Smart Benefits: Beware - ERISA Enforcement Recoveries Hit $696.3 Million in 2015

Monday, February 29, 2016

Rob Calise, GoLocalWorcester Business/Health Expert

This month, the DOL published its 2015 Fact Sheet outlining the civil and criminal enforcement activities for employee benefit plans and participants under ERISA. And last year, the DOL reported total monetary recoveries of $696.3 million – an increase of $96.6 million over 2014 – for direct payment to plans, participants and beneficiaries.

Civil Violations

Through its enforcement of ERISA, the Employee Benefits Security Administration (EBSA) closed 2,441 civil investigations in fiscal year 2015, with 1,640 of those cases (67.2%) resulting in monetary results for plans or other corrective action. Examples of civil violations applicable to both pension and welfare plans include:

•   Failing to operate the plan prudently and for the exclusive benefit of participants;
•   Using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals;
•   Failing to properly value plan assets at their current fair market value, or to hold plan assets in trust;
•   Failing to follow the terms of the plan (unless inconsistent with ERISA);
•   Failing to properly select and monitor service providers;
•   Taking any adverse action against an individual for exercising his or her rights under the plan (e.g., being fired, fined, or otherwise being discriminated against);
•   Failure to comply with ERISA Part 7 and the Affordable Care Act (welfare plans only).

Criminal Violations

EBSA also conducts investigations of criminal violations regarding employee benefit plans such as embezzlement, kickbacks, and false statements under Title 18 of the U.S. Criminal Code. In 2015, EBSA closed 275 criminal investigations, which led to the indictment of 61 individuals – including plan officials, corporate officers, and service providers – for offenses related to employee benefit plans.

EBSA's oversight authority extends to nearly 681,000 retirement plans, approximately 2.3 million health plans, and a similar number of other welfare benefit plans, such as those providing life or disability insurance.

Rob Calise is the Managing Director, Employee Benefits. of Cornerstone|Gencorp, where he helps clients control the costs of employee benefits by focusing on consumer driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance.

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