The United States Department of Labor (DOL) recently published its Fiscal Year 2016 “Fact Sheet” documenting the criminal and civil enforcement activities of its Employee Benefits Security Administration (EBSA) under the Employee Retirement Income Security Act of 1974 as amended (ERISA). The recent trend of increased criminal enforcement and decreased civil enforcement continued in FY 2016, but with total monetary recoveries increasing for the second year in a row due to historically high results from EBSA’s informal complaint resolution system.
Criminal Investigations Remain a High Priority In FY 2016, DOL, working in conjunction with the Department of Justice, closed 333 total criminal investigations, marking a 20% increase over FY 2015 and the second highest performance in the last decade. This trend continued the drastic increase in criminal investigations since the DOL’s 2009 announcement that it would increase its efforts to enforce the criminal provisions applicable to ERISA plans.
In terms of success rates, there was a slight increase in the rate of criminal investigations closed with guilty pleas or convictions over FY 2015. In FY 2016, there were 75 successful investigations closed—up from FY 2015’s total of 67, which was a five-year low—representing a nominal decrease in the rate of results when compared to the increased total number of investigations closed, which is within the average annual fluctuation over the last 15 fiscal years.
In FY 2016, the total number of civil investigations closed as well as civil investigations closed with results decreased for a third consecutive year. The DOL closed a total of 2,002 civil investigations; of those, 1,356 civil investigations were closed with results. Both of these figures represent approximately a 17% drop from the FY 2015 civil investigation results.
The total monetary results for all EBSA enforcement and compliance activities have gradually increased since FY 2014’s historic low.
In FY 2016, EBSA reported total monetary recoveries of $777.5 million, an increase of $81.2 million over FY 2015. Although that is an 11% increase—directly in line with the average annual fluctuation of approximately 10%—it is still significantly lower than the absolute dollar value for average annual recoveries of $1.284 billion since FY 2001.
Sustained Impact of the Informal Complaint Resolution System Recoveries from the Informal Complaint Resolution System dipped slightly from FY 2015 while recoveries from Prohibited Transactions Corrected and Plan Assets Protected increased slightly.
In terms of total monetary results, recoveries from the Informal Complaint Resolution System represented 51% of the total recoveries for FY 2016, which was a slight drop from 58% in FY 2015. However, this still amounts to the third highest result when compared to the 15-year average. Conversely, recoveries from Prohibited Transactions Corrected and Plan Assets Protected increased to 18%, which nonetheless was the third lowest in the last 15 years. These two departures from the historical averages represent an inverse relationship between the informal complaint resolution system and prohibited transactions—as recoveries from the informal complaint resolution system have risen, recoveries from prohibited transactions have declined.
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