The Battle for Regulatory Approval

Despite consumer enthusiasm for partnership plans, the U.S. Department of Labor has fought for years to shut them down.

Shortly after partnership plans were created in 2018, the entrepreneurs shared the idea with the department and initially received positive feedback. At the department’s suggestion, they requested a formal Advisory Opinion from the department to establish “safe harbor” guidelines in which partnership plans could operate. However, in a troubling sign of things to come, the department refused to respond or provide feedback as they do for other Advisory Opinion requests. After nearly a year of outreach and numerous requests that were essentiallyignored, LP Management Services (LPMS) and Data Marketing Partnership LP (DMP), one of the partnership plans, filed suit against the Department of Labor in the U.S. District Court in Texas, where DMP is based.

In September 2020, the court issued a sweeping ruling in favor of LPMS and DMP. The Department of Labor challenged that outcome before the 5th Circuit Court of Appeals, but that court ruled in favor of the companies in 2022, largely upholding the original decision. But that was not the end. Despite losing two court rulings, the department decided to continue its campaign.

In 2019, the department launched what it termed “the Anjo Investigation.” Anjo LLC is a Tennessee company through which Alex Renfro, the Nashville-based health benefits attorney who was a primary architect of partnership plans, previously owned interest in Suffolk Administrative Services, and also provided legal and consulting services to LP Management Services and other clients.

The Department of Labor claimed that the Anjo Investigation was unrelated to Renfro’s work on behalf of LP Management Services, and instead sought evidence of possible ERISA violations by Suffolk and related companies while providing services to traditional employers.

All of the corporate and individual targets of the Anjo Investigation cooperated fully with the department, providing hundreds of thousands of pages of documents, submitting to questioning, and volunteering to make modifications to business practices that the department deemed necessary.

However, in November 2024, the Department of Labor sued Suffolk Administrative Services LLC (SAS), Providence Insurance Company (PIC), and their individual owners in the U.S. District Court for Puerto Rico, alleging that the Anjo targets acted as fiduciaries, overcharged and hid fees. Both Suffolk and Providence are vendors to the companies that provide partnership plans. For example, Providence provides “stop loss” or “reinsurance” to the sponsors of plans managed by LP Management Services. Since 2018, Providence has paid tens of millions of dollars to cover claims made by plan participants.

The Anjo targets deny the allegations, arguing that they disclosed their fees, which were, in fact, below industry standards. They are not fiduciaries, they argue, because they were hired by ERISA plan sponsors, who are in fact the fiduciaries. Further, the Anjo targets have never touched any benefit plan funds. Those are managed by licensed third-party administrators, who collect program fees, and adjudicate and pay medical claims and fees.

The Department of Labor attempted to tie the Anjo investigation and DMP court disputes together, despite the fact that none of the Anjo targets hold any interest in or control over LP Management Services, DMP or other partnership plan sponsors.

Still, DOL insisted on “global settlement negotiations,” offering to settle the Anjo investigation if the DMP case, which DOL had unsuccessfully fought for years, was dropped. The department said it would not resolve either matter, on any terms, unless both were settled concurrently.

The parties rejected DOL’s settlement offer.

Left with no choice, LP Management Services and DMP filed a supplemental complaint in the original suit just days before the latest department action, alleging improper and illegal coercive tactics by the Department of Labor.