You are the head of HR of Food-First, Inc., a supermarket chain with 10,000 stores and 90,000 employees. Food-First has a retirement plan and a group health insurance benefit plan for its employees. Both plans are subject to ERISA. Sixty percent of the employees are participants of both plans, and forty percent do not currently participate in either plan. Food-First is interested in increasing enrollment for both plans.

The named fiduciary for the group health insurance benefit plan is Bobby Smith. Bobby own 1,000 refrigerated trucks. He has a nice little business delivering fresh fruit and vegetables to supermarkets around the country. Bobby has not been very good at keeping records, and he recently discovered that some of his trucks had been delivering strawberries to Food-First's supermarkets in Ohio. Bobby did not put a stop to the Ohio deliveries and he did not investigate further to see if any of his other trucks were delivering fruit and vegetables to Food-First supermarkets in other states. Additionally, each year, Bobby has his refrigerated trucks deliver fresh blueberries to Food-First's Annual Group Health Insurance Plan Open-Enrollment Picnic, in which employees get to eat blueberries and chocolate and enroll in the company's group health insurance plan. Bobby does not charge Food-First for delivering the blueberries. His trucks do have large painted signs that state: "Bobby's Refrigerated Trucks - Delivering Fresh Fruit and Vegetables to Local Grocers Since 1999."

The named fiduciary for Food-First's retirement plan is Sandra Lee. Sandra runs a talent-management company that specializes in supermarket advertising models. Sandra on occasion has some of her supermarket advertising models appear on local TV ads for Food-First, Inc. Sandra does not get paid any commission for placing the advertising models. The models get paid directly by Food-First. Additionally, this last year four of Sandra's models appeared in an ad that was created solely for Food-First's 90,000 employees. The ad was part of a new campaign to get more of Food-First's employees to sign up for the company's retirement plan. Again, the models were paid directly by Food-First, and Sandra did not charge any commission for helping get the transaction done.

Questions

After reading, Meeting Your Fiduciary Responsibilities Link here https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/meeting-your-fiduciary-responsibilities.pdf

and Understanding your Fiduciary Responsibilities Under a Group Health Plan Link here https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/understanding-your-fiduciary-responsibilities-under-a-group-health-plan.pdf

• Please review the following excerpts of ERISA 1106 and 1002(14), AND
• Write a memo for the board of directors explaining what if any violations of 1106 have occurred, due to the actions of Bobby and Sandra.
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Answer rating: 100% (QA)

Memorandum for the Board of Directors Subject Potential Violations of ERISA 1106 and 100214 Dear Board Members I am writing to bring to your attention potential violations of ERISA 1106 and 100214 ari... View the full answer