U.S. Department of Labor Seeks to Amend Complaint to Protect Participants And Beneficiaries of Failing Multiple Employer Welfare Plan

CHICAGO, IL – The U.S. Department of Labor has filed a motion to amend its complaint requesting that the U.S. District Court, Northern District of Illinois, include additional defendants and claims in its action seeking to pay more than $50 million in unpaid participant health benefit claims in the AEU Holdings LLC Employee Benefit Plan.

The Department's amended complaint seeks to add as defendants Black Wolf Consulting Inc. owner Rod Maynor; AEU Holdings LLC owners Steven Goldberg and Stephen Satler; Veritas PEO LLC and Veritas Benefits LLC, and owners James D'Iorio and Charles LaMantia; and Wilson Benefits Services LLC and WBS LLC, and owner Donald R. Wilson.

The Plan is a Multiple Employer Welfare Arrangement (MEWA) formerly operated by the existing defendants, AEU Benefits LLC, AEU Holdings LLC, and Black Wolf Consulting Inc. In November 2017, the Department filed its original complaint after an Employee Benefits Security Administration (EBSA) investigation found the defendants violated provisions of the Employee Retirement Income Security Act (ERISA) when they failed to pay health benefit claims.

At its height, the MEWA provided health and welfare benefits to employer-sponsored ERISA-covered plans covering approximately 14,000 participants and beneficiaries. These participants worked for more than 560 employers in 36 states. Numerous participants alerted EBSA of the MEWA's serious failure to pay medical claims. As of September 2018, the MEWA has more than $50 million in processed but unpaid claims for medical services that participants had received as far back as January 2016.

The new filing requests that the court order AEU Holdings LLC, Black Wolf Consulting Inc., Maynor, Goldberg, Satler, Veritas, LaMantia, and D'Iorio to restore losses to the MEWA and participating plans caused by their fiduciary breaches, and disgorge all profits and fees. In addition, the filing requests that the court bar them from serving as fiduciaries or service providers to any ERISA-covered plan. Wilson Benefits Services LLC, WBS LLC, and Wilson are alleged to have knowingly participated in these violations and should similarly be required to disgorge all profits and fees.

EBSA investigators in Chicago and Florida found that contributions received from the participating plans were pooled in two offshore accounts in Bermuda as part of the MEWA for purposes of paying claims. These contributions were also used to pay excessive, undisclosed fees and expenses to the defendants, other service providers, and re-insurance providers. AEU Holdings LLC continued to pay these excessive fees despite the MEWA's inability to pay for millions in pending health claims.

EBSA's investigation also found Black Wolf Consulting Inc., Maynor, Veritas Benefits LLC, D'Iorio, and LaMantia used plan assets for their own business and personal use, transferring over $6.5 million from the Veritas Benefits LLC and Black Wolf Consulting Inc. benefits accounts to their own accounts. They also marked up the MEWA's contribution rates for their own benefit and Veritas received additional administrative fees from AEU Holdings LLC.

This litigation commenced in 2017 with the Department's filing of a temporary restraining order. The court granted the Department's request for the temporary restraining order, which immediately appointed an independent fiduciary to oversee the MEWA's operations; marshal and control the MEWA's assets related to the underlying participant plans; and perform an accounting of the MEWA's financial position. The order also instructed the fiduciary to terminate the MEWA and determine the MEWA's ability to pay outstanding participant health claims. The independent fiduciary continues to work to negotiate and pay outstanding health claims.

The Department also exercised its authority to issue a cease and desist order preventing sub-brokers and aggregators working on the MEWA's behalf from marketing it to prospective employers or from enrolling new employers. The U.S. Secretary of Labor has the authority to issue an ex parte cease and desist order to a MEWA whenever the Secretary finds reasonable cause to believe, among other things, that the respondent(s) engaged in conduct that creates an immediate danger to public safety or welfare.

Members of the public seeking more information may contact EBSA at https://www.askebsa.dol.gov or 866-444-3272.

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Docket Number: 1:17-cv-07931-JHL-SMF