A press release from Hewitt’s office said ERISA requires the administrators of qualified insurance plans to provide certain specified information (including all commissions and fees paid to insurance brokers in connection with the purchase of group insurance) to the United States Department of Labor, Employee Benefits Security Administration, and the Internal Revenue Service. Unum, at the request of the San Diego Insurance broker, agreed to make payments of certain fees at various times from 2000 through 2004 without disclosing those fees to the insurance plan administrator, the announcement said.
The fees were typically denoted as request for proposal (RFP), communication, or enrollment fees, and as a result of the fees, the insured unknowingly paid higher premiums. In total, the broker secretly charged the insured millions of dollars in higher premiums based on the undisclosed fees.
“The Labor Department will not tolerate service providers who fail to disclose fees or compensation arrangements that impact benefit plans,” said Bradford P. Campbell, Assistant Secretary of the Labor Department’s Employee Benefits Security Administration, in the announcement. “This case demonstrates the importance of our enforcement and regulatory efforts to ensure that benefit plan fiduciaries have the information they need to fulfill their responsibilities and to protect the interests of the workers in their plans.”