“Examining the Policies and Priorities of the Employee Benefits Security Administration”
No chapters available yet
Legend
Transcript markers
- text Sentence being played
- text Search result
- text Intervention cited by the link you opened
Click a sentence to play the video from that moment. Select text to quote it with the speaker, timestamp and link.
More options
House Education and Workforce Subcommittee on Health, Employment, Labor, and Pensions U.S. House of Representatives
Follow its sittingsSpeaker 3
We look at gas prices. President Trump's reckless tariffs and senseless war in Iran have spurred chaos in the financial markets. Although they're good today, who knows what'll happen tomorrow, caused largely by the erratic policies that have left inconsistencies at the gas pump for struggling families. According to data from Vanguard, there's a rising number of Americans who are tapping their retirement savings accounts to cover emergency expenses. And The New York Times recently reported on the trend of middle-class Americans selling their plasma to help with the high cost of housing, groceries, and health care.
The last thing that these American workers and their families need is more risk, but I'm afraid that's what we've been getting from the current administration. The labor department abandoned an essential protection ensuring workers do not get ripped off by their financial adviser when investing their retirement nest egg. Return on investment is important, but also proper oversight on that return on investment and financial advisers is also important. The department also proposed a rule to provide a safe harbor for retirement plan managers to offer high-cost investments such as crypto and private equity in workers' 401(k) plans. The department also has taken no action to address the pernicious claim denials that make health care unaffordable for Americans and has been an important subject of this subcommittee in both maturities.
And the department announced it would not enforce the 224 mental health parity final rule, and will not defend it from a lawsuit brought by representatives of some of the largest corporations in the world who wanna avoid their responsibilities to provide health care under their insurance plans, including parity. Mister undersecretary, I understand that you led a successful business before taking on this public service role. As my committee members know, I often remind my Republican colleagues I was once a Republican, and I was once a small business owner. I understand the pressure of making payroll. But I'm concerned that EBS's approach so far under your leadership sees such regulatory issues through a fairly narrow lens, by combating litigation, by encouraging combative litigation.
As a result, EBSA appears to consistently prioritize the interests of corporations over workers and their families, who I'm sure we both agree are central to EBSA's mission. This is not a correct approach, in my view. Workers and families need an EBSA that fights for them, stands up for their interests. We must not repeat that core principle. Thank you, Mister Chair, and I yield back.
Speaker 2
Thank you for yielding. And, mister secretary, I do need to make one correction. I apologize. It's Daniel and not David.
Speaker 2
Two great names, but I apologize, and I correct the record on that. Alright. Now pursuant to committee rule eight c, all members who wish to insure written statements to the record may do so by submitting them to the committee clerk electronically in Microsoft Word format by 5 PM, 14 days after this hearing. And without objection, the hearing record will remain open for 14 days to allow such statements and other extraneous material noted during the hearing to be submitted for the official hearing record. I note that some of our colleagues who are not permanent members of this committee may be waiving on for the purpose of today's hearing.
I will now turn to the introduction of our witness, the honorable Daniel Aronovich, assistant secretary of employee benefits of the Employee Benefits Security Administration at the Department of Labor. We thank you for being here today. We look forward to your testimony. Pursuant to committee rules, I would ask you to limit your oral presentation to a three-minute summary of your written statement. As committee members have many questions for you, the clock will count down from 3 minutes.
Pursuant to committee rule eight d and committee practice, however, we will not cut off your testimony until you reach the 5 minute mark. I would also like to remind you to be aware of your responsibility to provide accurate information to the subcommittee. I will now recognize Assistant Secretary Aronovich for your testimony.
Speaker 4
Good morning, Chairman Allen, Ranking Member Desanje, and members of the subcommittee. Thank you for inviting me here today to testify about the important work of the Employee Benefits Security Administration at the United States Department of Labor. EBSA is charged with protecting American workers' retirement and health care benefits under ERISA. We are stewards of retirement and health plans in America. Unfortunately, prior to my confirmation last year, litigation abuse and regulatory overreach threatened harm to Americans' retirement and health plans.
