Federal Register / Vol. 88, No. 213 / Monday, November 6, 2023 / Notices 76253 

2All contract personnel will sign appropriate 

nondisclosure agreements. 

3Electronic Document Information System 

(EDIS): https://edis.usitc.gov 

internal investigations, audits, reviews, 

and evaluations relating to the 

programs, personnel, and operations of 

the Commission including under 5 

U.S.C. Appendix 3; or (ii) by U.S. 

government employees and contract 

personnel,2 solely for cybersecurity 

purposes. All nonconfidential written 

submissions will be available for public 

inspection at the Office of the Secretary 

and on EDIS.3

This action is taken under the 

authority of section 337 of the Tariff Act 

of 1930, as amended (19 U.S.C. 1337), 

and of §§ 201.10 and 210.8(c) of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.10, 210.8(c)). 

By order of the Commission. 

Issued: October 31, 2023. 

Lisa Barton, 

Secretary to the Commission. 

[FR Doc. 2023–24409 Filed 11–3–23; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Exemption Application No. L–11954] 

Proposed Exemption for Certain 

Prohibited Transaction Restrictions: 

Fedeli Group, Inc. Employee Benefits 

Plan Located in Cleveland, OH 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of proposed exemption. 

SUMMARY: This document provides 

notice of the pendency before the 

Department of Labor (the Department) of 

a proposed individual exemption from 

certain of the prohibited transaction 

restrictions of the Employee Retirement 

Income Security Act of 1974 (ERISA or 

the Act). This proposed exemption 

would permit the Fedeli Group, Inc. 

Employee Benefits Plan (the Benefit 

Plan) sponsored by Fedeli Group, Inc. 

(Fedeli Group or the Applicant) to enter 

into an insurance contract with THP 

Insurance Company, Inc. (THP), an 

unrelated insurance company, and THP 

will, in turn, enter a reinsurance 

arrangement with Risk Specialists LLC 

(Risk Specialists), a captive reinsurance 

company affiliated with Fedeli Group. 

DATES: 

Comments due: Written comments 

and requests for a public hearing on the 

proposed exemption should be 

submitted to the Department by 

December 21, 2023. 

Exemption date: If granted, this 

proposed exemption will be in effect on 

the date that the grant notice is 

published in the Federal Register. 

ADDRESSES: All written comments and 

requests for a hearing should be 

submitted to the Employee Benefits 

Security Administration (EBSA), Office 

of Exemption Determinations, 

Attention: Application No. L–11954 via 

email to e-OED@dol.gov or online 

through https://www.regulations.gov. 

Any such comments or requests should 

be sent by the end of the scheduled 

comment period. The application for 

exemption and the comments received 

will be available for public inspection in 

the Public Disclosure Room of the 

Employee Benefits Security 

Administration, U.S. Department of 

Labor, Room N–1515, 200 Constitution 

Avenue NW, Washington, DC 20210. 

See SUPPLEMENTARY INFORMATION below 

for additional information regarding 

comments. 

FOR FURTHER INFORMATION CONTACT: 

Blessed Chuksorji-Keefe of the 

Department, telephone (202) 693–8567. 

(This is not a toll-free number.) 

SUPPLEMENTARY INFORMATION: 

Comments: Persons are encouraged to 

submit all comments electronically and 

not to follow with paper copies. 

Comments should state the nature of the 

person’s interest in the proposed 

exemption and how the person would 

be adversely affected by the exemption, 

if granted. Any person who may be 

adversely affected by an exemption can 

request a hearing on the exemption. A 

request for a hearing must state: (1) the 

name, address, telephone number, and 

email address of the person making the 

request; (2) the nature of the person’s 

interest in the exemption, and the 

manner in which the person would be 

adversely affected by the exemption; 

and (3) a statement of the issues to be 

addressed and a general description of 

the evidence to be presented at the 

hearing. The Department will grant a 

request for a hearing made in 

accordance with the requirements above 

where a hearing is necessary to fully 

explore material factual issues 

identified by the person requesting the 

hearing. A notice of such hearing shall 

be published by the Department in the 

Federal Register. The Department may 

decline to hold a hearing if: (1) the 

request for the hearing does not meet 

the requirements above; (2) the only 

issues identified for exploration at the 

hearing are matters of law; or (3) the 

factual issues identified can be fully 

explored through the submission of 

evidence in written (including 

electronic) form. 

Warning: All comments received will 

be included in the public record 

without change and may be made 

available online at https://

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be confidential or other 

information whose disclosure is 

restricted by statute. If you submit a 

comment, EBSA recommends that you 

include your name and other contact 

information in the body of your 

comment, but DO NOT submit 

information that you consider to be 

confidential, or otherwise protected 

(such as a Social Security number or an 

unlisted phone number) or confidential 

business information that you do not 

want publicly disclosed. However, if 

EBSA cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EBSA might not be 

able to consider your comment. 

Additionally, the https://

www.regulations.gov website is an 

‘‘anonymous access’’ system, which 

means EBSA will not know your 

identity or contact information unless 

you provide it in the body of your 

comment. If you send an email directly 

to EBSA without going through https:// 

www.regulations.gov, your email 

address will be automatically captured 

and included as part of the comment 

that is placed in the public record and 

made available on the internet. 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974, as amended (ERISA). If the 

exemption is granted, the Fedeli Group, 

Inc. Employee Benefits Plan (the Benefit 

Plan) sponsored by Fedeli Group, Inc. 

(Fedeli Group or the Applicant) will 

enter into an insurance contract with 

THP Insurance Company, Inc. (THP), an 

unrelated insurance company, and THP 

will, in turn, enter a reinsurance 

arrangement with Risk Specialists LLC 

(Risk Specialists), a captive reinsurance 

company affiliated with Fedeli Group. 

Under the reinsurance arrangement, 

Risk Specialists will reinsure the 

insurance risks associated with the 

Benefit Plan. The reinsurance 

arrangement would result in an indirect 

transfer of premium payments from the 

Benefit Plan to Risk Specialists, LLC. 

