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View More Press Releases by Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Press Release

DOL Obtains Consent Judgment and Order Protecting Participants and Beneficiaries of Failing MEWA

Issued by Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Mar. 25, 2019

LOS ANGELES, CA, March 22, 2019 - After an investigation by the U.S. Department of Labor's Employee Benefits Security Administration (EBSA), the U.S. District Court for the Central District of California has entered a consent judgment against the individual defendants of a failing California-based Multiple Employer Welfare Arrangement (MEWA) in a Department lawsuit aimed at protecting more than 16,000 participants and beneficiaries.

Under the consent judgment, the owners of the company operating the MEWA admitted to violating the Employee Retirement Income Security Act (ERISA) and relinquished all claims to any assets that had been in corporate accounts.  In addition, the court ordered a lifetime fiduciary bar against these individuals. Finally, the court made the prior appointment of an independent fiduciary permanent.

The consent judgment significantly resolves a February 1, 2019 lawsuit filed by the Department that alleged that Riverstone Capital LLC, NexGen Insurance Services Inc., NGI Brokerage Services Inc., and James C. Kelly, Travis O. Bugli, and Robert Clarke, violated ERISA by failing to set adequate premium rates, hold the assets of the MEWA in trust, and charging excessive fees. As unpaid claims mounted, Riverstone delayed the payment of approved claims and "cherry-picked" which claims to pay.

"The U.S. Department of Labor is committed to protecting the benefits of America's workers," said Department's Employee Benefits Security Administration Regional Director Crisanta Johnson, in Los Angeles. "The Department will continue to aggressively pursue and hold accountable those that misuse assets intended for health insurance purposes."

As of the end of December 2018, the Riverstone MEWA had approximately $24 million in processed but unpaid claims, despite collecting only between $4-6 million in contributions each month and having reserves far short of the amount needed to pay the claims.

Early in February 2019, the Department secured temporary relief that included the appointment of an independent fiduciary, Receivership Management, to take control over the failing MEWA until a preliminary injunction hearing could take place.  Receivership Management was also given temporary control over corporate accounts which contained plan assets belonging to the ERISA-covered plans. Once in place, Receivership Management determined that the MEWA and participating plans were not viable going forward, and that the only means of designing and implementing a fair process for paying out covered-claims, to the extent feasible, was to terminate the MEWA and proceed to liquidation.

The consent judgment issued on March 13, 2019, permanently bars Kelly, Bugli, and Clarke from being service providers or fiduciaries to ERISA-covered Plans. Under the judgment, they relinquish all claims to corporate accounts that were placed under the control of Receivership Management Inc.

The judgment also permanently appoints Receivership Management as the independent fiduciary of the MEWA. Under the judgment, Receivership Management will submit on or before March 29, 2019, a proposed orderly plan of liquidation, and is authorized to pursue all legitimate claims the Riverstone MEWA and participating plans may have against the defendants or any third party likely to result in a meaningful recovery of assets to pay participant claims or administration costs. The judgment protects participants and beneficiaries unable to pay covered-medical expenses from collections actions. This relief was granted under the All Writs Act, 28 U.S.C. § 1651.

The judgment does not settle any claims that Receivership Management may assert based on ERISA or any other law against the defendants for past or present conduct. Neither the Department nor the independent fiduciary is precluded from obtaining additional monetary relief on ERISA claims against the defendants or others. In addition, the judgment orders Kelly, Bugli, and Clarke to cooperate fully with the independent fiduciary, and enjoins them from coercing, intimidating or interfering with MEWA's termination and liquidation process.

In February, the Department also issued a cease and desist order that prevents brokers and other MEWA operators and agents from working on behalf of the MEWA to market it to prospective employers or enroll new employers.

EBSA's Los Angeles Regional Office conducted the investigation, and the Regional Solicitor's Office litigated this case on the Department's behalf.

For persons directly impacted by this case, the independent fiduciary has set up the following website, The Department urges members of the public to immediately contact EBSA at or 866-444-3272 if they are the targets of any sales pitches or marketing activities similar to the Riverstone / NexGen MEWA.


View More Press Releases by Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Editor's note: This press release has been issued by the company named above, not BenefitsLink. Reliance on information in this press release might be prudent only after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by BenefitsLink.

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