A federal judge has directed the managers of an organization that arranged health coverage for about 700 employers to pay $1.3 million into a settlement fund, in response to allegations that the managers breached their fiduciary duty to the plans and participants under the Employee Retirement Income Security Act.
The U.S. Department of Labor accused the defendants, Jeffrey Bemoras and Apex Management Group I Inc., of commingling cash from different employers and receiving undisclosed and excessive compensation.
DOL officials and the defendants agreed to resolve the matter by agreeing to the settlement fund payment, according to a consent order and judgment issued by U.S. District Judge Robert Gettleman Tuesday.
The case was filed in the U.S. District Court for the Northern District of Illinois.
Bemoras and Apex could not immediately be reached for comment.
Kelli Hammerl, the acting regional director for the DOL's Employee Benefits Security Administration in Chicago, said DOL officials believe that Apex improperly used funds from some employers in the MEWA to pay claims for others.
"The Department of Labor will enforce the law and hold fiduciaries accountable for violations," Hammerl said.
What it means: DOL and EBSA officials have said since Donald Trump returned to the White House that DOL will emphasize efforts to educate employers and provide informal advice over lawsuits and criminal investigations.
But Daniel Aronowitz, the assistant U.S. Labor secretary who serves as EBSA's administrator, indicated that EBSA may still begin formal investigations when it believes a plan fiduciary has been disloyal to the plan participants.
The DOL announcement about the Apex case may be a sign that DOL will continue to pursue litigation against MEWA administrators accused of commingling different employers' assets.
Case details: Apex ran a multiple employer welfare arrangement, or MEWA, that once provided minimum essential coverage, or that the Affordable Care Act defines as solid major medical coverage, for about 11,000 people.
DOL officials filed a complaint against Apex in May 2024. The defendants had asked the court to dismiss part of the case, based on the argument that Bemoras and Apex were not health plan fiduciaries.
The defendants also argued that, in some cases, employer plan funds were commingled because the third-party administrators that helped run the plans sometimes paid claims with commingled funds without the knowledge or approval of the defendants, according to an answer the defendants filed in October 2024.
The settlement fund will make payments to the employers and plan participants who used the coverage, according to the order.
The settlement fund payment comes on top of previous arrangements for the defendants to pay civil penalties and to pay $445,000 based on DOL loss calculations.
The order also forbids Bemoras or Apex from acting as ERISA plan fiduciaries for outside employers' plans, but it lets Bemoras serve as the owner, shareholder, principal, partner or officer of a company that has an ERISA-qualified health or retirement plan, as long as he is not an ERISA fiduciary or service provider for the plan.
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