This exemption requires, among other 

things, annual reports to be prepared by 

a qualified, independent fiduciary and 

submitted to the Department of Labor 

confirming whether Fedeli and its 


ddrumheller on DSK120RN23PROD with NOTICES1
76254 Federal Register / Vol. 88, No. 213 / Monday, November 6, 2023 / Notices 

1The Department notes that the independent 

fiduciary’s annual written report is essential to the 

Department’s tentative finding that this proposed 

exemption is and will continue to be, in the interest 

and protective of the Plan and its participants and 

beneficiaries. Each report must demonstrate that the 

independent fiduciary has clearly, prudently, and 

loyally determined whether Fedeli and its affiliates 

have complied with each term and condition of the 

exemption. The exemption’s relief is conditioned 

on the independent fiduciary’s compliance with 

this requirement. 

2The Department notes that availability of this 

exemption is subject to the express condition that 

the material facts and representations contained in 

Application L–11954 are true and complete, and 

accurately describe all material terms of the 

transactions covered by the exemption. If there is 

any material change in a transaction covered by the 

exemption, or in a material fact or representation 

described in the application, the exemption will 

cease to apply to the covered transactions as of the 

date of such change. 

3The independent fiduciary’s determination of 

the $2,023.20 amount is described below in more 

detail. 

affiliates have met the exemption’s 

terms and conditions.1

Summary of Facts and 

Representations 2

1. The Plan Sponsor. Fedeli Group is 

an S corporation based in Cleveland, 

Ohio. Fedeli Group provides insurance 

products and risk management services. 

Fedeli Group is 51% owned by the 

Umberto P. Fedeli Amended and 

Restated Revocable Trust (dated July 16, 

2016), 29% by the Umberto P. Fedeli 

2012 Discretionary Trust (dated 

November 28, 2012) and 20% by the 

Umberto P. Fedeli 2009 Discretionary 

Trust (dated December 23, 2009). 

2. The Plan. The Fedeli Group 

sponsors and administers the Benefit 

Plan, which is a self-funded employee 

welfare benefit plan covering medical 

and hospital expenses for eligible Fedeli 

Group employees. The Benefit Plan 

currently covers approximately 64 

participants. 

3. The Captive Reinsurer. Risk 

Specialists is a licensed property and 

casualty captive insurance company 

that operates under applicable 

Tennessee law. Risk Specialists is 100% 

owned by Risk Specialists Captive 

Holdings, LLC (Risk Specialists Captive 

Holdings LLC), a limited liability 

company formed in Ohio on the same 

date as Risk Specialists. Risk Specialists 

Captive Holdings is 51% owned by the 

Fedeli Revocable Trust, 29% owned by 

the Fedeli 2012 Trust, and 20% owned 

by the Fedeli 2009 Trust. Risk 

Specialists serves as the reinsurer with 

respect to 13 different lines of insurance 

coverages provided to Fedeli Group and 

unrelated third parties. 

4. The Third-Party Insurer. THP 

Insurance Company, Inc. (THP) is a 

domestic stock insurance company 

domiciled in West Virginia and licensed 

in both Ohio and West Virginia. THP is 

unrelated to all Fedeli Group-related 

entities and is currently rated ‘‘A+’’ by 

A.M. Best Company. 

5. Transitioning the Benefit Plan to 

the Third-Party Insurer Using the 

Captive Reinsurer. Fedeli Group seeks 

to use its captive insurance company, 

Risk Specialists, to reinsure the Benefit 

Plan’s claims. If this proposed 

exemption is granted, the Plan will 

enter into a Master Group Policy with 

THP, pursuant to which THP will 

provide group health insurance 

coverage to eligible participants under 

the Benefit Plan. THP will enter into a 

reinsurance agreement (the Reinsurance 

Agreement) with Risk Specialists. Under 

this arrangement, Risk Specialists will 

be responsible for the Benefit Plan’s 

insurance claims under the Master 

Group Policy with THP, and Risk 

Specialists will indirectly receive the 

Benefit Plan’s premium payments to 

THP. The Reinsurance Agreement 

between THP and Risk Specialists will 

be ‘‘indemnity only,’’ which means that 

THP will be responsible for Benefit Plan 

claims under the Master Group Policy to 

the extent Risk Specialists does not 

satisfy those claims under the 

Reinsurance Agreement. 

6. Exemptive Relief Requested. The 

proposed reinsurance arrangement 

would violate certain prohibited 

transaction provisions of ERISA for the 

following reasons: 

• Fedeli Group is a party in interest 

with respect to the Benefit Plan 

pursuant to ERISA section 3(14)(C), 

because it is an employer whose 

employees are covered by the Benefit 

Plan; 

• The Trusts are parties in interest 

with respect to the Benefit Plan under 

ERISA section 3(14)(E) because they 

collectively own 100% of Fedeli Group, 

the Benefit Plan sponsor. 

• Risk Specialists, the captive 

reinsurer, is a party in interest with 

respect to the Benefit Plan under ERISA 

section 3(14)(G) because it is 100% 

owned by the Trusts. 

7. ERISA section 406(a) prohibits a 

wide range of transactions between 

plans and parties in interest with 

respect to those plans. As relevant here, 

ERISA section 406(a)(l)(D) prohibits a 

plan fiduciary from engaging in a 

transaction if the fiduciary knows or 

should know the transaction constitutes 

a direct or indirect transfer any plan 

assets for the use or benefit of a party 

in interest. The reinsurance arrangement 

would result in an indirect transfer of 

Benefit Plan premium payments to Risk 

Specialists, which is a party in interest 

with respect to the Benefit Plan. 

8. ERISA section 406(b)(1) of ERISA 

prohibits a fiduciary from dealing with 

plan assets for the fiduciary’s own 

interest or own account. The fiduciaries 

of the Benefit Plan would violate ERISA 

section 406(b)(1) by causing the Benefit 

Plan to pay premiums to THP, with the 

knowledge that the premiums will 

ultimately be directed to Risk 

Specialists, the captive reinsurer. 

