House Republicans probe DOJ on pension plan overpayments linked to dead retirees

Two House Republicans on Aug. 7 asked the Justice Department how it’s investigating pension plan overpayments, following a high-profile overpayment to a Teamsters plan that erroneously included dead retirees in its data.

The overpayment dates back to December 2022, when the Pension Benefit Guaranty Corp. awarded the Teamsters Central States, Southeast & Southwest Areas Pension Fund, Chicago, $36 billion as part of its Special Financial Assistance Program, marking the largest award in the program's history. The American Rescue Plan Act, passed by Democrats in 2021, created the SFA program as a way to aid financially struggling multiemployer plans.

The PBGC’s Office of Inspector General found in a November report that the agency required the pension fund to supply a list of all plan participants and proof of a search for deceased participants, known as a death audit, which the PBGC did not cross-check with the Social Security Administration’s Death Master File. The Government Accountability Office recommends using that resource to reduce improper payments to dead people, according to the report.

Ultimately, the PBGC OIG found that the Central States’ SFA application included 3,479 deceased participants, meaning the PBGC overpaid the pension fund by $127 million. The Central States pension fund had $42.6 billion in assets as of Dec. 31, 2022, according to the plan's most recent Form 5500 filing.

On April 8, the PBGC announced the pension fund had returned the $127 million overpayment after “coordinating for several months with the PBGC’s Office of the Inspector General, the Department of Justice’s Civil Division, and Central States to achieve an appropriate resolution,” the agency said in a news release.

In an Aug. 7 letter addressed to Attorney General Merrick Garland, Reps. Virginia Foxx, R-N.C., and Bob Good, R-Va., credited their work on the House Education and the Workforce Committee for the repayment, stating “the committee ensured that the $127 million in overpayments would be recovered on behalf of taxpayers.”

Foxx and Good — who chair the House Education and the Workforce Committee, and Health, Employment, Labor and Pensions Subcommittee, respectively — have led an investigation of the overpayment, as they previously requested information and documents from Solicitor of Labor Seema Nanda. Foxx also subpoenaed the PBGC back in March as part of the investigation, following a hearing in which former PBGC Director Gordon Hartogensis testified.

The lawmakers’ letter points out that in June, the DOJ announced the Graphic Communications National Pension Fund had also agreed to repay $8 million in excess funds that it had received from the SFA program. That overpayment was discovered via another PBGC OIG report, which found the fund had erroneously included 371 dead participants, according to a DOJ news release.

“However, PBGC has not reported repayment from more than 60 other plans that received similar improper payments,” the lawmakers wrote in their letter.

The agency “identified deceased participants on rolls of more than 60 other multiemployer plans that received improper payments based on those rolls,” according to the letter. “None of these other plans are reported to have restored the improper payments.”

In his March testimony, Hartogensis noted the PBGC has revised the SFA application review process to require an independent death audit for all pending and prospective applications; however, 67 plans — including Central States — received SFA funding before the new screening process was put in place. The PBGC is working with those plans to see if more overpayments were made and begin the repayment process, Hartogensis said at the time.

The PBGC did not immediately respond to a request for comment.

Foxx and Good requested that Garland provide all documents and communications “related to DOJ’s decision to investigate Central States and the Graphic Communications NPF,” as well as those “related to any steps DOJ is taking to ensure that all other multiemployer pension plans that received improper SFA payments will repay those amounts.”

They also asked if the DOJ is investigating or plans to investigate other plans that the PBGC found included dead participants in their SFA applications, and if so, to name them. Lastly, the lawmakers requested any documents and communications related to such plans that the DOJ has chosen not to investigate.

The information and responses are requested by no later than Aug. 21, according to the letter.