July 2011 The Fiduciary Shield, "Fiduciary Liability Policies May Not Cover Costs Associated with DOL Investigations"
The Employee Retirement Income Security Act (ERISA) gives the Secretary of Labor's broad power to investigate whether any person has violated, or is about to violate, any regulation of ERISA. Responding to such investigations can result in significant expenses - including legal fees - even if no violations are ultimately uncovered. This issue of The Fiduciary Shield discusses how a plan's fiduciary liability insurance carrier might respond to claims related to these Department of Labor (DOL) investigations.
The entire investigatory process, in the context of possible breach of fiduciary duty violations by employee benefit plan fiduciaries, is discussed. From the possible insurance carrier responses to a notice of claim filing, to the determination of this response based on the DOL's written communication with the plan, to the ultimate involvement and advice of fund counsel.
The ultimate goal is to find a solution acceptable to both the insured and the insurance carrier. This issue of The Fiduciary Shield outlines the steps that The Segal Company recommends that fiduciaries under DOL investigation take (subject to fund counsel's advice and participation) to increase the likelihood that an insurance carrier will accept a notice of a claim as a claim.