9. Benefits to the ERISA-Covered Plan. 

The Department has the authority under 

ERISA section 408(a) to exempt 

transactions from the prohibitions of 

ERISA section 406. Specifically, ERISA 

section 408(a) provides that the 

Department may not grant an exemption 

unless it finds that the exemption is 

administratively feasible, in the 

interests of the plan and the plan’s 

participants and beneficiaries, and 

protective of the rights of the plan’s 

participants and beneficiaries. 

10. The Department has tentatively 

determined that the proposed 

reinsurance arrangement would be in 

the interest of the Benefit Plan and its 

participants and beneficiaries. As 

described in further detail below, a 

qualified, independent fiduciary has 

concluded that the reinsurance 

arrangement will reduce each Benefit 

Plan participant’s share of the Benefit 

Plan premium paid to THP by at least 

$2,023.20 3 per participant per year for 

the duration of the exemption relative to 

the contribution the participant would 

otherwise have made under a noncaptive arrangement with a competitive 

third party insurer receiving no more 

than reasonable compensation within 

the meaning of ERISA section 408(b)(2). 

Historically, Benefit Plan participants 

contributed approximately 25% towards 

the cost of the Benefit Plan. Under the 

proposal, all the savings from the 

Captive Approach will be used to 

reduce Benefit Plan participants’ share 

of the Benefit Plan’s premiums, and 

Benefit Plan participants will contribute 

no more than 17.38% of the Benefit 

Plan’s costs throughout the duration of 

the exemption. 

11. The Department requested that the 

Applicant provide a complete and 

accurate accounting of all benefits the 

Fedeli Group expects to derive from the 

captive reinsurance arrangement, 

including tax and non-tax benefits. In 

addition, the Department requested that 

the Applicant provide a full explanation 

of the ‘‘economic substance of the 

proposed transaction,’’ that is, the 

economic impact or outcome that the 

exemption would have on the Fedeli 

Group, Fedeli-related parties and the 

Benefit Plan’s participants and 

beneficiaries. Both the accounting of 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 213 / Monday, November 6, 2023 / Notices 76255 

4Under the current arrangement, the funding 

obligation is less predictable because benefits are 

paid out as claims are incurred. 

expected benefits and the explanation of 

the expected economic substance of the 

proposed transaction were reviewed and 

confirmed by the independent fiduciary. 

Applicant’s Response: The Applicant 

represents that the only benefits Fedeli 

Group expects to receive from the 

proposed Captive Approach relative to 

the Plan’s current self-funding 

arrangement are the incidental benefits 

that would result from more 

predictability and better control over its 

benefit funding obligations. Under 

Fedeli Group’s current self-funded 

arrangement, Fedeli’s benefit funding 

obligations are dependent on the timing 

and amount of participant claims. In 

contrast, under the Captive Approach, 

the Fedeli Group will only make one 

annual premium payment. According to 

the Applicant, this initial funding 

obligation will represent an estimate of 

the anticipated claims Benefit Plan 

participants and beneficiaries will incur 

during the year. The ability to budget for 

one up-front annual premium payment 

instead of multiple weekly or monthly 

claims payments would provide Fedeli 

Group with predictability for Fedeli 

Group’s benefit obligations.4

In addition, the Applicant represents 

that the Captive Approach grants 

financial control to the Fedeli Group 

over insurance spending by managing 

risks and underwriting ‘‘Fedeli specific’’ 

risks rather than paying risk premiums 

to third-party insurers or self-insuring. 

By underwriting its own risks, the 

Fedeli Group gains greater transparency 

and improved data on its actual benefit 

claims cost and utilization. Fedeli also 

benefits from flexibility in underwriting 

and funding depending on the Fedeli 

Group’s specific employee 

demographics and plan design that it 

could not receive by purchasing 

commercial insurance. 

Furthermore, the Captive Approach 

will result in reduced overall plan costs 

because benefit expenses are paid based 

on actual experience, as opposed to a 

third-party insurance carrier (the ThirdParty Approach) requiring a fixed 

payment at a premium charged by an 

insurance carrier where the premium 

amount does not change regardless of 

the amount of claims that are incurred. 

Moreover, the Fedeli Group will not 

bear the sole payment obligation that it 

does under its current self-insurance 

arrangement. These reduced costs will 

redound to the Benefit Plan in the form 

of lower cost of health care coverage. 

The Department’s Note: This 

exemption is being proposed based on 

the Applicant’s representations and the 

exemption’s requirement, that no Fedeli 

Group-related entity will receive a 

direct or indirect profit, tax benefit, 

investment gain or other remunerative 

benefit through the Captive Approach. 

The Department notes that if a Fedeli 

Group-related entity ultimately receives 

such a profit, benefit or gain, the Fedeli 

Group must further enhance the Benefit 

Plan in an amount greater than the 

$2,023.20 per participant per year 

contribution reduction in a manner 

consistent with the terms and 

conditions of this proposed exemption. 

Additionally, the Department notes that 

this proposed exemption prohibits 

Fedeli Group or a related entity from 

using any participant-related data or 

information generated by, or derived 

from, the Captive Approach in a manner 

that benefits the Fedeli Group or related 

entity. 

As described below, this exemption, if 

granted, requires a qualified, 

independent fiduciary to review all 

relevant financial information of Risk 

Specialists and any other Fedeli-related 

entity as is necessary to ensure that this 

and the other terms and conditions 

described in this proposal are met and 

to annually certify in a written report 

submitted to the Department that all 

requirements of the proposed exemption 

have been met. 

Applicant’s Analyses 

12. The Applicant represents to the 

Department that it evaluated two 

different insurance-based approaches to 

provide the benefits payable under the 

Benefit Plan and the effects on the costs 

from each, based on the 2023 plan year 

information for the Benefit Plan. The 

Applicant’s first insurance-based 

approach contemplates a Third-Party 

Approach, while the second insurancebased approach takes into account Risk 

Specialists as the captive reinsurer (the 

Captive Approach). 

