Seema Nanda Solicitor of Labor | Official Website
A federal court has sanctioned a $12 million distribution plan to assist health plan participants and medical providers affected by the mismanagement of a multiple employer welfare arrangement (MEWA). This decision follows legal action initiated by the U.S. Department of Labor, which revealed that former fiduciaries of the AEU Holdings LLC Employee Benefit Plan mishandled funds, resulting in approximately $83 million in improperly billed health claims.
On October 29, 2024, the U.S. District Court for the Northern District of Illinois approved Receivership Management Inc.'s proposal to distribute an additional $12 million to those impacted. Receivership Management acts as the MEWA’s independent fiduciary.
In 2017, following investigations by the Employee Benefits Security Administration offices in Chicago and Atlanta, the department's Office of the Solicitor filed a lawsuit against AEU Benefits LLC, AEU Holdings LLC, and Black Wolf Consulting Inc. The investigation uncovered breaches by these entities and Veritas PEO, leading to severe underfunding of the MEWA. These breaches resulted in participants across 36 states being charged approximately $83 million in health claims. To date, over $17 million has been recouped to address these unpaid claims.
Since November 2017, various legal measures have been employed against defendants, culminating in judgments that recovered $14 million for outstanding medical claims. From September 2021 onwards, further funds were retrieved through separate litigation efforts on behalf of the MEWA. Additionally, the court prohibited 16 defendants from serving as fiduciaries or service providers for ERISA-covered plans.
"The U.S. Department of Labor never wavered in its commitment to protecting participants and beneficiaries from unpaid claims because of fiduciary breaches," stated Solicitor of Labor Seema Nanda. "AEU Holdings, Black Wolf Consulting and Veritas PEO mismanaged the plan and left it severely underfunded."
Earlier this year in March 2023, an interim payment plan distributing $6.3 million was approved by the court. Medical providers accepted $5.3 million from this amount with agreements not to seek further payments from plan participants.
The final distribution plan will be enacted post a 30-day appeal period following its approval on October 29, 2024. It includes distributing an additional $9.4 million to medical providers who accepted interim payments and allocating $2.7 million directly to plan participants whose providers did not accept interim payments.
"The egregious violations of the Employee Retirement Income Security Act by AEU Holdings, Black Wolf Consulting and Veritas PEO left plan participants with unpaid claims," said Assistant Secretary for Employee Benefits Security Lisa M. Gomez.
At its peak operation level, MEWA supported around 14,000 individuals working for over 560 employers across 36 states. Numerous complaints highlighted systemic failures within MEWA regarding medical claim payments.
Further details about this case can be accessed via the independent fiduciary’s webpage.
