dol investigations of employee benefit plans:...
Post on 13-Aug-2018
220 Views
Preview:
TRANSCRIPT
The audio portion of the conference may be accessed via the telephone or by using your computer's
speakers. Please refer to the instructions emailed to registrants for additional information. If you
have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Presenting a live 90-minute webinar with interactive Q&A
DOL Investigations of Employee Benefit Plans:
Navigating Enforcement Actions,
Audits and Settlements
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
TUESDAY, JUNE 6, 2017
Ivelisse Berio LeBeau, Member, Sugarman & Susskind, PA, Miami
José M. Jara, Partner, FisherBroyles, LLP, New York
Tips for Optimal Quality
Sound Quality
If you are listening via your computer speakers, please note that the quality
of your sound will vary depending on the speed and quality of your internet
connection.
If the sound quality is not satisfactory, you may listen via the phone: dial
1-866-258-2056 and enter your PIN when prompted. Otherwise, please
send us a chat or e-mail sound@straffordpub.com immediately so we can
address the problem.
If you dialed in and have any difficulties during the call, press *0 for assistance.
Viewing Quality
To maximize your screen, press the F11 key on your keyboard. To exit full screen,
press the F11 key again.
FOR LIVE EVENT ONLY
Continuing Education Credits
In order for us to process your continuing education credit, you must confirm your
participation in this webinar by completing and submitting the Attendance
Affirmation/Evaluation after the webinar.
A link to the Attendance Affirmation/Evaluation will be in the thank you email
that you will receive immediately following the program.
For additional information about continuing education, call us at 1-800-926-7926
ext. 35.
FOR LIVE EVENT ONLY
Program Materials
If you have not printed the conference materials for this program, please
complete the following steps:
• Click on the ^ symbol next to “Conference Materials” in the middle of the left-
hand column on your screen.
• Click on the tab labeled “Handouts” that appears, and there you will see a
PDF of the slides for today's program.
• Double click on the PDF and a separate page will open.
• Print the slides by clicking on the printer icon.
FOR LIVE EVENT ONLY
DOL Investigations of Employee
Benefit Plans: Navigating
Enforcement Actions, Audits and
Settlements
Tuesday, June 6, 2017
Ivelisse Berio LeBeau, Esq. José M. Jara, Esq. Sugarman & Susskind, PA FisherBroyles, LLP
Miami, FL New York, NY
Background: DOL and EBSA
U.S. Department of Labor has many sub-
agencies, including:
Employee Benefits Security
Administration (EBSA)
◦ Charged with investigating ERISA violations
◦ Subpoena Power
Office of the Solicitor of Labor (SOL)
◦ “in house” DOL counsel
◦ Independent litigation authority
6
EBSA
National Office
◦ Different divisions with different missions
Regional Offices
◦ Regional Directors
◦ Pension Benefit Advisors
“customer service”; handle calls
◦ Investigators
Usually attorneys or accountants
◦ Supervisors
Usually former investigators
7
EBSA: Civil and Criminal
EBSA has broad investigative authority
Most EBSA investigations are civil, but
EBSA also has authority to conduct
criminal investigations
◦ Same investigators
◦ Some different rules for criminal cases
◦ Criminal cases go to the U.S. Attorney’s Office
instead of DOL Solicitor’s
Enforcement Manual on website
8
EBSA Enforcement Statistics
For FY2016 EBSA reports:
◦ $777.5 million recovered for direct payment to plans, participants, beneficiaries
$352 million Enforcement Actions
$394.2 million Informal Complaint Resolutions
◦ Over 2,000 civil cases closed; 67.7% with results
◦ 144 cases referred for litigation; 62 federal lawsuits filed
◦ 333 criminal cases closed; 96 indictments
Presentation describes EBSA regional office investigations that led to these results
9
Why me? (or who does EBSA
investigate?) EBSA investigators likely will not tell you
why your plan is being reviewed
Reasons for initiating reviews:
◦ Employee/Participant Complaints
Other Complaints
◦ Targeted:
National Office Enforcement Projects
Regional Office Enforcement Projects
Information Reported on Form 5500s
◦ Random?
◦ Referrals from other agencies 10
EBSA Enforcement Projects
Available on EBSA website (but have to look for it!)
National Enforcement Projects on: ◦ Major Case Enforcement Priority
◦ Employee Contributions Enforcement Priority
◦ Contributory Plans Criminal Project
◦ Plan Investments Conflicts
◦ Health Benefits Security Project (Part 7)
◦ ESOPs
◦ Bankruptcy (REACT)
◦ Abandoned Plans
◦ Voluntary Fiduciary Correction
11
Investigation Subjects
All Types of Employee Benefit Plans:
◦ Retirement, Health, Apprenticeship, Legal
Plan Sponsors
Plan Trustees
Named Fiduciaries
Functional Fiduciaries
Plan Administrators
Service Providers
◦ Consultants Custodians
◦ Investment Advisors Directed Trustees
12
What are they looking for?
