On May 27, 2021, the Government Accountability Office (GAO) publicly released a report on the Employee Benefits Security Administration’s (EBSA’s) ERISA enforcement activities. The report followed a fifteen-month study focused upon the EBSA’s management of and efforts to improve the enforcement process, as well as the immediate and long-term challenges presented by the COVID-19 pandemic. It was the first GAO report issued on EBSA enforcement since 2007.
The EBSA is the DOL agency primarily responsible for protecting the rights of participants in employer-sponsored group health and retirement plans. As of fiscal year 2020, this included about 154 million participants in 722,000 retirement plans and 2.5 million health plans with combined assets of over $10.7 trillion. The EBSA’s ERISA enforcement activities are largely performed by investigators in its 10 regional offices, with policy direction, guidance and oversight provided by the EBSA national offices.
First, the recent GAO report explains that the EBSA generally focuses enforcement efforts in three broad categories of ERISA requirements that apply to both retirement and health plans and their service providers: participant disclosures (e.g., SPDs), plan reporting (e.g., Forms 5500) and fiduciary responsibilities. Enforcement is primarily through civil investigations of plans; two-thirds of such investigations are initiated from leads identified by EBSA staff.
According to the EBSA data, retirement plan investigations typically involve an examination of plan-related financial transactions to assess whether the fiduciary is managing plan assets prudently and in the best interest of participants. Health plan investigations often focus on enforcing federal health plan coverage and availability requirements, and also frequently target financial solvency and fraud in multiple employer welfare arrangements. For fiscal year 2021, the EBSA’s operating plan includes an investigative focus on health plans’ compliance with mental health parity requirements and reimbursement rates, autism treatment limitations, denials of claims for emergency services, and fees paid to insurance companies and other service providers, among other things.
Generally, the EBSA encourages plans to voluntarily remedy identified violations. Remedies may include restoring plan or participant assets, paying erroneously denied claims and making necessary administrative changes. Most investigations are settled at the regional level; however, unresolved civil or criminal cases may be referred to the DOL’s Office of the Solicitor or the Department of Justice, respectively. In fiscal year 2020, approximately 84% of investigations were civil and 16% criminal in nature, resulting in over $3 billion in payments restored to plans and participants.
Next, the GAO report observes that the EBSA has used a variety of approaches to improve its investigative processes. These strategies include improved targeting techniques (to identify plans for investigation) and prioritization of cases by their potential to affect many participants and recover significant assets, such as restored retirement plan contributions or payments for incorrectly denied medical claims. (Prior to 2013, enforcement efforts focused on the number of cases closed, rather than the impact of such cases.) As a result, greater resources are allocated to major cases, national enforcement projects and evolving issues. Additionally, to ensure the consistency and quality of enforcement efforts across regions, the EBSA provides all employees with ongoing training, written protocols and management oversight.
Finally, the report addresses the numerous challenges for benefit plans and the EBSA that resulted from the COVID-19 pandemic. For example, one cited initial challenge for plan administrators was the implementation of COVID-19 relief measures (e.g., under the FFCRA and CARES Act) without regulations. Guidance subsequently issued by the EBSA in the form of FAQs and notices largely addressed these concerns. However, the report also recognizes the ongoing COVID-19 issues faced by plan sponsors, such as the financial difficulties of paying plan health claims with reduced cash flows, the administrative burdens created by the COVID-19 deadline extensions, and the challenges of finding retirement participants entitled to benefits who terminated employment during the pandemic.
The report incorporates numerous charts that reflect the EBSA organizational structure and statistical enforcement data, amongst other items. The appendices provide historical information on national and regional enforcement projects from 2011 through 2021 and common ERISA violations identified in investigations.
Employers that sponsor group health and/or retirement plans may find the GAO report particularly insightful in understanding EBSA ERISA enforcement approaches and current priorities.