The $1.3M MEWA Fiduciary Breach Settlement: Why “The TPA Did It” Won’t Save Plan Fiduciaries
- Aug 4
- 9 min read
MEWA ENFORCEMENT • ERISA FIDUCIARY DUTY • TPA OVERSIGHT
A federal judge has ordered the manager of a Multiple Employer Welfare Arrangement covering roughly 11,000 people across 700 employers to pay $1.3 million into a settlement fund for an MEWA Fiduciary Breach Settlement under ERISA. The case, resolved by consent order in the U.S. District Court for the Northern District of Illinois, is the latest signal that even in an enforcement era marked by education-first rhetoric, the Department of Labor will still pursue litigation when fiduciaries cross the line on commingling and undisclosed compensation.
For self-funded plan sponsors, the more important takeaway has nothing to do with MEWAs specifically. It is what the defendants tried to argue, and what the court was unwilling to accept: that blame for commingled funds belonged with their third-party administrators, not with the named fiduciaries themselves. That defense did not work. It is also the exact failure mode that documented, independent oversight is supposed to prevent.
What Happened: MEWA Fiduciary Breach Settlement
On April 28, 2026, U.S. District Judge Robert Gettleman entered a consent order and judgment against Jeffrey Bemoras and Apex Management Group I Inc., the operators of a MEWA that once provided minimum essential coverage, ACA-compliant major medical, to approximately 11,000 covered lives across roughly 700 participating employers. The Department of Labor filed its complaint against the defendants in May 2024.
DOL alleged two specific fiduciary breaches:
Commingling employer assets. DOL officials accused the defendants of using funds contributed by some employers in the MEWA to pay claims for participants of other, unrelated employers, effectively cross-subsidizing one group’s coverage at another’s expense.
Undisclosed and excessive compensation. The defendants were alleged to have received compensation that was both undisclosed to plan participants and contributing employers, and excessive in amount.
Kelli Hammerl, acting regional director for EBSA in Chicago, summarized the agency’s position: “The Department of Labor will enforce the law and hold fiduciaries accountable for violations.”
In addition to the $1.3 million settlement fund, which will be distributed to the participating employers and plan participants, the defendants previously agreed to pay $445,000 based on DOL loss calculations, plus separate civil penalties. The order also bars Bemoras and Apex from acting as ERISA plan fiduciaries for outside employers’ plans, though Bemoras may continue to own or operate a company that maintains its own ERISA-qualified health or retirement plan, provided he is not a fiduciary or service provider to that plan.
The Defense That Did Not Work
The most instructive part of this case for self-funded plan sponsors is not the size of the settlement. It is the argument the defendants tried to make in an October 2024 filing as part of their motion to dismiss, an argument that should sound uncomfortably familiar to any plan sponsor relying on a TPA to administer claims:
“The defendants argued that, in some cases, employer plan funds were commingled because the third-party administrators that helped run the plans sometimes paid claims with commingled funds without the knowledge or approval of the defendants.”
Translated into the language of standard self-funded plan governance, this is the “we trusted our TPA” defense. It is the position every plan sponsor falls back to when something goes wrong with claims administration: we hired professionals, we relied on them, we did not know. In MEWA enforcement, and increasingly in standard self-funded plan enforcement, that defense does not satisfy ERISA’s prudence and loyalty requirements.
ERISA Section 404(a) requires fiduciaries to act with the care, skill, prudence, and diligence of a prudent expert. That obligation includes ongoing monitoring of every service provider with discretion over plan assets. A plan sponsor who can produce a contract requiring TPA compliance, but cannot produce evidence of independently verifying that compliance, has not satisfied the duty of prudence; they have merely delegated and hoped.
Why MEWA Enforcement Tells You About Self-Funded Plan Enforcement
MEWAs have always been EBSA’s most established health-plan enforcement focus. They are easier targets than single-employer plans for three reasons: a long history of fraud and insolvency in the MEWA market, dual federal and state regulation, and structural opacity that creates obvious flagging signals when something goes wrong. For decades, MEWA enforcement absorbed nearly all of EBSA’s health-plan litigation budget.