Focus on investigating potential breaches
of ERISA fiduciary duty
Violations of:
ERISA §404 Fiduciary Duties
ERISA §406 Prohibited Transactions
ERISA §405 Co-Fiduciary Duties
ERISA Part 7 Health Plan Requirements
13
What are they looking for?
Common Scenarios:
◦ Delinquent Employee Contributions
◦ Excessive Service Provider Fees
◦ Imprudent Investments
◦ Plan Sponsor Bankruptcies
◦ Part 7 violations in Health Plans
◦ Abandoned Pension Plans
◦ Hard to Value Assets
14
EBSA Investigative Process
EBSA Enforcement Manual on website
Initial Contact
◦ Usually a letter/could be a phone call
Request for Documents
◦ Standard and non-standard requests
◦ If don’t cooperate expect a subpoena
◦ Accommodation subpoenas
15
Documents
Does request ask for copies to be sent to EBSA office or for on-site review?
◦ Pros and Cons to both
◦ Copying Costs/Electronic Media
Standard Requests:
◦ Governing Plan Documents
Plan Document/Amendments
Trust Document/Amendments
SPD/SMMs
16
Documents
Standard Requests
◦ Required Reporting
5500s
Annual Funding Notices
SBCs
Participant Statements
SARs
◦ Audits
◦ Fidelity Bond/Fiduciary Liability Policy
◦ Service Provider Contracts
17
Documents
Standard Requests: ◦ Plan Contribution records Employee contributions
CBAs
◦ Meeting Minutes
◦ Participant Loan records
◦ Income/Expenses/Journals
◦ Appraisals
◦ Part 7/ACA related
◦ COBRA/HIPAA/other notices
◦ Correspondence/E-mails
18
Documents
Standard Requests:
◦ Bank Accounts/Statements
◦ Investment Accounts/Statements
◦ Real Property Records
◦ Securities/Bonds
◦ Claims Adjudication Records
Non-standard requests
◦ Requests that refer to anything specific, such as a specific investment/type of investment; a specific claim or type of claim; specific plan details
19
On-site Review
Most investigations will include an on-site
review
◦ “desk audit” exception
What to Expect:
◦ Usually at primary place of business
◦ Can last days or weeks
◦ Investigator will likely review documents
◦ Investigator may conduct interviews
20
Interviews
Typically interviews held on-site,
sometimes at EBSA office
◦ Voluntary
◦ Not recorded
◦ Not under oath
◦ No time limit
Attorney Present?
◦ Who’s the Client?
21
Interviews
Common interview subjects:
◦ Plan Administrator
If in-house or entity, could interview several people
who perform different functions
◦ Trustees
If board usually designee or officers; could interview
all
◦ Fiduciaries
◦ Plan Sponsor
22
Interviews
Standard Procedures/Disclosures
Circumstances matter:
◦ Tone of interviewer
◦ Attitude of interviewee
◦ Point of investigation
◦ Nature of Review
Practice Tips
Administrative Depositions
23
Follow Up (and why does it take so
long?) There will be follow up questions
There will likely be follow up requests for
documents
There could very likely be long periods of
time between requests, contacts
What’s happening at EBSA?
◦ Reports- Investigator, Supervisor, National
◦ Reviews-Supervisor, Regional, National
24
After the investigation is complete
Most investigations lead to a letter from
EBSA reporting the results
Possibilities:
◦ No findings/Closing letter
◦ Findings but no action/Closing letter
◦ Voluntary Compliance Request
◦ Referral to Solicitor’s Office for litigation
25
Voluntary Compliance
EBSA encourages voluntary compliance
Offered in almost all matters
Work with the investigator and correct issues identified in the review
◦ Change procedures
◦ Adopt policies
◦ Enforce policies
◦ Restore assets
◦ Repay monies
◦ Correct prohibited transactions
26
Voluntary Compliance
Submit response to VC Letter
◦ Address all issues raised
◦ Include any defenses to claims
◦ Describe voluntary compliance actions
◦ Include exhibits
◦ Include additional information as
relevant to address issues raised
27
Voluntary Compliance
If money is paid to address issues—
◦ Recoveries generally go to an employee
benefit plan
◦ Recoveries could go to a person
◦ Recoveries do not go to the DOL or Treasury
If address issues to EBSA’s satisfaction,
EBSA will issue a No Action letter
28
502(l)
ERISA §502(l) requires that the DOL
assess a 20% penalty on amounts
recovered by settlement agreement or
court order
Are voluntary compliance actions taken in
response to a VC letter from EBSA a
settlement agreement?
