A company managed the retirement and healthcare funds of 293,000 working people, gave itself the contractual power to dip into those funds whenever it wanted, and then paid itself fees so large that at least one worker ended up with nothing in his retirement account, according to a federal court filing.

The Machine They Built to Drain Your Check

Fringe Benefit Group, operating through its subsidiaries Plan Benefit Services and Fringe Insurance Benefits, sold itself to employers as a trusted administrator for worker benefit programs. The pitch was straightforward: let FBG handle the complexity of retirement and healthcare benefits, so employers could compete for government contracts that required them to pay prevailing wages.

To win those government contracts, employers had to provide their workers with real wages and real benefits. FBG stepped in as the middleman, managing two trust funds: the Contractors and Employee Retirement Trust (CERT) for retirement savings, and the Contractors Plan Trust (CPT) for health and welfare benefits. Workers’ money flowed into these trusts every time they clocked hours on the job.

The trap was hidden inside the fine print. Every employer who signed up with FBG also signed a Master Trust Agreement that handed FBG extraordinary power over those funds. FBG could determine its own fees. FBG could instruct banks to pay those fees directly from the trust. FBG could appoint and remove the trustee. FBG could require the trustee to make disbursements to FBG itself, in any amount FBG directed.

Who Checks the Checkbook? Nobody FBG Didn’t Hire.

FBG also held the power to appoint and remove the trustee, the person whose job was theoretically to protect the workers’ money. When the company watching the money also picks and fires the person watching the company, that is not oversight. That is a closed loop.

On top of fixed administrative fees of $200 per employer and testing fees of $400 per employer, FBG charged indirect fees of 1.15% of total company assets in the trust. Variable fees piled on top of that, structured in tiers that FBG itself decided how to categorize each employer. Workers had no say in any of this, because the contracts were between FBG and the employers, not between FBG and the workers whose money sat in those trusts.

The Fee Wasn’t the Bug. It Was the Business Model.

FBG’s Vice President, Jennifer Carol Pagano, testified during depositions that the fees FBG charged were unaffected by the different arrangements the company made with different employers. In other words, the price of FBG’s fees did not change based on what services individual employers needed or received. The court found that FBG’s fees were “either uniform or amenable to a pricing grid” across the board, applying to all plans the same way. That is not a tailored service fee. That is a toll booth on a road workers had no choice but to use.

The Non-Financial Ledger: What This Cost Real People

Heriberto Chavez went to work. He clocked his hours. His employer, the Training, Rehabilitation and Development Institute (TRDI), deposited fringe benefit money into an account in his name for every hour he worked, as federal and state law required. On paper, Chavez was building something: a retirement cushion, a small financial foundation for later in life.

In reality, FBG was at the other end of that pipeline, skimming. According to court documents, FBG took at least 10% of the monthly premium TRDI paid on Chavez’s behalf into CPT, pulling that fee directly from Chavez’s individual health and welfare account. The account was depleted faster than it should have been, Chavez alleges, solely because FBG’s fees were unreasonable. The final accounting of what that depletion cost him: no amount was ever contributed to his retirement account. The fees consumed it all.

That sentence deserves to land. A man worked. Money was deposited in his name. A company with total contractual authority over that money deducted its fees. When it was done, the retirement account that was supposed to exist for Chavez held nothing. He did not receive a smaller retirement fund. He received the void left behind by a company that positioned itself to eat first and left him nothing.

When 17% Disappears Before Your Doctor Ever Sees a Dime

Jose Escarcega’s situation documents another layer of the scheme. Escarcega, represented in this lawsuit by his mother Evangelina, was enrolled in a “limited medical plan” through a company called Standard Security Life, accessed via FBG’s CPT trust. For the ancillary insurance premiums and fees associated with that plan, FBG deducted more than 17% of the payments for its own compensation before sending the remainder to Standard Security Life. Seventeen cents of every dollar meant for Jose’s healthcare coverage went to FBG. That is not an administrative fee. That is a cut taken from a sick person’s coverage.

