UPDATE: On December 16, 2019, DOL released an additional batch of case files, this time from the San Francisco Regional Office. While we haven’t been able to take a deep dive into these records yet (a lot of which go back to the 1980s and 1990s), we have updated the table to identify key case files, including letters and closure memos from DOL, that match up with the San Francisco cases included in the Case Summary Report. Specifically, the cases that have been updated in the Table and for which new records are available are Case Nos. 70-012624; 70-012961; 70-012978; 70-013041; 70-013055; 70-013640; 70-013641; 70-013726; 70-014050; 70-014353; 70-014489; 70-015036; 70-015037; 70-015038; 70-015117; 70-015265; 70-015766; 70-015853; 70-015868; 70-016010; 70-016372; 70-016392; 70-016407; 70-016477; and 70-016495.
CHIR is excited to announce the release of several thousand pages of Department of Labor (DOL) investigative records regarding Multiple Employer Welfare Arrangements (MEWAs), including Association Health Plans (AHPs). Under federal law, the regulation of MEWAs is a joint federal-state responsibility. The DOL’s Employee Benefits Security Administration (EBSA) is charged with enforcement of federal standards for MEWAs, including reporting and disclosure requirements and the fiduciary conduct of individuals responsible for administering the benefit plans offered under these arrangements.
These records include:
- A Case Summary Report containing all case summaries for “open” investigations since 2006 through the present where a case summary was written and submitted to DOL’s Quarterly MEWA Reports. Each summary represents a MEWA or MEWA-related entity where the EBSA conducted a civil investigation. The summaries span the life of the case.
- Closed investigative files from EBSA’s regional and district offices going back at least seven years. These files include, to the extent the documents are present in the respective files, EBSA’s Reports of Investigation (memos describing DOL’s actions as to a particular case) and other internal memos and notes; voluntary compliance letters, case closure letters, and other communications between DOL and parties under investigation; and association charters, bylaws, and articles, plan documents, and other factual material. To date, we have received and posted files from New York, Seattle, Chicago, Boston, Cincinnati, and Los Angeles.
What’s more, to make these records readily accessible to the public, CHIR has prepared a table, with links, that you can use as a guide to all the cases included in the Case Summary Report. This table includes basic information such as case numbers, case names, the regional or district office that we know or suspect (based on context clues) filed the case summary, and, where identifiable, whether the subject of investigation is an AHP or AHP-related entity, the states impacted, and the years in which the MEWA or MEWA-related entity was under investigation. The table also provides a brief snapshot of each case. These snapshots are not a final or authoritative take on a case, but should be used as a flag that a case may warrant closer attention based on your interests.
Where did this information come from and why does it matter?
As prior Georgetown reports have detailed at length, MEWAs, including AHPs, have a troubled history, rife with fraud, insolvency, and abuse. But reams of information about the scope of problems associated with these plans over the past decade has remained hidden from the public, stored away in governmental files and reports. Disturbingly, this information—and any analysis of it—was completely left out of the Trump Administration’s proposed rule on AHPs. Thus, before the Trump administration finalized rules that would undermine states’ authority to regulate AHPs and allow them to proliferate unchecked, CHIR and others demanded that the public be given access to agency records that would shed light on the potential impacts this rule change would have.
Unfortunately, just months later DOL proceeded to finalize the AHP rule with only modest changes and without releasing any of its records. In the final rule, DOL did note that it “recently examined” its internal records relating to MEWAs (including AHPs) operating between 2012 and 2016 and provided some high-level takeaways from these reports. But these takeaways were neither comforting nor satisfying:
- As of 2016, approximately 1.9 million employees were covered by 536 MEWAs. But these estimates and others may be incomplete or inaccurate, because reporting violations appear to be common. As DOL stated, “[w]hile plan MEWAs generally are required to file both Form M–1 and Form 5500, many fail to file both or report potentially inconsistent information across the two forms.”
- Even among those filing required reports, 41 percent of self-insured MEWAs “indicated that they had not obtained actuarial opinions about their financial stability.” Additionally, 14 percent of MEWAs reported that they failed to set up a separate trust to hold plan assets.
- While DOL has pursued 968 civil enforcement cases involving MEWAs since 1985, it admits that its “enforcement efforts often were too late to prevent or fully recover major financial losses,” and that it fails to consistently collect information about the “associated unpaid claims or their financial impacts on patients and healthcare providers.”