13. The Applicant states that, based 

on actual values from the Benefit Plan’s 

2023 financial statement, the annual 

premium under the Third-Party 

Approach would have been $2,254,314, 

compared to the $2,124,829 annual 

premium under the Captive Approach. 

Therefore, the Applicant calculated the 

total annual cost savings under the 

Captive Approach would be $129,485 

for the 2023 Plan Year. 

14. The cost savings under the 

Captive Approach will be passed on to 

Benefit Plan participants on a pro-rata 

basis, by reducing employees’ Benefit 

Plan contribution obligations. As of 

September 19, 2023, the Benefit Plan 

covered 64 participants, the $129,485 in 

total annual cost savings under the 

Captive Approach will be directly 

applied to Benefit Plan participants as a 

reduction in their contribution 

obligations. 

15. The Applicant calculated the 

monthly $161.60 contribution reduction 

per Benefit Plan participant 

($129,485.00/12 months = $10,790.42/ 

64 participants = $168.60). The 

Applicant states that this monthly 

reduction in contribution obligations 

will result in annual savings per 

participant of $2,023.20 ($168.60 × 12 

months) with no reduction in medical, 

health, or other plan benefits. Further, 

the Applicant states that these cost 

savings for Benefit Plan participants 

will be implemented simultaneously 

with the establishment of the Captive 

Approach. 

16. The Applicant represents that, 

historically, contributions to the Benefit 

Plan by Benefit Plan participants have 

been targeted at 25% of Benefit Plan 

costs. By implementing the proposed 

Captive Approach and lowering annual 

Benefit Plan costs by $129,485, there 

will be a cost savings to the Benefit Plan 

of 7.62% per year. Based on the 

Applicant’s assertions that the Captive 

Approach will result in participants’ 

savings of 7.62% per year, the 

Department is including an exemption 

condition that requires participant 

contributions to comprise no more than 

17.38% (i.e., 25%¥7.62%) of the 

Benefit Plan’s premiums on a goingforward annual basis. 

The Independent Fiduciary 

17. George J. Stadtlander, President 

and majority owner of Consoliplex 

L.L.C. (Consoliplex), a health plan 

service organization located in 

Cleveland, Ohio, will serve as the 

Benefit Plan’s qualified independent 

fiduciary (the Independent Fiduciary) 

with respect to the proposed 

transactions. Mr. Stadtlander states that 

he is qualified to serve as the 

Independent Fiduciary for the Benefit 

Plan because he: (a) is not employed by 

Fedeli Group or its affiliates; (b) has 

more than thirty years of experience in 

the field of health benefits, including 

serving as an officer and executive vice 

president for Medical Mutual, a local 

health insurance company with over $2 

billion in annual premiums; (c) 

currently owns an organization that 

serves as a plan manager for five 

multiple employer welfare 

arrangements; and (d) has managed the 

actuarial department, the underwriting 

department, network contracting, 

utilization management and sales 

departments, in his capacity with the 

local health local health insurance 

company, which has provided him with 


ddrumheller on DSK120RN23PROD with NOTICES1
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5 In this regard, Mr. Stadtlander stated that he 

received full disclosure of all benefits the Applicant 

expected to derive from the proposed transactions. 

Among other things, Mr. Stadtlander reviewed 

internal analyses of the economic benefits to the 

Applicant prepared by consultants and the 

Applicant itself, and he received full access to all 

data necessary to evaluate the transactions, 

including submissions made by the Applicant to 

state insurance departments. 

6As described above, Fedeli Group represents 

that it would benefit by an increased predictability 

and greater control over its benefit funding 

obligations. 

the experience and background for 

forming the opinions expressed in his 

Independent Fiduciary report. Mr. 

Stadtlander was chosen to act as 

Independent Fiduciary by David M. 

Deroma, the plan fiduciary responsible 

for selecting the independent fiduciary. 

Mr. Deroma represents that Mr. 

Standtlander’s selection was based 

solely on his qualifications to serve as 

an independent fiduciary after a 

prudent process without regard to 

whether Mr. Standtlander’s views were 

likely to favor the interests of the Fedeli 

Group or related parties. 

18. Mr. Stadtlander represents that he 

understands his duties, responsibilities, 

and liabilities under ERISA as the 

Independent Fiduciary on behalf of the 

Benefit Plan participants and their 

beneficiaries, and that, as Independent 

Fiduciary of the Benefit Plan, he does 

not act on behalf of the Benefit Plan 

sponsor or take its interests into 

account. Mr. Stadtlander also represents 

that neither he nor Consoliplex have 

received, nor will they receive, more 

than 1% of their annual income from 

Fedeli Group and its related parties. In 

addition, Mr. Stadtlander represents 

that neither he nor any related parties, 

including Consoliplex: have performed 

any work in connection with the 

Captive Approach on behalf of the 

Fedeli Group or its related parties; have 

any financial interest with respect to his 

work as an independent fiduciary or the 

Captive Approach apart from his 

express fees for his work as an 

independent fiduciary for the Benefit 

Plan; or have received any other 

compensation or entered into any 

financial or compensation arrangements 

with the Fedeli Group and related 

parties. Fedeli Group and its related 

parties have not, and will not, 

indemnify the Independent Fiduciary, 

in whole or in part, for any violations 

of state or federal law that may be 

attributable to the Independent 

Fiduciary in performing its duties under 

the captive reinsurance arrangement. In 

addition, no contract or instrument 

purports to waive any liability under 

state or federal law for any such 

violations. 

19. As the Independent Fiduciary, Mr. 

Stadtlander prepared an initial report 

dated February 26, 2018 (the February 

2018 Independent Fiduciary Report), 

which he has updated with 

supplemental reports on July 30, 2019 

(the July 2019 Independent Fiduciary 

Report), and December 5, 2019 (the 

December 2019 Independent Fiduciary 

Report), at the Department’s request. 

