31 Jan

The Georgetown University Health Policy Institute's Center on Health Insurance Reforms ("CHIR") recently announced the Department of Labor's ("DOL") release of thousands of pages of its investigative records regarding Multiple Employer Welfare Arrangements ("MEWAs"), including Association Health Plans ("AHPs"). The release was in response to CHIR's Freedom of Information Act ("FOIA") request, following the DOL's attempt to expand AHPs in 2018. 

At the federal level, the DOL’s Employee Benefits Security Administration ("EBSA") is primarily responsible for MEWA enforcement, including reporting and disclosure requirements and fiduciary conduct under the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

CHIR's Case Summary Report indexes “open” investigations from 2006 through the present where a case summary was written and submitted to DOL’s Quarterly MEWA Reports. Links to data within the Case Summary Report provide insight not only into the investigation process, but also to specific findings and the DOL's enforcement actions. The hundreds of Voluntary Compliance letters and case summaries not only highlight the primary areas of the DOL's focus in MEWA investigations, but also indicate where EBSA may be willing to yield or compromise. 

What else do the DOL's MEWA files tell us?

  • MEWA compliance/investigations are a DOL national enforcement priority. Chances are, if you sponsor or administer a MEWA (including an AHP), a DOL investigation is in your future. And just because you've already been audited doesn't mean the DOL won't return.
  • Common corporate practices can create major problems in the MEWA context. DOL MEWA investigations frequently focus on basic corporate expense categories such as compensation, professional fees, marketing and travel. Many MEWA sponsors have founds themselves in hot water for failing to recognize the special rules that apply to these expenses when paid for from "plan assets" under ERISA.
  • All MEWA revenue, including premiums, contributions, commissions, interest and other income, is generally subject to ERISA's "plan asset" rules. DOL investigations routinely scrutinize a MEWA's receipt of plan assets and the spending thereof. Revenue sharing arrangements and any transactions with related parties are generally red flags for regulatory scrutiny.
  • MEWA investigations (and DOL enforcement actions, including sanctions, penalties and litigation) are not limited to fly-by-night operations that fail to pay claims. Plenty of MEWAs sponsored by reputable trade and professional organizations have found themselves in receipt of multi-million dollar settlement negotiations with the DOL in relation to inadvertent compliance failures. (The dollars can add up quickly when multiple years are involved. See below.)
  • MEWA investigations routinely involve multiple plan years (4 to 6 years is common). The investigation itself can last for several years as well.
  • For AHP sponsors specifically: don't expect to profit from your MEWA. Time and again, the DOL has made clear that an entity sponsoring a MEWA may not profit from its operations. This rule extends not only to administrative fees, but to commissions, marketing and agency fees as well.

Not only is this new data from the DOL (thanks to CHIR!) instructive as to the MEWA investigation process, it more importantly provides MEWA sponsors and administrators with helpful guidance for enhancing and maintaining ERISA compliance. As evident from the DOL's MEWA files, an ounce of prevention is worth a pound of cure.

ERISA Law Practice, LLC provides full service legal advice to MEWAs, including AHPs. Contact us at 303.808.4041 for additional information.

Additional information provided by CHIR can be accessed at http://chirblog.org/the-mewa-files/

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