EBSA discretion to reduce penalty
29
Referral to Solicitor’s Office
If voluntary compliance efforts fail, or
EBSA does not seek voluntary
compliance, EBSA refers matter to
Solicitor’s Office for litigation
Office of the Solicitor
◦ National Office/Pension Benefits Security
Division (PBSD)
◦ Regional Offices
◦ Represent DOL in federal court cases
◦ Has independent litigation authority 30
Solicitor’s Office (SOL)
SOL attorney will receive all investigation
materials, interview reports, and
documents, along with EBSA report
describing investigation and findings
SOL attorney will conduct independent
review of facts and claims
SOL attorney will likely reach out to
subjects of investigation
31
Solicitor’s Office (SOL)
SOL response may include:
◦ Request for tolling agreement
◦ Request for documents
◦ Request for meeting to discuss issues
◦ Filing case in federal court
Cases frequently settle with SOL
◦ Both before and after filing in federal court
32
Solicitor’s Office (SOL)
Complaint/Consent Judgment
◦ If enter into negotiations before SOL files in
federal court
◦ SOL will file complaint with allegations
◦ Simultaneously file negotiated consent
judgment
◦ Several non-negotiable items:
No denials of liability
DOL will issue press release
DOL will assess 502(l) penalty
33
Solicitor’s Office (SOL)
If negotiations with SOL fail, or if no tolling agreement reached, or if facts show exigent circumstances, SOL will file complaint in federal court
Will proceed as any other federal litigation
Any settlement of case after filing will require settlement agreement with same parameters/limitations as Consent Judgment
34
Related concerns
Internal Revenue Service
◦ DOL only acts on its own behalf
◦ Issues in DOL matter could raise excise tax concerns, i.e.
Section 4975 if any prohibited transactions
Section 4980D if any health plan violations
◦ Tax qualification issues are referred to IRS
Participant Complaints
◦ DOL action does not bind Plan participants
◦ Participants can’t get same recovery twice
35
Voluntary Fiduciary Correction
Program (VFCP)
The VFCP is NOT available if a plan is
already under review
If Plan is already being reviewed and
attempt VFCP it will be denied
If have self-identified fiduciary violations,
and not under review, consider entering
the VFCP and addressing the issues raised
before EBSA opens an investigation!
36
Questions?
Ivelisse Berio LeBeau, Esq. José M. Jara, Esq.
Sugarman & Susskind, PA FisherBroyles, LLP 100 Miracle Mile, Suite 300 445 Park Avenue, 9TH Fl.
Coral Gables, FL 33134 New York, NY 10022
Ivelisse@sugarmansusskind.com jose.jara@fisherbroyles.com
305-529-2801 (646) 457-1517
37
Ivelisse Berio LeBeau, Esq. Ms. Berio LeBeau has been working in the employee benefits law field for more than 20 years. Ivelisse counsels the boards of trustees of jointly administered multiemployer pension and welfare benefit funds; represents fiduciaries in litigation and in connection with government agency investigations; represents employees in employment law matters, including participants in ERISA benefit plans; and provides general ERISA compliance advice to plan sponsors. At present her practice has focused on the requirements and implications of the Affordable Care Act; the responsibilities of service providers to benefit plans; and representing plans and their trustees in investigations conducted by the U.S. Department of Labor.
From 1994 to 2007 Ivelisse served as a Trial Attorney in the Solicitor’s Office of the U.S. Department of Labor. At the DOL she represented the Employee Benefits Security Administration (“EBSA”) in lawsuits brought under ERISA alleging that fiduciaries to employee pension and welfare benefit plans breached fiduciary duties imposed by ERISA or were engaged in transactions prohibited under ERISA, including actions against fiduciaries who had made imprudent investment decisions and against service providers who generated and retained undisclosed indirect compensation. Ivelisse also worked closely with EBSA investigators providing legal support and assistance during EBSA investigations.
In September of 2015 Ms. Berio LeBeau was inducted as a Fellow of the American College of Employee Benefits Counsel, an invitation-only organization of nationally recognized employee benefits lawyers who have made significant contributions to the advancement of the employee benefits field.
Ms. Berio LeBeau is Editor in Chief of the upcoming 4th edition of Employee Benefits Law to be published by Bloomberg BNA Books later in 2017; she was previously co-editor of the 3rd edition of Employee Benefits Law and Editor in Chief of the 2014 and 2015 Supplements to the 3rd edition. This legal treatise is based on contributions by members of the Employee Benefits Committee of the American Bar Association’s Labor and Employment Law Section. Ivelisse is also a frequent speaker on employee benefits law topics at conferences and seminars sponsored by organizations including the American Bar Association, the International Foundation of Employee Benefit Plans, the Florida Bar Labor and Employment Section, and local bar and trade organizations.
38
Jose M. Jara, Esq.
Mr. Jara has over 20 years of ERISA and employee benefits experience,
ranging from governmental compliance, fiduciary liability insurance, to
the application of ERISA’s fiduciary standards and prohibited
transaction provisions. Mr. Jara has extensive experience resolving
issues for corporate plan sponsors and multiemployer plans before
the U.S. Department of Labor, where he was formerly a senior
pension law specialist and investigator.
39
top related