20. February 2018 Independent 

Fiduciary Report. Mr. Stadtlander 

represents that he reviewed the 

Applicant’s rationale as to why the 

Captive Approach would directly 

Benefit Plan participants and 

beneficiaries. Mr. Stadtlander represents 

that the Applicant’s factual assumptions 

and related analysis were accurate and 

reasonable, and that his access to the 

Fedeli Group’s books and records will 

allow him to ensure that the use of the 

Benefit Plan’s assets comply with the 

requirements of ERISA. 

21. Mr. Stadtlander represents that he 

is authorized to take all appropriate 

actions to safeguard the interests of the 

Benefit Plan and its participants and 

beneficiaries, including but not limited 

to monitoring the proposed transactions 

to ensure the transactions remain in the 

interests of the Benefit Plan and its 

participants and beneficiaries, and that 

he can take appropriate actions 

available under the circumstances with 

respect to the proposed transactions, 

including but not limited to enforcing 

compliance with all contractual 

conditions and obligations imposed on 

any party dealing with the Benefit Plan. 

22. July 2019 Independent Fiduciary 

Report. In the July 30, 2019 Independent 

Fiduciary Report, Mr. Stadtlander 

certified that the proposed captive 

reinsurance arrangement would: (a) 

primarily Benefit Plan participants and 

beneficiaries and only provide nonmonetary benefits to the Fedeli Group; 

(b) create real and substantial additional 

benefits for the Plan and Plan 

participants; (c) not be offset by 

reduction in benefits/salaries elsewhere; 

and (d) otherwise be consistent with 

ERISA (including the prudence and 

loyalty provisions) and the law. 

23. December 2019 Independent 

Fiduciary Report. At the Department’s 

request, Mr. Stadtlander provided 

additional responses and clarifications 

related to the proposed transactions. Mr. 

Stadtlander: (a) reviewed the 

Applicant’s representations that the 

Fedeli Group and/or its related parties 

would not receive a monetary benefit 

(tax or non-tax, including a profit) from 

the proposed captive reinsurance 

arrangement, and certified that the 

Applicant’s representations were 

accurate; 5 (b) determined that the 

proposed captive reinsurance 

arrangement would: (i) primarily Benefit 

Plan participants inasmuch as the 

financial benefits to Benefit Plan 

participants would exceed the amount 

of any non-monetary incidental benefit 

to the Fedeli Group and related parties; 6

(ii) create real and substantial additional 

benefits for the Benefit Plan and for 

Benefit Plan participants; (iii) not be 

offset by reduction in benefits/salaries 

elsewhere; and (iv) be otherwise 

consistent with ERISA (including 

prudence/loyalty provisions) and the 

law; (d) certified, within the context of 

the captive, that the savings from the 

Captive Approach would inure to the 

benefit of the participants through a 

combination of some or all improved 

benefits or reduced contributions; (e) 

confirmed that, as the Independent 

Fiduciary, he had the requisite 

knowledge regarding captive 

reinsurance arrangements to fulfill his 

duties under ERISA section 404 as a 

prudent plan fiduciary; (f) confirmed 

that he, as the Independent Fiduciary, 

would monitor the reinsurance 

arrangement throughout the duration of 

the exemption, if granted by the 

Department; (g) confirmed that the 

proposed captive reinsurance 

arrangement is consistent with the 

prudence and loyalty provisions of 

ERISA section 40 and other applicable 

laws; and (h) provided analyses to 

support all representations it made to 

the Department. 

24. In addition, Mr. Stadtlander stated 

that he would annually determine 

whether the terms and conditions of the 

exemption, if granted, had been met in 

the prior year. Specifically, the terms of 

the proposed exemption, if granted, 

provide that Mr. Stadtlander must file 

annual certified reports with the 

Department that confirm whether all 

terms and conditions of the exemption 

have been met under penalty of perjury. 

Under the terms of the proposed 

exemption, each report must be 

completed within six months from the 

end of the 12-month period to which it 

relates (the first 12-month period 

beginning on the effective date of the 

exemption, if granted, and submitted to 

the Department within six months 

thereafter). 

25. Finally, Mr. Stadtlander attached 

his supporting analysis to the 

Independent Fiduciary Report. 

Stadtlander’s analysis confirmed the 

Fedeli Group’s calculations of the final 

saving value and annual cost savings. 

As stated above, the Applicant 

calculated a savings of $168.60 per 

Benefit Plan participant per month 

using the Captive Approach based on an 


ddrumheller on DSK120RN23PROD with NOTICES1
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7ERISA section 408(a). 

overall annual cost savings to the 

Benefit Plan of $129,485.00. 

The Department’s Findings 

26. The Department has the authority 

under ERISA section 408(a) to grant an 

exemption from the prohibition 

transaction provisions of ERISA section 

406 if the Department finds that the 

transaction is in the interest and 

protective of the rights of the affected 

plan and its participants and 

beneficiaries, and is administratively 

feasible.7 The Department’s findings 

required under ERISA section 408(a) 

with respect to the proposed captive 

reinsurance arrangement are discussed 

below. 

27. The Proposed Exemption is 

‘‘Administratively Feasible.’’ The 

Department has tentatively determined 

that the proposed exemption would be 

administratively feasible, because the 

proposed captive reinsurance 

arrangement is subject to robust annual 

reviews by Mr. Stadtlander and 

included in a report he must file with 

the Department’s Office of Exemption 

Determinations. 

28. The Proposed Exemption is 

‘‘Protective of the Plan.’’ The 

Department has tentatively determined 

that the proposed exemption is 

protective of the rights of the Benefit 

Plan’s participants and beneficiaries 

because, among other things, a the 

exemption contains a number of 

additional conditions in addition to the 

requirement discussed above, including 

the following: (a) no commissions will 

be paid by the Benefit Plan with respect 

to the direct sale of any third party 

insurance contract and/or any 

reinsurance contract; and (b) the Fedeli 

Group will only contract on behalf of 

the Benefit Plan with insurers having a 

financial strength rating of ‘‘A’’ or better 

from A.M. Best Company or the 

equivalent rating from another rating 

company. In addition, for each taxable 

year of Risk Specialists, the gross 

premiums received in that taxable year 

by Risk Specialists for benefit insurance 

provided to Fedeli Group and its 

employees with respect to which Risk 

Specialists is a party in interest by 

reason of the relationship to Fedeli 

Group as described in ERISA section 

3(14)(E) or (G), will not exceed 50% of 

the gross premiums received for all lines 

of insurance (i.e., benefit insurance and 

non-benefit insurance) in that taxable 

year by Risk Specialists. 