That is changing. Daniel Aronowitz, the EBSA Administrator under the current administration, has publicly emphasized education and informal advice over investigations and lawsuits. But Aronowitz has also indicated that EBSA may still begin formal investigations when it believes a plan fiduciary has been disloyal to participants. The Apex case is precisely that scenario: the agency saw conduct it considered structurally disloyal, including commingling, undisclosed compensation, and proceeded to litigation despite the broader posture.
EBSA’s FY2026 national enforcement projects formalize what the Apex case demonstrates. Service provider oversight is now an explicit enforcement priority for health and welfare plans, not only for MEWAs, but for the standard self-funded plans that cover roughly 67 percent of the U.S. employer-insured workforce. The fiduciary framework EBSA applied to Apex applies, in identical form, to every ERISA-covered self-funded plan in the country.
Three Fiduciary Failure Patterns Plan Sponsors Should Recognize
Strip the Apex case down to its core, and the conduct DOL targeted maps cleanly onto three patterns that exist, in less dramatic form, across the broader self-funded health plan ecosystem.
1. Cash flow opacity and commingling
In the Apex case, employer contributions were allegedly mixed across plans, with funds from one employer paying claims for another. In standard self-funded arrangements, the analogous risk is more subtle but the principle is identical: plan sponsors must be able to trace plan assets from contribution to payment. Cross-plan offsetting practices, opaque PBM rebate flows, and TPA-administered settlement-and-recovery funds all raise the same question — are this plan’s assets being used exclusively for this plan’s participants?
2. Undisclosed and excessive compensation
The CAA 2021 broker and consultant compensation disclosure rules, ERISA Section 408(b)(2) extended to group health plans, exist precisely because this failure mode is the most common in the market. Compensation that exists in the form of contingent overrides, network access fees, recovery program shares, or PBM spread cannot be evaluated for reasonableness if it is not disclosed. The Schlichter Bogard ERISA suits naming Gallagher, Mercer, Lockton, and Willis Towers Watson filed in late 2025 are built on this exact theory.
3. The “we relied on the TPA” defense
This is the failure pattern Apex tried and lost on. ERISA fiduciaries cannot delegate prudence. They can hire experts, but they remain responsible for overseeing those experts, evaluating their performance, and documenting the basis for their continued reliance. “The TPA paid the claim” is not a defense if the fiduciary cannot show that they had a reasonable, monitored basis for trusting that the TPA paid it correctly.
How Independent Oversight Builds the Documented Defense
The common thread across all three failure patterns is the absence of independent verification. A TPA reporting on its own performance has no incentive to surface its own errors. A broker reporting on its own compensation has no incentive to flag conflicts. A carrier reporting on its own claims accuracy has no incentive to challenge its own adjudication. The Morgan Lewis fiduciary hygiene framework issued in February 2026, see “Strengthening Fiduciary Hygiene,” is explicit on this point: vendor self-reporting is not, and has never been, sufficient evidence of fiduciary monitoring.
What plan sponsors should be able to produce, on request, falls into four categories:
Independent claims-level analysis — not a sample, not a TPA self-audit, but a payment-by-payment review that identifies coding errors, contract violations, and improper payments at the line-item level.
Compensation benchmarking — documented evidence that broker, consultant, and TPA fees are reasonable relative to the services delivered, with all forms of direct and indirect compensation surfaced.
Cash flow integrity verification — documented evidence that plan contributions are used exclusively for that plan’s claims, with cross-plan offsetting and other commingling-adjacent practices identified and remediated.
Audit-ready documentation — a record of the monitoring process itself, demonstrating that the fiduciary was actively reviewing service provider performance on an ongoing basis, not merely reading TPA dashboards.
This is what “documentation of prudence” looks like in practice. It is also what the Apex defendants did not have, and what every self-funded plan fiduciary should be working to build before, not after, an EBSA inquiry letter arrives.
Build the Documented Defense Before You Need It ClaimInformatics provides the independent, conflict-free claims oversight that plan sponsors need to satisfy ERISA’s prudence and loyalty requirements — and to demonstrate, in audit-ready form, that they did not simply rely on TPA self-reporting. Schedule a complimentary fiduciary exposure assessment. |
Frequently Asked Questions
What is a MEWA, and how does it differ from a single-employer self-funded plan?
