Consulting | Brokerage | Compliance | Communication | Administration
Webinar
Department of Labor Audits And Related Topics
Presented by
Patrick C. Haynes, Jr., Esq., LL.M.
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Patrick C. Haynes, Jr.
As counsel for Crawford Advisors’ Employee Benefits and Executive Compensation Group, Mr. Haynes advises employers and plan sponsors in a variety of health and welfare benefit plan compliance matters, including, but not limited to, tax qualification and other Internal Revenue Code issues, ERISA, COBRA and HIPAA portability and privacy issues. Mr. Haynes lectures frequently and has published many articles on health and welfare benefit plan compliance topics.
Today’s presenter
Practice Areas Employee Benefits & Exec Comp, ERISA, COBRA, HIPAA, §125, and §§ 105, 106, 129, 132
Education Temple University School of Law, LL.M.
Rutgers University School of Law, J.D.
Rutgers University School of Business, M.B.A.
Rutgers University College of Arts & Sciences, B.A.
Admitted to Practice U.S. Supreme Court
Federal and State Courts of
New Jersey
Pennsylvania
Connecticut
District of Columbia
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Polling Questions for Participants
Relating to Audits FY 2010
• How many cases were referred for litigation?
• What percentage of investigations were closed with results?
• Number of individuals indicted?
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Employee Benefits Security Administration
Employers that have had their group health plans audited by the Employee Benefits Security Administration (EBSA, the arm of the U.S. Department of Labor that enforces Title I of ERISA) are aware of the broad nature of the document requests and compliance reviews carried out under these audits.
The EBSA has updated its audit protocols to include a review of plans' compliance with the Patient Protection and Affordable Care Act (PPACA), the Genetic Information Nondiscrimination Act (GINA), and wellness programs.
An uptick in PPACA enforcement appears to be underway, and many plan sponsors have received EBSA audit notices.
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The Process
What is the Process of a DOL Audit?
• Document Request Letter (either Limited Targeting or an Open Investigation)
• Document Production
• On‐Site Interviews
• No Action/Violation Letter
• Closing Letter
• One Way Closing Letter/Settlement Agreement
• Civil Litigation Referral or Criminal Investigation
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Document Request
A standard request includes: 49 potential items for review, 26 to be copied and provided in advance of the audit
• Plan documents, including amendments
• SPD, Benefits Booklet and other docs describing eligibility
• Summary of Material Modifications (SMMs)
• IRS determination letters
• Signed 5500s
• Summary Annual Reports (SARs)
• Transaction records (bank statements, cancelled checks
• List of plan service providers and associated contracts
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Document Request (cont.)
• Participant enrollment packages
• Identity of plan trustees, administrators, etc.
• All Policies and Procedures (P&Ps) related to ERISA Title I (HIPAA, MHPA, COBRA, etc.) • P&Ps related to determining plan eligibility
• P&Ps related to claims and appeals
• Sample HIPAA certificate of coverage
• N&MHPA and WHCRA notices
• HIPAA Special Enrollment notices
• Claims incurred reports
• Materials describing wellness programs
• Required Health Reform notices
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What are they looking for?
EBSA audits examine compliance with a range of federal statutes and regulations, such as ERISA, HIPAA, COBRA, and the Women's Health and Cancer Rights Act.
Many will be facing audits on the full range of PPACA mandates.
The DOL's audit letters are looking for information and documentation concerning particular aspects of the PPACA, such as the plan's grandfather status, coverage for adult children, lifetime and annual limits, and claims and appeals procedures.
The DOL also is looking at the design of wellness programs offered in connection with group health plans and the related, required notices that have to be provided with outcome-based programs.
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Best Compliance Practices
Generally, plan sponsors and administrators must be able to demonstrate that their plans comply with the PPACA, which requires documentary evidence from plans, record keepers and/or service providers.
Written records of the steps taken to comply with the PPACA Since Sept. 23, 2010, including detailed records of participation information and communications with participants about enrollment periods and coverage, should be retained in a readily accessible fashion.