Jorge Moreno participated in both the retirement trust and the health trust. Like Chavez and Escarcega, FBG’s fees were subtracted from his individual accounts. He alleges FBG deducted more than 10% of payments for its own compensation before remitting the rest to his medical insurance providers. Three workers, three different lives, one company with its hand in all of their pockets simultaneously, structured by contracts that workers never signed and could not renegotiate.

They Couldn’t Even Leave. The Contract Wasn’t With Them.

What makes the human betrayal here so complete is the power asymmetry baked into the structure. These workers did not choose FBG. They did not negotiate fees with FBG. They never saw the Master Trust Agreement that handed FBG authority over their money. Their employers signed those agreements, and the workers were simply folded into the system as participants. The trust was not voluntary. Participation in the plan was tied to employment. The fees were not disclosed in any meaningful way to the people actually losing money. Workers like Chavez, Escarcega, and Moreno had no mechanism to say no, no alternative trust to join, and no visible way to see exactly how much FBG was extracting from them until years later, in a federal courthouse.

Legal Receipts: Straight From the Court Documents

FBG Gave Itself the Keys and the Safe

“The Master Trust Agreement allows FBG to determine the fees deducted from CERT and allows it to direct ‘banks and other entities holding Trust funds to pay those fees, including to FBG itself.'” — U.S. Fifth Circuit Court of Appeals, August 11, 2023 (describing FBG’s contractual powers)

Workers Allege They Were Robbed Before Their Coverage Kicked In

“FBG deducted fees totaling more than 10% of these payments for their own compensation before remitting the remainder to their medical insurance providers.” — Fifth Circuit opinion, citing allegations by plaintiffs Escarcega and Moreno

A 17% Bite Out of a Limited Medical Plan

“FBG deducted compensation for itself . . . for ancillary insurance premiums and fees of more than 17% of these payments, remitting the remaining amount as premiums to SSL.” — Fifth Circuit opinion, citing Jose Escarcega’s allegations regarding Standard Security Life payments

The Court’s Framing of What This Case Is Actually About

“Plaintiffs allege that FBG ‘accepted excessive fees, handpicked providers to maximize its profits, controlled disbursements from the trusts for its own benefit, and unlawfully procured indirect compensation.'” — Fifth Circuit opinion, summarizing the amended complaint, citing Chavez v. Plan Benefit Servs., 957 F.3d 542, 544 (5th Cir. 2020)

The Court Confirmed FBG Enriched Itself at Workers’ Expense

“Plaintiffs claim that FBG ‘impos[ed] sky-high administrative costs, . . . enrich[ing] [itself] at the expense of the Trusts’ participating employee benefit plans and the employees who receive their retirement and healthcare benefits through those plans.'” — U.S. Fifth Circuit Court of Appeals, August 11, 2023, quoting plaintiffs’ characterization of FBG’s conduct

Societal Impact Mapping

Public Health: When the Insurance Fee Eater Comes for Your Doctor Bills

The CPT trust was supposed to deliver health and welfare benefits to working people who were employed on government-contracted jobs. These were not white-collar professionals with multiple benefit options and HR departments to advocate for them. These were workers who depended on prevailing wage laws to ensure they received at minimum a legally mandated standard of compensation and coverage.

When FBG extracted 10% or more of the monthly premium payments before forwarding the rest to insurance carriers, the coverage those workers received was diminished. A premium payment that was supposed to represent full coverage became a partial payment, because FBG took its cut first. For Jose Escarcega, enrolled in a limited medical plan to begin with, FBG took more than 17% of his ancillary insurance payments before any of it reached his insurer. A limited plan that loses 17% of its funding before it even begins is not a health plan. It is a shell.

