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Compliance August 7, 2023
DOL Bars Aliera Companies, CEO From Serving as ERISA Fiduciaries
The health insurance company and CEO Shelley Steele were accused of paying more than $100 million to themselves and affiliated businesses.
Reported by Remy Samuels
The Department of Labor obtained a consent judgement barring Aliera Healthcare Inc. and its CEO Shelley Steele from serving as ERISA fiduciaries and service providers after finding that they commingled more than $100 million in funds received from individuals and ERISA-covered health plans.
Based in Atlanta, The Aliera Companies, which does business as Aliera Healthcare Inc., created, marketed, sold and administered health coverage for approximately 1,025 employers across 39 states for ERISA-covered employer-sponsored plans, according to the DOL.
The company and Steele serve as fiduciaries to more than 1,000 U.S. employer-sponsored health plans.
The action, in the U.S. District Court for the Northern District of Georgia, follows an investigation by the Philadelphia, Atlanta and Boston regional offices of the department’s Employee Benefits Security Administration.
“Shelley Steele and The Aliera Companies flagrantly violated their duties as fiduciaries by failing to act solely in the interest of plan participants and their beneficiaries,” Acting Regional EBSA Director Norman Jackson in Philadelphia said in a statement. “This judgment should serve as a warning to other fiduciaries who choose to place the interests of themselves over the plan participants.”
Aliera also partnered with health care sharing ministries and sold health care products to individuals and ERISA-covered employer-sponsored group health plans that included a claimed health care-sharing ministry component. Health care sharing ministries are non-insurance entities in which members “share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs,” according to the Affordable Care Act.
According to the DOL, Aliera collected at least $543,941,705 in healthcare payments from individuals and employer-sponsored group plans and commingled these payments. Although the vast majority of the payments Aliera obtained were made by individuals, the company also received more than $17 million from more than 1,000 ERISA-covered employer-sponsored group plans, the DOL found.
A lawsuit filed by the department’s Office of the Solicitor claimed that Aliera and Steele paid themselves and their affiliated businesses more than $100 million and used about $189,226,916 of the money received to pay health care claims for individuals and ERISA-covered plans.
The Aliera Companies filed for bankruptcy in federal court in Delaware in December 2021. On August 4, 2023, the DOL filed a proof of claims in the ongoing bankruptcy proceedings in the amount of $3,874,950 for the amounts owed by Aliera to more than 1,000 ERISA-covered plans.
In related news, the DOL also recently sued health insurance company UMR Inc. for allegedly breaching plan documents under ERISA by denying certain emergency rooms claims based solely on diagnosis codes and not the standard established by the Patient Protection and Affordable Care Act.
The DOL reached a settlement with Prudential Insurance Company of America earlier this year, as well.