The Fact Sheet recently published by the U.S. Department of Labor (DOL) documenting Fiscal Year 2014 civil and criminal enforcement activity under the Employee Retirement Income Security Act of 1974, as amended (ERISA) showed a continuing increase in the number of investigations conducted by DOL.

Criminal Investigations Are Increasing   As reported in Sutherland’s Legal Alert of January 4, 2010, DOL has been stating since at least 2009 that it would increase the frequency with which it, working with the U.S. Justice Department, would invoke the criminal provisions applicable to ERISA plans.

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In FY 2014, 365 criminal investigations were closed, representing a nearly 30% increase since FY 2010. This step-up in criminal investigations goes back even farther than 2009 – the number of criminal investigations has been trending upward since FY 2001, increasing 155% over that period – but has accelerated in recent years.

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While the number of persons indicted has also increased over this period of increased criminal investigations, only 23% of those investigations closed in FY 2014 resulted in guilty pleas and/or convictions, which is consistent with experience in the preceding three years but below the 14-year average of nearly 34% and the high water mark of nearly 57% reached in FY 2007.

Civil Investigations Are Increasing in Number But Declining in Rate of Results

DOL’s strategic plan for FY2014 through FY2018 also calls for vigorous civil enforcement, with a concentration on issues and areas that have the greatest impact on the protection of plan assets and participants’ benefits.

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The total number of ERISA civil investigations closed has been trending upward since FY 2010. In FY 2014, DOL closed 3,928 civil investigations, which represents a 26% increase over civil investigations closed in FY 2010 – fairly comparable to the percentage increase over this period in criminal investigations closed. DOL closed more civil investigations in FY 2014 than it has since FY 2004, when it closed 4,399.

Despite this recent increase, the number of civil investigations closed is still down overall since the early 2000s. In FY 2002, DOL closed about 25% more investigations than in FY 2014.

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The increase in civil investigations closed during the last few years has not been accompanied by a proportionate increase in results.

  • The number of investigations resulting in monetary results for plans or other corrective action has increased from 2,301 in FY 2010 to 2,541 in FY 2014, representing a 10% increase.
  • While the number of civil investigations yielding results has increased, civil investigations yielding results as a proportion of total civil investigations closed has declined from nearly 74% in FY 2010 to less than 65% in FY 2014 – the lowest rate of results in 12 years.

Monetary Results Were Relatively Low in FY 2014   Total monetary results from all EBSA enforcement and compliance activities in FY 2014 were low relative to previous year totals.

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Monetary results for FY 2014 totaled $599.7 million, which is below the 14-year average of $1.38 billion and is the lowest in the 14-year period from FY 2001 to FY 2014. Because monetary results year over year can vary widely with the character and size of the cases that reached closure in that year – by way of example, consider the anomalous results of FY2004 – FY2014 results may represent only a cyclical variation rather than a trend.