The public health dimension compounds when you consider the scale. As of February 2021, the CPT class alone included 68,066 participants across 350 plans. If each of those participants had a portion of their health coverage skimmed before it reached their insurer, the aggregate effect on actual healthcare access, coverage gaps, out-of-pocket costs, and deferred medical care across nearly 70,000 workers and their families is staggering. These are not hypothetical harms. These are families who may have gone without care, delayed procedures, or faced unexpected medical bills because the money earmarked for their coverage had already gone somewhere else first.

Economic Inequality: Retirement Stolen From the Workers Who Had the Least to Spare

The workers in this case were employed under prevailing wage laws, which exist precisely because without legal mandates, low-wage government contractors would pay workers as little as the market allows. Prevailing wage laws are a floor. FBG’s fee structure was a trapdoor installed in that floor.

The retirement trust, CERT, held funds for 224,995 participants across 2,994 plans. Every one of those participants had money flowing into the trust on their behalf, and every one of them had FBG’s fees flowing out of it. The workers contributing to CERT were not wealthy investors who could absorb a 1.15% asset drain on top of fixed administrative fees. They were hourly workers whose fringe benefit contributions were often the primary mechanism through which they would build any retirement savings at all.

For Chavez, the math ended in a complete wipeout: zero retirement savings, despite working and having contributions made in his name. His case is not necessarily representative of every worker in the class, but the court’s opinion makes clear that FBG’s fee structure applied uniformly and systematically. A company that charges fees “unaffected by the different arrangements” with different employers, as FBG’s own Vice President testified, does not discriminate between the worker who can absorb the loss and the worker who cannot. It simply takes, across the board, from all 293,000 of them.

The design of the scheme also targeted workers who had the least institutional power to fight back. They did not sign the contracts. They did not negotiate the fee structures. They did not even know, in many cases, how much was being taken. They were participants in trusts they had no direct relationship with, governed by agreements they had never seen, administered by a company they had no ability to remove. The only reason any of them learned the details of what FBG was doing is because three of them found attorneys and filed a federal lawsuit in 2017, and fought it for six years just to get to the point where a court said: yes, you can proceed as a class.

The Cost of a Life: What the Numbers Tell Us

What Now: Who Answers for This, and How You Push Back

The Corporate Roles That Built This Scheme

• Master Plan Sponsor and Recordkeeper of CERT and CPT Trusts: Fringe Benefit Group / Plan Benefit Services / Fringe Insurance Benefits
• FBG Vice President (testified on fee structures): Jennifer Carol Pagano
• Named Plaintiffs leading the class: Heriberto Chavez, Evangelina Escarcega (on behalf of Jose Escarcega), Jorge Moreno

The Watchlist: Regulators Who Should Be All Over This

• Department of Labor (DOL): ERISA enforcement is a core DOL function. Fiduciary breaches of this scale are exactly what the Employee Benefits Security Administration (EBSA) exists to investigate.
• IRS: Retirement plan administration and trust fund compliance fall under IRS purview. Excessive fee structures affecting tax-advantaged retirement accounts warrant scrutiny.
• Department of Labor Wage and Hour Division: Prevailing wage laws were the gateway that pushed workers into FBG’s system. Enforcement of those laws includes oversight of how fringe benefit funds are actually administered.
• State Insurance Commissioners: FBG’s CPT trust administered health insurance products. State-level insurance regulators in every state where FBG operated should review whether premium diversions violated state insurance laws.

The Move From Here

The court battle continues, and the 293,000 workers in this class have a long road ahead before anyone sees a dollar returned. In the meantime, if you or someone you know contributes to an employer-sponsored benefit plan administered by a third-party administrator, request a full fee disclosure in writing. ERISA gives you that right under the law. Mutual aid networks and worker centers in your area can help you understand your rights without needing a lawyer. Organizations like the National Employment Law Project (NELP) and local worker centers provide free resources. The only thing that makes schemes like this possible long-term is silence. Do not be silent.