Press Release

Federal Court Approves $12M Plan to Distribute Assets to Providers, Participants Harmed by Underfunded Health Plan Arrangement in 36 States

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

Nov. 18, 2024

AEU Holdings, Black Wolf Consulting, Veritas PEO Plan underfunded plan by more than $54M

CHICAGO – A federal court has approved a plan to make a final distribution of $12 million in assets to health plan participants and medical providers harmed by a multiple employer welfare arrangement, known as a MEWA. This distribution arises from a litigation brought by the U.S. Department of Labor after an investigation found mismanagement by the former fiduciaries of AEU Holdings LLC Employee Benefit Plan caused about $83 million in health claims to be wrongly billed to participants. 

On Oct. 29, 2024, the U.S. District Court for the Northern District of Illinois approved a plan by Receivership Management Inc. in Madison, Tennessee, to distribute an additional $12 million to medical providers and the plan participants. Receivership Management is the MEWA’s court-appointed independent fiduciary.

In 2017, the department’s Office of the Solicitor sued AEU Benefits LLC, AEU Holdings LLC and Black Wolf Consulting Inc. after investigators in the department’s Employee Benefits Security Administration offices in Chicago and Atlanta found fiduciary breaches by AEU Holdings, Black Wolf and Veritas PEO that led to mismanagement and severe underfunding of the MEWA. Their fiduciary breaches caused participants in 36 states to be billed approximately $83 million in health claims, with the plan responsible for paying approximately $54 million. To date, more than $17 million has been recovered to fund the unpaid claims. 

Since November 2017, the department’s Office of the Solicitor obtained a temporary restraining order, preliminary injunction, consent order, judgments and default judgments against the defendants, resulting in $14 million for the outstanding medical claims. Since September 2021, the court-appointed independent fiduciary recovered some funds through separate litigation on behalf of the MEWA. The court previously barred the 16 defendants from serving as fiduciaries or service providers to ERISA-covered plans in the future.

“The U.S. Department of Labor never wavered in its commitment to protecting participants and beneficiaries from unpaid claims because of fiduciary breaches,” said Solicitor of Labor Seema Nanda. “AEU Holdings, Black Wolf Consulting and Veritas PEO mismanaged the plan and left it severely underfunded. The final distribution plan approved by the court brings long-awaited financial relief to beneficiaries and medical providers and shows we will take all actions needed to prevent employers, participants and beneficiaries from being bilked out of their healthcare benefits.”

In March 2023, the court approved the independent fiduciary’s plan to distribute $6.3 million in interim payments to medical providers. The medical providers accepted $5.3 million in interim payments and those who accepted the interim payments have agreed not to pursue additional amounts from plan participants. 

The independent fiduciary’s plan for final distribution, which the court approved on Oct. 29, 2024, will be implemented after a 30-day appeal period of the court order and will have the independent fiduciary distribute an additional $9.4 million to medical providers who accepted the interim payment and distribute $2.7 million directly to plan participants whose medical providers refused to accept the interim payment. Plan participants can use these amounts towards satisfying unpaid claims for medical providers who did not accept the interim payments. The court will continue to oversee the final distribution process until its completion and the conclusion of the independent fiduciary’s activities.

“The egregious violations of the Employee Retirement Income Security Act by AEU Holdings, Black Wolf Consulting and Veritas PEO left plan participants with unpaid claims and jeopardized their access to healthcare, causing great harm,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez. “The Employee Benefits Security Administration is committed to ensuring plan participants and beneficiaries receive the benefits they have earned.”

At its height, the MEWA covered approximately 14,000 participants and beneficiaries. These participants worked for more than 560 employers in 36 different states. Numerous participant complaints alerted EBSA to the existence of a systemic failure by the MEWA to pay medical claims.

For information about this case or to view a copy of the independent fiduciary’s plan of distribution, visit the independent fiduciary’s webpage

Walsh v. AEU Benefit, LLC, AEU Holdings LLC, Black Wolf Consulting Inc., SD Trust Advisors LLC, The AEU Holdings LLC Employee Benefit Plan

U.S. District Court for the Northern District of Illinois

Civil Case No. 1-17-cv-07931

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