only accrual of interest rather than the full amount owed after the sale of a hotel/casino in which it had an interest and has a civil suit pending to recover the money it believes is owed. The Pension Fund plans to accept an amount which is less than the outstanding debt due upon the sale of another hotel/casino. It could suffer a loss of as much as $21.3 million on the sales; however, the loss would not significantly affect Pension Fund operations. Finally, in 1983, the H&W Fund acquired the assets of a private firm which processed its claims and has begun in-house claims processing. Although civil suits were brought against the H&W Fund and the claims processing corporation for violations of Employee Retirement Income Security Act, the suits were partially settled.

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