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Blog » News » Health and welfare benefits administration firm to pay $44.4m in fringe benefits

Health and welfare benefits administration firm to pay $44.4m in fringe benefits

Benefits and healthcare advisor to pay back $44 million

In a significant move, the Department of Labor has compelled a health and welfare benefits administration firm to repay $44.4m in fringe benefits.

Axim Fringe Solutions Group LLC, majority owner James Campbell, and the firm’s Director of Compliance Accounting, Melissa McManus, are under investigation by the DoL. They allegedly misappropriated the money contained in and paid out via fringe benefit plans.

“Axim Fringe Solutions Group endangered the health coverage of numerous workers and their families across America. The Department of Labor will pursue all legal remedies available to ensure plan participants and beneficiaries receive the benefits they have earned,” said Regional Solicitor of Labor Samantha N. Thomas.

Axim and owners complicit in employee benefit fraud

The U.S. District Court for the Southern Division of the District of Maryland supplied the court judgment, which followed litigation by the department’s Office of the Solicitor. The Employee Benefits Security Administration (EBSA) flagged the monetary mismanagement as part of an ongoing investigation.

According to the DoL, Campbell and McManus’ illicit behavior breached the Employee Retirement Income Security Act. They did so using fringe benefits money taken in by governmental clients to pay those clients’ expenses for over seven years. Money was funneled from employee trust accounts to Axim’s operating account, totaling $5 million.

Furthermore, they have also been found guilty of breaching the McNamara O’Hara Service Contract Act by “charging clients’ employees for their fringe benefits instead of charging its clients for employer administrative costs of fringe benefits,” according to the DoL statement.

This had a domino effect on those working in government contracts as they received delayed payments for healthcare insurance, which led to providers sending them direct correspondence and fines regarding late payment notices.

“The law is clear. Employee contributions cannot be used to pay for employers’ costs related to employee benefit plans,” said Deputy Regional Director of the EBSA Norman Jackson. “Axim Fringe Solutions Group illegally put the interests of their clients ahead of their client’s employees by using workers’ hard-earned wages to pay for their employers’ costs.”

In the end, Campbell and McManus are banned from operating in any fiduciary capacity for any ERISA-covered plan. Axim, Campell, and McManes must pay $100,000 to restore fringe benefit payments and are permitted to utilize employee fringe benefits to pay employer’s expenses in future roles or functions.

Image: Ideogram.

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