29. Further, the interests of the 

Benefit Plan and its participants and 

beneficiaries are represented in the 

covered transactions by an Independent 

Fiduciary that is obligated, among other 

things, to: (a) monitor the transactions 

described in the exemption on behalf of 

the Benefit Plan, on a continuing basis, 

to ensure the transactions remain in the 

interest of the Benefit Plan; (b) take all 

appropriate actions to safeguard the 

interests of the Benefit Plan; and (c) 

enforce compliance with all conditions 

of the exemption and all conditions and 

obligations imposed on any party 

dealing with the Benefit Plan. In 

connection with the provision to 

participants in the Benefit Plan of the 

insurance coverage provided by THP or 

its successor, which is reinsured by the 

Risk Specialists, the Independent 

Fiduciary will review all contracts (and 

any renewal of such contracts) of the 

reinsurance of risks and the receipt of 

premiums therefrom and ensure that the 

requirements of this exemption, and the 

terms of the increased benefits continue 

to be satisfied. 

30. The Proposed Exemption is ‘‘In 

the Interests of the Plan.’’ The 

Department has tentatively determined 

that the proposed exemption would be 

in the interest of the Benefit Plan 

because, among other things, all of the 

cost savings from the Captive Approach 

(relative to the reasonable cost the 

Benefit Plan would otherwise have paid 

for comparable benefits pursuant to a 

non-captive arrangement with an 

unrelated, third-party insurer) will be 

used to reduce the amount that each 

Benefit Plan participant is required to 

contribute toward the premium the 

Benefit Plan pays to THP or another 

fronting insurer. Specifically, based on 

calculations confirmed by the 

Independent Fiduciary, the captive 

reinsurance arrangement will reduce the 

monthly contribution of each Benefit 

Plan participant by approximately 

$168.60. This monthly reduction in 

contribution obligations will result in 

annual savings per participant of 

$2,023.20 ($168.60 × 12 months). 

Significantly, Benefit Plan participants 

will contribute no more than 17.38% of 

the premium paid by the Benefit Plan to 

THP or another fronting insurer in any 

Benefit Plan year, which is less than the 

25% the participants previously 

contributed to Benefit Plan premiums. 

In addition, the proposed exemption 

conditions require contributions of 

Benefit Plan participants to be further 

reduced by any net benefit received by 

any Fedeli Group entity, including Risk 

Specialists, that is generated by the 

Captive Approach over each five-year 

period, the first year of which would 

begin on the date this exemption is 

granted. Net benefits may include, but 

are not limited to, increased earned 

income, increased savings, a tax 

reduction or a profit or any benefit 

arising from a further diversification of 

Risk Specialist’s risks in connection 

with adding Plan-related insurance risks 

to Risk Specialist’s other risks. 

Participants’ contributions will be 

reduced by the amount of the net benefit 

(plus interest) on a pro rata basis in the 

year following the five-year period to 

which the net benefit relates. 

Summary 

31. Based on Fedeli Group, Inc. 

satisfying the conditions described 

above and the representations made in 

its exemption allocation and 

communications with the Department, 

the Department has tentatively 

determined that the relief sought by the 

Applicant satisfies the statutory 

requirements for an exemption under 

ERISA section 408(a). 

Notice to Interested Persons 

Notice of the proposed exemption 

will be provided by the Applicant to all 

Interested Persons within 15 days of the 

publication of the notice of proposed 

exemption in the Federal Register, by 

first class U.S. mail to the last known 

address of all such individuals. Such 

notice will contain a copy of the notice 

of proposed exemption, as published in 

the Federal Register, and a 

supplemental statement, as required 

pursuant to 29 CFR 2570.43(a)(2). The 

supplemental statement will inform 

interested persons of their right to 

comment on the pending exemption. 

Written comments are due within 45 

days of the publication of the notice of 

proposed exemption in the Federal 

Register. All comments will be made 

available to the public. 

Warning: If you submit a comment, 

EBSA recommends that you include 

your name and other contact 

information in the body of your 

comment, but DO NOT submit 

information that you consider to be 

confidential, or otherwise protected 

(such as Social Security number or an 

unlisted phone number) or confidential 

business information that you do not 

want publicly disclosed. All comments 

may be posted on the internet and can 

be retrieved by most internet search 

engines. 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under ERISA 

section 408(a) does not relieve a 

fiduciary or other party in interest or 

disqualified person from certain other 

provisions of ERISA and/or the Code, 

including any prohibited transaction 


ddrumheller on DSK120RN23PROD with NOTICES1
76258 Federal Register / Vol. 88, No. 213 / Monday, November 6, 2023 / Notices 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of ERISA 

section 404, which, among other things, 

require a fiduciary to discharge their 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

ERISA section 404(a)(1)(B); nor does it 

affect the requirement of Code Section 

401(a) that the plan must operate for the 

exclusive benefit of the employees of 

the employer maintaining the plan and 

their beneficiaries; 

(2) Before an exemption may be 

granted under ERISA section 408(a), the 

Department must find that the 

exemption is administratively feasible, 

in the interests of the plan and of its 

participants and beneficiaries, and 

protective of the rights of participants 

and beneficiaries of the plan; 

(3) The proposed exemption would be 

supplemental to, and not in derogation 

of, any other provisions of ERISA and/ 

or the Code, including statutory or 

administrative exemptions and 

transitional rules. Furthermore, the fact 

that a transaction is subject to an 

administrative or statutory exemption is 

not dispositive of whether the 

transaction is, in fact, a prohibited 

transaction; and 

(4) The proposed exemption would be 

subject to the express condition that the 

material facts and representations 

contained in the application are true 

and complete at all times and that the 

application accurately describes all 

material terms of the transactions which 

are the subject of the exemption. 

