The United States Department of Labor (DOL) recently published its Fiscal Year 2015 “Fact Sheet” documenting civil and criminal enforcement activities under the Employee Retirement Income Security Act of 1974 (ERISA). Although civil monetary recoveries trended upward, they remained at historic lows, while criminal investigations continued at historically high levels.

Monetary Results Increased

The total monetary results for FY 2015 from Employee Benefits Security Administration (EBSA) enforcement and compliance activities increased over FY 2014’s historic low.



The DOL reported total monetary recoveries of $696.3 million in FY 2015, an increase of $96.6 million over FY 2014. While this was a significant increase over FY 2014’s low recoveries, the total monetary results for FY 2015 still lagged behind the 15-year average of approximately $1.3 billion in annual recoveries.

The composition of the FY 2015 total recoveries also indicates the continuing contribution from DOL’s Informal Complaint Resolution System. In FY 2015, almost half of the $96.6 million improvement – $46.7 million – came from the Informal Complaint Resolution System, which has been steadily replacing Prohibited Transactions Corrected and Plan Assets Protected as the largest source of recovery.

Growth of the Informal Complaint Resolution System

Recoveries from the Informal Complaint Resolution System have continued to increase as recoveries from Prohibited Transactions Corrected and Plan Assets Protected have declined.

 
In terms of total monetary results, recoveries from the Informal Complaint Resolution System represented 58% of the total recoveries for FY 2015, which was a slight drop from 59% in FY 2014. However, this figure still represented a record high result when compared to the 15-year average of only 18%. Conversely, recoveries from Prohibited Transactions Corrected and Plan Assets Protected dropped to 17%, which was a 15-year low excluding the anomalous FY 2009. These two departures from the historical averages represent a trend in the composition of the EBSA’s recoveries. Over the last 15 years, recoveries from the Informal Complaint Resolution System have gradually swapped places with recoveries from Prohibited Transactions Corrected and Plan Assets Protected as the primary source of monetary recoveries.

Civil Investigations Decreased in Number But Increased in Rate of Results

In FY 2015, the total number of civil investigations closed and of civil investigations closed with results both decreased, for the first time since FY 2010 and to the lowest levels since 2001.



In contrast, the rate of investigations closed with results ticked upward.



However, the FY 2015 results may not signify any trend. Given the vagaries attendant to the timing of the closure of investigations, the FY 2015 results may be nothing more than single year data points.

Criminal Investigations Remain High

In FY 2015, the DOL, working in conjunction with the Department of Justice, closed 275 total criminal investigations, fewer than in FY2014 but still at a historically high level.

Before the DOL’s FY 2009 announcement that it would emphasize ERISA criminal investigations, the DOL closed only an average of 192 criminal investigations per year. Since FY 2009, the average total criminal investigations closed has increased dramatically to approximately 239.

Despite this increased enforcement effort, there has not been a corresponding increase in the rate of criminal investigations closed with guilty pleas or convictions.



In terms of “success,” the number of criminal investigations closed with a guilty plea or conviction also dropped in FY 2015. At 67 successful closures, FY 2015 had the lowest number of closures in the last five years.  

The actual percentage of criminal investigations closed with guilty pleas or convictions increased slightly in FY 2015 for a second straight year after declining since FY 2010. While the rate increased slightly in FY 2014 and FY 2015, it has hovered slightly at approximately 24% since 2011. Accordingly, while the success rate is relatively low, this has been the longest period of stabilization compared to prior year fluctuations.