DOL Recovered More than $2.4 Billion for Benefit Plan Participants in 2021

The United States Department of Labor has issued a fact sheet summarizing the enforcement results obtained by its Employee Benefits Security Administration ("EBSA") division in the fiscal year 2021. The Employee Retirement Income Security Act of 1974 ("ERISA") is enforced by the EBSA.

Source: MONDAQ | Published on January 18, 2022

EMPLOYEE BENEFITS CONCEPT

The fact sheet focuses on the over $2.4 billion recovered by EBSA on behalf of ERISA plans, participants, and beneficiaries. Civil enforcement actions resulted in a $1.95 billion recovery for plan fiduciaries. Recovery from informal complaints is also highlighted, as are compliance assistance programs. These enforcement statistics indicate that in 2022, all plan fiduciaries should take steps to identify plan administration issues that could lead to enforcement actions.

Civil Enforcement and Recovery Statistics from the EBSA

In 2021, EBSA completed 1,072 civil investigations, 741 (69%) of which resulted in monetary recoveries for plans or other corrective action. The vast majority of EBSA's monetary recoveries were for benefit payments made to terminated vested participants in defined benefit plans: EBSA recovered $1.548 billion on behalf of 16,024 such participants and only $398 million through its other civil enforcement investigations combined.

In 2021, EBSA also obtained 449 non-monetary corrections and injunctive relief orders, including plan procedure reforms (124), orders prohibiting individuals from acting as fiduciaries (34), court appointment of independent fiduciaries (16), and fiduciary removal (16). (6). To correct identified ERISA violations, EBSA relies heavily on voluntary compliance measures—only 70 cases were referred to the Solicitor of Labor for litigation.

Programs for Compliance Assistance

The EBSA's Voluntary Fiduciary Correction Program ("VFCP") encourages ERISA violations to be self-corrected. The EBSA received 1,201 applications for the VFCP in 2021. According to EBSA, this program enabled it to restore $34 million to plans.

Criminal Enforcement Statistics from the EBSA

EBSA opened 188 criminal investigations in 2021, 118 (63 percent) of which involved health plans. Furthermore, the EBSA issued 72 indictments against plan officials, corporate officers, or plan service providers, 39 of which involved health plans and 16 of which stemmed from the EBSA's Contributory Plans Criminal Project, which investigates delinquent employee contributions owed to retirement and health plans. EBSA obtained 38 guilty pleas or convictions as a result of its investigations, recovered nearly $4 million for plans or participants, and served 41 notice letters prohibiting convicted individuals from serving as plan fiduciaries or service providers.

Complaints Made Informally

Nearly 176,000 inquiries were received by the EBSA from individuals seeking assistance with employee benefit plan issues. EBSA recovered nearly $500 million through informal resolution of these complaints based on these inquiries. EBSA also opened 251 enforcement investigations in connection with the inquiries, often because the inquiries revealed an ERISA violation or because EBSA received multiple complaints about a specific plan or service provider.

What Should Plan Fiduciaries Do To Avoid EBSA Enforcement Action?

While the EBSA oversees all ERISA plans, the statistics above show that in 2021, the EBSA's primary activity was civil enforcement, with a focus on locating missing participants in retirement plans. Complaints about the same plans or providers frequently trigger EBSA investigations, especially when the complaints involve multiple plans, providers who serve multiple plans, or an unresponsive plan sponsor. This is consistent with the EBSA's stated national enforcement priority of investigating professional fiduciaries and service providers with oversight of large amounts of plan assets.

EBSA investigations have a high success rate and should be avoided at all costs. As a result, we advise fiduciaries to take the following steps to mitigate the risks of an EBSA investigation:

  • In accordance with recent DOL and EBSA guidance, implement or update a missing participant policy and administrative practices for defined benefit and defined contribution plans.
  • Establish and adhere to a compliance calendar that calls for a regular review of service providers, administrative processes, and plan responsibility allocations.
  • Investigate and respond fully, promptly, and fairly to participant questions or concerns, lowering the likelihood of a participant calling the EBSA hotline and initiating an EBSA inquiry.
  • Before an investigation, self-report and self-correct any identified issues (via the VFCP process) to control the process of correction and minimize the costs of any required corrective action.