Proposed Exemption 

Section I. Proposed Transactions 

If the proposed exemption is granted, 

the restrictions of ERISA sections 

406(a)(1)(D)and 406(b)(1) shall not 

apply to the reinsurance of risks and the 

receipt of premiums therefrom by Risk 

Specialists Insurance Company, Inc. 

(Risk Specialists), in connection with 

insurance contracts sold by THP 

Insurance Company, Inc. (THP) or any 

successor insurance company to THP, 

which is unrelated to the Fedeli Group, 

Inc., including any entity related to 

Fedeli Group Inc. (collectively, Fedeli 

Group), to provide medical and hospital 

coverage to participants in the Fedeli 

Group Inc. Employee Benefit Plan (the 

Benefit Plan) provided that the 

conditions set forth in Section II are 

met. 

Section II. Conditions 

(a) All of the savings from the captive 

reinsurance arrangement will be used to 

reduce the amount that each Benefit 

Plan participant is required to 

contribute toward the premium the 

Benefit Plan pays to THP or another 

fronting insurer. The cost savings must 

be determined relative to the reasonable 

cost the Benefit Plan would otherwise 

have paid for comparable benefits 

pursuant to a non-captive arrangement 

with an unrelated, third-party insurer. 

In no year will the reduction in Benefit 

Plan participant contributions be less 

than $2,023.20 per participant per year. 

The premium reduction must benefit all 

Plan participants equally and must be 

verified by the Independent Fiduciary 

as described below. 

(b) Benefit Plan participant 

contributions will be further reduced by 

an amount equal to any net benefit (the 

Extra Benefit) any Fedeli Group entity 

received that is directly or indirectly 

generated by the Captive Approach over 

each five-year period, the first of which 

begins on the grant date this exemption 

is granted. Extra Benefits include, but 

are not limited to, increased earned 

income, increased savings, a tax 

reduction or a profit or any benefit 

arising from a further diversification of 

Risk Specialist’s risks in connection 

with adding Plan-related insurance risks 

to Risk Specialist’s other risks. The 

reduction must be received by Benefit 

Plan participants on a pro rata basis in 

the year following the five-year period 

to which the Extra Benefit relates; plus, 

an additional interest payment on the 

amount of the Extra Benefit at the 

Internal Revenue Code’s federal 

underpayment rate established in Code 

section 6621(b). The interest on the 

Extra Benefit must be calculated for the 

period from the end of the Benefit Plan 

year the Extra Benefit was earned 

through the start of the Benefit Plan year 

in which the Extra Benefit is applied to 

reduce Benefit Plan participants’ 

contributions. 

(c) Benefit Plan participants 

contribute no more than 17.38% of the 

premium paid by the Benefit Plan to 

THP or another fronting insurer; 

(d) Risk Specialists: 

(1) Is a party in interest with respect 

to the Benefit Plan by reason of a stock 

affiliation with Fedeli Group that is 

described in ERISA section 3(14)(E) or 

(G); 

(2) Is licensed to sell insurance or 

conduct reinsurance operations in the 

state of Tennessee; 

(3) Has obtained a Certificate of 

Authority from the insurance 

commissioner of the State of Tennessee 

to transact the business of a captive 

insurance company, which has neither 

been revoked nor suspended, and has 

undergone a financial examination 

(within the meaning of the law of its 

domiciliary State, Tennessee) by the 

Insurance Commissioner of the State of 

Tennessee within five years before the 

end of the year preceding the year in 

which the reinsurance transaction 

occurred; 

(4) Has undergone and shall continue 

to undergo an examination by an 

independent certified public accountant 

for its last completed taxable year 

immediately prior to the taxable year of 

the reinsurance transaction covered by 

this exemption; and 

(5) Is licensed to conduct reinsurance 

transactions by a state whose law 

requires that an actuarial review of 

reserves be conducted annually by an 

independent firm of actuaries and 

reported to the appropriate regulatory 

authority; 

(e) The Benefit Plan pays no more 

than adequate consideration with 

respect to insurance that is part of the 

captive reinsurance arrangement 

covered by the exemption; 

(f) No commissions are paid by the 

Benefit Plan with respect to the direct 

sale of such contracts or the reinsurance 

thereof; 

(g) In the initial year of any contract 

involving Risk Specialists and THP or 

any successor insurer, the Benefit Plan’s 

participants and beneficiaries receive an 

immediate and objectively determined 

benefit in the form of decreased 

participant contributions, and such 

benefits will continue in all subsequent 

years of each contract and in every 

renewal of each contract; 

(h) In the initial year and in 

subsequent years of coverage provided 

by THP or another fronting insurer 

(either, a Fronting Insurer), the formulae 

used by the Fronting Insurer to calculate 

premiums must be similar to formulae 

used by other insurers providing 

comparable life insurance coverage 

under similar programs that are not 

captive reinsured. Furthermore, the 

premium charges calculated in 

accordance with the formulae must be 

reasonable and must be comparable to 

the premiums charged by the Fronting 

Insurer and its competitors with the 

same or a better financial strength rating 

providing the same coverage under 

comparable programs that are not 

captive reinsured; 

(i) Fedeli Group only contracts with 

insurers with a financial strength rating 

of ‘‘A’’ or better from A.M. Best 

Company. The reinsurance arrangement 

between any fronting insurer and Risk 

Specialists will be indemnity insurance 

only, such that the fronting insurer will 

not be relieved of any liability to the 

Benefit Plan should Risk Specialists be 

unable or unwilling to cover any 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 213 / Monday, November 6, 2023 / Notices 76259 

liability arising from the reinsurance 

arrangement; 

(j) Participants and beneficiaries in 

the Benefit Plan must receive no less 

than the immediate and objectively 

determined increased benefits the 

participant and beneficiary received in 

the initial year of each such contract 

involving Risk Specialists and THP in 

subsequent years of every contract of 

reinsurance involving Risk Specialists 

and THP; 

