US Department of Labor sues Puerto Rico based service providers, executives to stop excessive fees, self dealing; recover health plans’ funds

Date of action:November 5, 2024

Type of action:Complaint filing

Defendants: Suffolk Administrative Services LLC, San Juan, Puerto Rico

Providence Insurance Co., San Juan, Puerto Rico

Alexander Renfro, William Bryan and Arjan Zieger

Background: The U.S. Department of Labor filed the complaint afterinvestigators with its Employee Benefits Security Administration found that since at least 2016, the companies and their current and former executives -Alexander Renfro, William Bryan and Arjan Zieger -have marketed, sold and serviced employer-sponsored health benefit plans while collecting and diverting significant fees for themselves in violation of the Employee Retirement Income Security Act.

The department alleges Suffolk Administrative Services and its current and former executives unilaterally approved millions in unreasonable and unnecessary fees to Suffolk Administrative Services, its sister company Providence Insurance Co., and other service providers. EBSA determined more than half the money paid by the plans are directed to administrative costs with the remainder used to pay health claims. The complaint does not address plans established by "limited partnerships," which are the subject of separate litigation in the ongoing case, Data Marketing Partnership LP v. U.S. Department of Labor, 4:19-cv-00800 (N.D. Tex.).

Quote: "The U.S. Department of Labor acted to stop this excessive fee arrangement and recover as much as $40 million in unjust profits on behalf of plan participants," explained EBSA Regional Director Klaus Placke in San Francisco. "We want to ensure these plans are administered properly and that their participants have access to affordable healthcare benefits."

Court: U.S. District Court of Puerto Rico

Docket Number: 3:24-cv-01512

Learn more about EBSA.