In the meantime, however, CHIR continued its efforts to obtain DOL’s MEWA files, demanding a response to its March 2018 Freedom of Information Act request. This has involved months of negotiations with agency officials to refine and narrow the scope of the request, more than a year of (still-ongoing) rolling productions, and a whole lot of waiting in between. But, finally having received and reviewed a critical mass of productions, we are able to share with you the MEWA files.
What are some preliminary takeaways?
Here are some top-level observations on the universe of documents available:
- There have been many MEWA investigations! The Case Summary Report listed 370 cases. Excluding those DOL redacted as non-responsive, or that we identified as not involving major medical benefits, we’ve identified 328 cases in the Case Summary Report as being of possible interest. Although the majority are one-offs, many of these cases involve repeat players or spawn several spin-off investigations due to the number of different entities engaged in a single scheme.
- The entities under investigation commonly cross state boundaries. In 116 cases—more than half of the “responsive” cases where a state impact was listed—DOL found that more than one state was impacted. In about 60 cases, more than 5 states were impacted. In fact, the multi-state reach of many of these cases is even bigger than listed, because of the interrelationships between cases. For example, an individual plan may be listed as its own case impacting a single state, but its insolvency or unpaid claims may be due to service providers, such as a third-party administrator or broker, who was operating in several states. While states frequently respond to instances of fraud and insolvency much more quickly than federal regulators, they don’t have the jurisdiction to halt multi-state operations.
- A lot of the post-ACA MEWA investigations are ongoing – and we don’t know what’s happening there. Among the 328 “responsive” cases, 49 were redacted from the Case Summary Report as “ongoing.” Almost all of these cases appear to have been opened since 2010 or later, although two cases from Philadelphia appear to date back to 2006 or so. These “ongoing” cases also make up a meaningful portion of the post 2010 cases: we estimate that approximately 134 of the “responsive” cases were opened post-2010 and that 47 of these—more than one-third—are still ongoing. Presumably many of these are more complex cases, given that they have been ongoing for several years. Thus, even with these files, there is still a lot we don’t know about DOL’s investigation into MEWAs post-ACA implementation.
- Speaking of the ACA: Our preliminary review of the files did not identify any examples of DOL using its new authority under the ACA to issue ex parte cease and desist orders to or seize assets. States have long used similar authority to protect consumers and prevent or limit harm by fraudulent or otherwise dangerous MEWAs, and DOL highlighted this new federal authority in its final rule to allay concerns about risks of fraud and abuse. (Perhaps such actions are hidden in the redacted ongoing cases.) But there are several examples of plans (and sometimes the major insurers they contract with) correcting ACA violations after DOL intervened. These included impermissible exclusions for out-of-network emergency services, pre-existing condition exclusion clauses, and treatment limitations on mental and behavioral health services.
Consistent with DOL’s observations, there are also many instances of plans failing to file forms or filing inaccurate forms, self-funded plans operating without ever consulting an actuary to set contribution rates or reserve levels, and a slow-moving and resource-limited federal agency unable to provide complete or at least timely relief to plan participants harmed by fraud and insolvency. Our early glimpse into these case files demonstrates that many employers and individuals, enticed by a MEWA’s offer of low premiums, enroll into coverage that all too often turns out to be illusory.
Over the next few weeks, CHIR will share the results of our deep dive into these records, what they mean for small business and individual policyholders, and their implications for policymaking in more depth. Stay tuned.
*Christine Monahan is a former CHIR staff member and currently Counsel at American Oversight.
 Records for one of these cases was included in the Chicago case files, however, involving an entity United Preferred Companies, Ltd. that was related to several other investigations that were included as responsive, so we’re counting this as responsive case.
 Some of the case files also included records from cases that did not appear anywhere in the Case Summary Report. For simplicity, we have not included them in the Table, but we may address them in future blogs if we determine they are of interest.
 Case opening and closure dates in the Table are often best estimates, as they were not consistently included in the case reports. Generally, if a data field has a year and “(or earlier)” or “(or later”) the year specified is the first or last date of action recorded, although it was not necessarily the first or last action to actually occur. We are also assuming that case numbers typically were assigned chronologically, such that we can sometimes infer when a case was opened based on the cases opened before or after it for which more information was available.
 As CHIRblog previously highlighted, DOL secured a victory in one of the two Philadelphia cases back in 2014, when a judge ordered plan fiduciaries to pay $4.7 million in assets and interest. It appears, however, that the case is still ongoing—and seemingly headed for trial—at least with respect to some defendants. This is prime example of how slow-moving these cases can be.