The Department of Labor’s enforcement division is currently instructing its regional offices to zero in on five areas of ERISA compliance: health fraud/Multiple Employer Welfare Arrangements (MEWAs); delinquent employee contributions; orphan plans; plan sponsor bankruptcy; and employee stock options/ESOPS, according to Virginia Smith, director of enforcement for DOL’s Employee Benefits Security Administration (EBSA).
Along with its normal routine of detecting violations of Title 1 of ERISA, DOL’s regions are now conducting exams of these five areas, Smith told attendees at the DOL Speaks conference in Washington April 25. In particular, EBSA is focusing on abusive and fraudulent MEWAs that promise inexpensive health benefit insurance but default on their obligations. With delinquent employee contributions, EBSA is investigating employers who delay forwarding contributions into 401(k)s and health care plans, or who convert the employee contributions to other uses, such as business expenses. In the last year, Smith said, EBSA has brought “more criminal cases on delinquent employee contributions” than in past years.
Then there are cases of participants and beneficiaries of plans whose sponsor has filed for bankruptcy. In 2001, EBSA started the REACT project, which enables EBSA to respond in an expedited manner to protect the rights and benefits of plan participants when the plan sponsor faces severe financial hardship or bankruptcy and the assets of the employee benefit plan are in jeopardy.
EBSA’s newest enforcement program is a post-Enron initiative in which DOL investigates ESOPs.
Smith said that EBSA conducts 4,000 investigations–civil and criminal–per year. In 2005, EBSA closed 3,782 civil and 196 criminal investigations, and obtained 106 indictments.