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How can this happen?
DOL investigations can be triggered by complaints from employees, former employees, unions, or competitors; and routine audits also can be performed, often focusing on a particular industry or type of employer.
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Employee Retirement and
Security Act of 1974 “ERISA”
Employers Subject to ERISA • ERISA Section 4(a) states that the provisions of ERISA Title I apply to any
employee welfare benefit plan if it is established or maintained:
• by an employer engaged in commerce or in any industry or activity affecting commerce;
• by any employee organization(s) representing employees engaged in commerce or in any industry or activity affecting commerce; or
• by both.
Exemptions • Indian Tribal Governments
• Church Plans
• Governmental Entities
• Subject to Public Health Service Act (PHSA)
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DOL ERISA Enforcement
Office of the
Secretary of Labor
Office of the Deputy
Secretary
Chief of Staff
Office of the 21st Century Workforce
Executive Secretariat
Scheduling & Advance
Center for Faith Based & Community Initiatives
Office of Public Liaison
Adjudicatory Boards
Office of
Congressional &
Intergovernmenta
l Affairs
Office of the
Assistant Secretary
for Administration
& Management
Office of the
Chief Financial
Officer
Office of the
Solicitor
Office of
Public Affairs
Office of the
Assistant Secretary
for Policy
Employment &
Training
Administration
Women’s Bureau Veterans’
Employment &
Training Service
Bureau of
International
Labor Affairs
Employment
Standards
Administration
Pension Benefit
Guaranty
Corporation
Office of
Disability
Employment
Policy
Occupational
Safety & Health
Administration
Mine Safety &
Health
Administration
Employee
Benefits Security
Administration
Bureau of Labor
Statistics
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Investigative Powers
DOL's Investigation Powers
• The DOL's investigative authority
comes from ERISA §504
• Provides the agency with power to
investigate whether “any person has
violated or is about to violate any
provision of ERISA Title I or any
regulation or order issued under Title I.”
• The DOL may commence an
investigation and require records
whether or not it has reasonable cause to
believe any particular violation exists.
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Investigative Powers (cont.)
DOL's Investigation Powers (continued)
• ERISA §504(a)(1) permits the DOL to investigate whether any person has
violated or will violate ERISA.
• ERISA §504 states that the DOL may make available to any person actually
affected by any matter which is the subject of an investigation (and to any
department or agency of the United States), information concerning any
matter which may be the subject of an investigation.
• In addition to its power to obtain documents in connection with an
investigation, the DOL has the broad general authority to request production
of documents “relating to” an ERISA plan.
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The Enforcement
EBSA Enforcement Priorities
• Focus on abuses by service providers
• Focus on general health plan violations,
HIPAA, and other health mandates
• Focus on Multiple Employer Welfare
Arrangements (MEWAs)
• Focus on bankrupt employers (REACT)
• Focus on employee contributions
• Plan expenses/settlor fees
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The Enforcement (cont.)
Civil Investigations‐Types
• Limited Reviews (No Specific Violations Are Suspected)
• Fiduciary Investigations
• Prohibited Persons Investigations
What is the Likelihood of a Civil Investigation?
• EBSA's oversight authority extends to over 708,000 retirement plans, 2.8 million health plans, and a similar number of other welfare benefit plans (such as life or disability insurance).
• In FY 2010, EBSA closed 3,112 civil investigations, with 2,301 (73.94%) resulting in monetary results for plans or other corrective action.
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Will they Sue?
Will the Department of Labor Sue if there is a violation found?
In FY 2010, 264 cases were referred for litigation. Nationwide in FY 2010, litigation was filed in 128 civil cases.
• Civil Investigations closed: 3,112
• Closed with Results: 2,301
• Referred for Litigation: 264
• Litigation Filed: 128
74% Closed with Results
In FY 2010, EBSA closed 281 criminal investigations; 97 closed with pleas or convictions, 96 individuals were indicted.
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