Surviving a DOL audit

[jeanine]

I am hoping to get some advice from anyone who has survived a DOL audit. Firm is a TPA, servicing self-funded and insured product employee health and welfare benefits plans. We have been told that DOL will arrive in about 5 weeks, subpoena in hand. Will we receive more information before the audit as to what specifically they want us to produce? If not, is there a reasonable time we may ask for in order to produce the documents? We have no idea yet whether they are auditing firm as a supplier of services to plans or if they are auditing a specific plan. Personal experience or reference to guidelines would be extremely appreciated.

[Guest [Pat M]]

< DOL/PBGC audit survivor (a DB plan termin, pension plan, union plan, and 401(k).

Do you know which office is auditing you yet? They'll send a "pre-list" of required items and your required response time (in days). The DOL knows whether or not to ask you for a specific item, relative to prior plan filings. You should have already (or will soon receive) the list from the office doing the audit. When you get the list, give the listed agent/rep a call. Chat about the list and ask for more information about the purpose of the audit. It will help you plan and focus your efforts. Then collect all listed items, like the copies of your SPD, plan amendments, plan year participation & enrollment lists, last 3 Form 5500's, Sched A's, etc., Call your rep. and discuss/negotiate on items you can't find, if any. If necessary, ask for an extension on any custom reports you may have to request from carriers. I got the process narrowed down within one week, and was able to completely avoid an on-site visit. Although I had to ship out boxes of materials, it was much more efficient. Create workpapers by plan, including a correspondence section, sectional pagination and references. Keep a copy of the main workpaper binder for yourself. You'll want to PROUDLY put your "PASS" letter in the front, as well as provide it to any other parties (sponsors & administrators) who may require it. Give me a shout if you need more info.

[Guest [Pat M]]

P.S. if you really want to do some background reading, try http://www.dol.gov/dol/pwba/public/programs/oca/ocaudit.htm . Or try the DOL's own audit of itself (PWBA) click here for the text.http://www.oig.dol.gov/public/reports/oa/1998/pwba_enf_rpt.htm

Excerpt:

Plan Selection

In accordance with the overall enforcement strategy, Regional Directors have authority to proactively target or select plans for investigation. Each Region we visited approached plan selection differently.

Regional plan targeting and selection reflected differences among Regions as to economics, industry concentrations, and other similar criteria. Plan selections also reflected the experience and judgment of the Regional Directors and their staff. For example, the Regional Director in one Region delegates the decisions regarding individual proactive plan targeting to a Targeting Committee, composed of employees and chaired by a Supervisory Investigator. Committee members study the plan universe and develop theories on potential violations and make presentations to the committee as a whole. The Committee then votes to adopt certain of these approaches. In another Region, the Regional Director determines the areas of proactive targeting. Investigators make individual plan selections, in concert with supervisors..."

[Kirk Maldonado]

I've had many clients undergo DOL audits, and none of them were served with subpoenas. A subpoena would be a sign that the DOL suspects something is very seriously amiss. If the DOL is coming after you with a subpoena, you'd better retain expert ERISA counsel ASAP.

[Guest [Pat M]]

jeanine, I hope this isn't too forward, but could you come back and let us know what happens?

[jeanine]

Kirk, We are the TPA. I am not sure if the subpoenas are so we can turn our client plans over to DOL or if they are for something else. Also, we administer plans for companies that buy our insured product line (actually another corporation but TPA and insurance company have same parent company). This is the area that worries me most. I have someone here who seems to think that they are off limits to the DOL because it is "insurance" and state law regulates. Even though it is insurance I am sure that DOL has jurisdiction to inspect based on the fact that they are ERISA plans. Comments anyone?

[Guest [Pat M]]

Jeanine, it sounds like there is some question about the purpose of the audit. If the audit is being done by the DOL, then they state in their annual workplans their goals for upcoming audits. Under FOI you can get a copy, if the new Workplan for 2000 is available. I know the one for 1999 is on line, and one of their missions is to evaluate how well plans select services providers. "PWBA has the responsibility for enforcing the rules and regulations governing the procurement of service providers for ERISA benefit plans." Just a thought, but maybe that's what's happening. http://www.oig.dol.gov/public/programs/oa/...n/wk_plan99.htm

[jeanine]

Thanks for all the input and site suggestions. I will let you know as I get any more details from DOL and the results of their visit. In the meantime, I am still open to suggestions.