A Multiple Employer Welfare Arrangement (MEWA) is a benefit arrangement that provides health and welfare coverage to employees of two or more unrelated employers. MEWAs are subject to both ERISA and state insurance regulation, a dual oversight structure that does not apply to single-employer self-funded plans. Despite the structural difference, the core ERISA fiduciary obligations- prudence, loyalty, exclusive purpose, and ongoing service-provider monitoring- are identical for MEWA fiduciaries and single-employer plan fiduciaries. See the DOL EBSA MEWA guidance page for the full regulatory framework.
Are plan sponsors who rely on a TPA personally liable for the TPA’s actions?
Plan sponsors are not automatically liable for every act of every service provider. They are, however, liable for failures in their own duty to prudently select and monitor those service providers. ERISA does not allow fiduciaries to delegate the duty of prudence away. A sponsor who can produce a TPA contract requiring compliance, but cannot produce evidence of independent verification of that compliance, has typically not satisfied the monitoring obligation. The Apex case shows EBSA pursuing fiduciaries directly even where the operational conduct was allegedly carried out by TPAs.
What does “undisclosed compensation” mean in an ERISA context?
Undisclosed compensation is any payment, fee, override, commission, rebate, or other thing of value received by a plan service provider that has not been clearly and accurately disclosed to plan fiduciaries. Under CAA 2021, ERISA Section 408(b)(2) was extended to group health plans, requiring brokers and consultants who receive $1,000 or more in direct or indirect compensation to disclose all sources, amounts, and arrangements. Compensation that exists but is not disclosed cannot be evaluated for reasonableness, and unreasonable compensation is, by definition, a prohibited transaction under ERISA Section 406.
How does this case affect plan sponsors who are not in MEWAs?
Directly, very little, most plan sponsors are not running MEWAs. Indirectly, considerably more. The Apex case establishes three things every fiduciary should internalize. First, EBSA is willing to pursue fiduciary breach litigation despite the broader education-first enforcement posture. Second, the “the TPA did it” defense is not a defense. And third, EBSA’s FY2026 national enforcement projects extend the same service-provider-oversight scrutiny that MEWAs have always faced to the broader self-funded plan market.
What documentation should a plan sponsor be prepared to produce in an EBSA inquiry?
At minimum, plan sponsors should be able to produce: the plan document and any amendments; the service provider contracts and 408(b)(2) compensation disclosures; evidence of an ongoing monitoring process for each service provider; independent verification of claims accuracy that is not solely based on TPA self-reporting; documentation of the prudent process used to select each service provider; and minutes or records of the fiduciary committee’s decisions, including the basis for continued reliance on each provider. Frier Levitt’s December 2025 analysis of the recent ERISA fiduciary breach lawsuits is a useful starting point for understanding what plaintiff firms are looking for in this documentation.
The Bottom Line
The Apex MEWA settlement is not, on its surface, a major case. The dollar amounts are modest by the standards of ERISA litigation. The conduct alleged is the kind of conduct EBSA has pursued for decades. What makes it instructive is the defense the fiduciaries tried to mount, and the framework the Department of Labor used to reject it. “The TPA did it without our knowledge” is not a defense — it is the description of a fiduciary breach in progress. Plan sponsors who cannot independently verify what their TPAs are doing with plan assets are precisely the fiduciaries the next round of enforcement is designed to find.
Related Resources from ClaimInformatics
Sources & External References
SOURCE | DESCRIPTION | LINK |
BenefitsPRO | Original article by Allison Bell reporting on the $1.3M Apex/Bemoras MEWA settlement and consent order in the Northern District of Illinois (May 1, 2026). | |
DOL EBSA — MEWA Guidance | Department of Labor Employee Benefits Security Administration overview of MEWA regulation, ERISA application, and dual federal-state oversight. | |
DOL EBSA — Enforcement | Official EBSA enforcement page describing FY2026 national enforcement priorities, including service provider oversight for health and welfare plans. | |
Morgan Lewis | February 2026 fiduciary hygiene guidance on DOL scrutiny and new litigation risks for health and welfare plans, including service-provider monitoring obligations. | |
Frier Levitt | December 2025 analysis of ERISA fiduciary breach lawsuits against self-funded health plans and broker co-defendants — the legal theory now being applied to TPA-administered claims. | |
DOL EBSA — Group Health Plan Fiduciary Responsibilities | Plain-English DOL guide to ERISA fiduciary duties applicable to group health plans — the framework EBSA applied to Apex. |
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