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Insurance dispute over lawsuit against Pennsylvania road contractor goes to federal court and other news

WILLIAMSPORT — A dispute between a major Pennsylvania highway contractor and its insurance company has gone to federal court.

Twin City Fire Insurance in Hartford, Connecticut, filed a complaint in the U.S. Middle Court on Thursday against Glenn O. Hawbaker Inc.

The question is whether Twin City’s policy covers lawsuits against a Center County contractor over allegations of misappropriation of more than $20 million in pension money and other benefits from workers.

Hobaker claims that the policy, effective April 1, 2021, provides coverage for one criminal and two class action civil cases. Twin City says this is not the case and refuses the lighting.

The criminal case filed by the state Attorney General’s Office was resolved in August 2021 when Hobaker waived four counts of theft and agreed to pay the affected victims $20,696,453.

Two related pending federal civil suits were filed by employees.

One accuses Houbaker of a systematic and covert scheme of wage abuse and shortages in wages and benefits.

Another accuses the company of violating certain fiduciary duties, among other things, by failing to make required contributions to Hobaker’s 401(k) retirement savings plan and other employee benefit plans.

Twin City claims that the 2021 policy does not cover losses that were in progress or were known prior to the policy’s effective date, restitution or other costs other than certain defense costs.

He also claims that Hobaker may have made false statements in his 2020 and 2021 policy filing.

Twin City quoted Howbaker as saying that all plans were in compliance with the Employee Retirement Act and there had been no investigation into any employee benefit plans in the previous two years.

According to the insurance company, no later than June 2019, Hawbaker knew that he was the subject of an investigation and that his payroll practices were inappropriate.

Hobaker notified and requested coverage of the criminal case on April 16, 2021. He demanded coverage of one of the civil lawsuits on May 19, 2021, and another on October 14, 2021, according to Twin City.

The criminal charges alleged that between 2015 and 2018, Hawbaker diverted more than $15 million in pension contributions intended for workers subject to current wage laws to government projects to fund pension contributions for all of its employees.

In 2018, the company changed its practice and pension money is now deposited directly into employees’ individual retirement accounts.

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By Peter Kavinsky

Peter Kavinsky is the Executive Editor at cablefreetv.org