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Report on ERISA Enforcement Identifies Common Violations, COVID-19 Challenges, and Regional Compliance Projects


· 5 minute read


· 5 minute read

GAO Report on Employee Benefits Security Administration: Enforcement Efforts to Protect Participants’ Rights in Employer-Sponsored Retirement and Health Benefit Plans, GAO-21-376 (May 2021)

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The U.S. Government Accountability Office (GAO) has released a report on ERISA enforcement efforts by the DOL’s Employee Benefits Security Administration (EBSA). The GAO explains that it undertook the study because effective oversight and enforcement are critically important to the integrity of the private employee benefit system, and much has changed since its last performance audit of EBSA in 2007. The report outlines EBSA’s organizational structure and investigative process, detailing the various ways in which case leads are generated and highlighting the role of EBSA’s ten regional offices, which may develop regional compliance projects and expertise based on local issues and results of previous investigations. According to the report, EBSA generally focuses its enforcement efforts in three broad categories applicable to retirement and welfare plans and their service providers: disclosures to participants; reporting to relevant agencies; and fiduciary responsibilities. For example, EBSA’s retirement plan investigations typically target financial transactions and consider whether fiduciaries are managing plan assets prudently and in participants’ best interests. EBSA’s health plan investigations often focus on compliance with federal health plan coverage and availability requirements and returning money to plans and participants affected by improper administrative practices or mishandling of plan funds (especially in the context of MEWAs). Since 2013, EBSA has prioritized cases that may result in large recoveries or affect many participants, e.g., through restored retirement plan contributions or payment of incorrectly denied medical claims. This has resulted in fewer closed cases but higher aggregate monetary recoveries.

Part of the report addresses challenges presented by COVID-19. Immediate challenges such as the lack of guidance on legislative relief and the inadequacy of existing guidance for the circumstances created by the pandemic have largely been resolved. Longer-term challenges identified by stakeholders include meeting reporting deadlines; finding missing retirement plan participants in light of increased employee turnover; overcoming pandemic-related economic hardships; and addressing administrative and financial difficulties created by deadline extensions during the COVID-19 outbreak period (see our Checkpoint article). EBSA officials echoed some of these concerns.

An appendix lists the top ten ERISA violations identified in EBSA investigations for the 2020 fiscal year. The top five violations involve fiduciary breaches and prohibited transactions. Others include improper benefits to the employer, and failures relating to participant disclosures, bonding, Form 5500 reporting, and the requirement to hold plan assets in trust. Another appendix lists EBSA regional offices’ compliance projects for the 2021 fiscal year, such as improper compensation to plan sponsors or their employees (Cincinnati); mental health parity for opioid addiction (Kansas City); and network adequacy for mental health providers (Philadelphia).

EBIA Comment: The report provides valuable insights into EBSA’s enforcement process and priorities. Plan sponsors and service providers—especially those with fiduciary duties—may be especially interested in knowing how EBSA chooses cases to investigate, and the projects being pursued by EBSA’s regional offices. For more information, see EBIA’s ERISA Compliance manual at Section XXXVII (“DOL Audits and Investigations Under ERISA”), and EBIA’s 401(k) Plans manual at Section XXXII.C (“DOL Investigations”).

Contributing Editors: EBIA Staff.

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