(k) For each taxable year of Risk 

Specialists, the gross premiums received 

in that taxable year by Risk Specialists 

for benefit insurance provided to Fedeli 

Group and its employees with respect to 

which Risk Specialists is a party in 

interest by reason of the relationship to 

Fedeli Group as described in ERISA 

section 3(14)(E) or (G), will not exceed 

50% of the gross premiums received for 

all lines of insurance (i.e., benefit 

insurance and non-benefit insurance) in 

that taxable year by Risk Specialists; 

(l) The Benefit Plan retains a qualified 

independent fiduciary (the Independent 

Fiduciary) to analyze the transactions 

covered by the exemption and render an 

opinion that the terms and conditions of 

this exemption have been satisfied; 

(m) The Independent Fiduciary will: 

(1) Monitor the transactions described 

here on behalf of the Benefit Plan on a 

continuing basis to ensure such 

transactions remain in the interest of the 

Benefit Plan; 

(2) Take all appropriate actions to 

safeguard the interests of the Benefit 

Plan; and 

(3) Enforce compliance with all 

conditions of this exemption and all 

conditions and obligations imposed on 

any party dealing with the Benefit Plan; 

(4) Review all contracts, and any 

renewals of such contracts, pertaining to 

the captive reinsurance arrangement, to 

determine whether the requirements of 

this exemption, and the terms of the 

increased benefits continue to be 

satisfied; and 

(5) Provide an annual, certified report 

to the Department, under penalty of 

perjury, indicating whether the terms 

and conditions of the exemption 

continue to be satisfied. Each report 

must be completed within six months 

after the end of the twelve-month period 

to which it relates (the first twelvemonth period begins on the first day of 

the implementation of the captive 

reinsurance arrangement covered by this 

exemption), and be submitted to the 

Department within 60 days thereafter. 

The relevant report must include all the 

objective data necessary to demonstrate 

that the Primary Benefit Test has been 

met; and 

(n) The Benefit Plan, Fedeli Group 

and its related parties have not, and will 

not, indemnify the Independent 

Fiduciary, in whole or in part, for 

negligence and/or for any violations of 

state or federal law that may be 

attributable to the Independent 

Fiduciary in performing its duties under 

the captive reinsurance arrangement. In 

addition, no contract or instrument will 

purport to waive any liability under 

state or federal law for any such 

violations. In the event a successor 

Independent Fiduciary is appointed to 

represent the interests of the Plan with 

respect to the subject transaction, no 

time shall elapse between the 

resignation or termination of the former 

Independent Fiduciary and the 

appointment of the successor 

Independent Fiduciary. 

(o) No Fedeli Group entity or related 

entity may use participant-related data 

or information generated by or derived 

from the proposed arrangement in a 

manner that benefits the Fedeli Group 

or related entity; 

(p) No amount of THP’s reserves that 

are attributable to the Plan participants’ 

contributions may be transferred to 

Fedeli Group or a related party; 

(q) Fedeli Group will not evade the 

conditions in this exemption by 

offsetting or reducing any benefits 

provided to Fedeli Group employees to 

defray the costs, expenses, or 

obligations of complying with this 

exemption; 

(r) All expenses associated with the 

exemption and the exemption 

application, including any payment to 

the Independent Fiduciary, must be 

paid by Fedeli Group and not the Plan; 

and 

(s) All the material facts and 

representations set forth in the 

Summary of Facts and Representation 

are true and accurate at all times. 

Effective Date: The proposed 

exemption will be in effect as of the date 

the grant notice is published in the 

Federal Register. 

Signed at Washington, DC. 

George Christopher Cosby, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2023–24401 Filed 11–3–23; 8:45 am] 

BILLING CODE 4510–29–P 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

[NOTICE: 23–111] 

Name of Information Collection: NASA 

Complaint of Discrimination Form 1355 

AGENCY: National Aeronautics and 

Space Administration (NASA). 

ACTION: Notice of information collection. 

SUMMARY: The National Aeronautics and 

Space Administration, as part of its 

continuing effort to reduce paperwork 

and respondent burden, invites the 

general public and other Federal 

agencies to take this opportunity to 

comment on proposed and/or 

continuing information collections. 

DATES: Comments are due by December 

6, 2023. 

ADDRESSES: Written comments and 

recommendations for this information 

collection should be sent within 30 days 

of publication of this notice to 

www.reginfo.gov/public/do/PRAMain. 

Find this particular information 

collection by selecting ‘‘Currently under 

30-day Review—Open for Public 

Comments’’ or by using the search 

function. 

FOR FURTHER INFORMATION CONTACT: 

Requests for additional information or 

copies of the information collection 

instrument(s) and instructions should 

be directed to Bill Edwards-Bodmer, 

NASA Clearance Officer, NASA 

Headquarters, 300 E Street SW, JF0000, 

Washington, DC 20546, 757–864–7998, 

or b.edwards-bodmer@nasa.gov. 

SUPPLEMENTARY INFORMATION: 

I. Abstract 

Federal agencies are required by 

statute not to engage in discrimination 

on the bases of race, color, religion, sex, 

national origin, age, disability, genetic 

information, or retaliation. A federal 

employee, former employee, or job 

applicant who believes s/he was 

discriminated against has a right to file 

a complaint with the agency’s office 

responsible for its Equal Employment 

Opportunity (EEO) programs. Federal 

agencies must offer pre-complaint 

counseling or EEO alternative dispute 

resolution (EEO ADR) to individuals 

who allege that they were discriminated 

against by the agency. If pre-complaint 

counseling or EEO ADR does not resolve 

the dispute(s), the individual can file a 

formal discrimination complaint with 

the agency’s EEO office. 

II. Methods of Collection 

Title 29 of the Code of Federal 

Regulations (CFR) part 1614 section 104 

requires agencies to establish 


ddrumheller on DSK120RN23PROD with NOTICES1