Innovation stagnated as employers were paralyzed by very rational fears. EBSA under President Trump and Secretary Chavez de Riemer's bold leadership is charting a new course. In a voluntary system, we want more employers to offer more benefits. To execute this vision, we are addressing regulatory overreach and litigation abuse with three key goals in mind. First, we are providing regulatory clarity for retirement and health plan sponsors.
President Trump's American worker first agenda for employer-sponsored health care is designed to put control back in the hands of employers and employees, drive down costs, and maximize value. We strive for a health care system where every dollar is traceable, every contract is understandable, and employers and workers get real value for their money. Our mission is simple, use ERISA's full power to demand value and lower cost by holding health insurers, PBMs, and service providers accountable. EBSA's groundbreaking proposed transparency rulemaking gives planned fiduciaries the tools they need to carry out their responsibilities and negotiate fair contracts with PBMs. Once finalized, this rule will save the American worker and the health care system billions of dollars over the next 10 years.
Coupled with the new provisions in the Consolidated Appropriations Act of 2026, specifically the requirement to pass through 100% of manufacturer rebates, this creates for the first time a complete transparency framework for prescription drug pricing. For retirement plans, under President Trump's directive, EBSA took decisive steps on March 31 to alleviate regulatory burdens and litigation risks that interfere with the ability of American workers to achieve the competitive returns and asset diversification necessary to secure a dignified and comfortable retirement. We published a notice of proposed rulemaking on investment selection that will assist plan fiduciaries who follow a prudent process, as outlined in 20 safe harbor examples in diversifying plan investment choices from unfair hindsight second-guessing of discretionary fiduciary decisions. Our second goal is to ensure that EBSA's enforcement is fair, even-handed, efficient. We will accomplish this objective with four guiding enforcement principles, including strategic focus on the most significant harm to plan participants, fairness and proper notice to the regulated community of all enforcement priorities, proper oversight to ensure EBSA's enforcement is consistent and uniform nationwide, and finally, ensuring that EBSA's enforcement will be timely and responsive.
EBSA's third goal is to address ERISA class action litigation abuse that has stifled innovation and plan design, paralyzing conscientious plan fiduciaries who follow sound fiduciary practices. This is why we have filed a number of amicus briefs to defend ERISA as a law of process in which independent and conflict-free plan fiduciaries have discretion and flexibility to act in the best interests of their participants. Importantly, we are not depriving workers of their right to sue. EBSA will ardently protect the right of participants to sue when the harm is real. Our amicus program is decisively pro-ERISA, as EBS' job is to protect and steward America's retirement and health systems.
We believe this three-part formula is how we deliver on President Trump's goal to usher in a new golden age for Americans, and how we achieve a new golden age of employee benefits. I look forward to answering your questions.
Speaker 2
Thank you, Mr. Secretary. Under committee rule nine, we will now question the assistant secretary under the five-minute rule. I would like to first recommend, recognize our esteemed chairman of the full committee, Mister Wahlberg, for his five minutes of questioning.
Speaker 5
Thank you, Mr. Chairman. And, Mr. Roanowitz, thank you for being here. I'm sure you're aware you are in an extremely important position. And too often, we don't really think till it's too late about the necessity of planning for the future, especially in the financial area, to make sure the retirement works. And so appreciate your efforts to beef it up and to encourage more to think seriously.
The committee wants workers along that line to save for the retirement with a peace of mind that they will have financial security during their retirement years. The question I have is what can EBSA do to encourage 401k plan fiduciaries to adopt lifetime income solutions in their plans, and how could Congress assist EBSA in that regard?
Speaker 4
Thank you for that question. At EBSA, our job is to put out clear rules and guidance on how to follow a prudent process. We don't pick winners and losers. We don't decide what is in plans, but we did put out at President Trump's directive an investment selection rule in which we took 52 years of ERISA law, and we affirmed that ERISA is a law of process in which plan fiduciaries have discretion and flexibility to do in a responsible way what they think is right for their plan participants. We wanted to give them confidence that if they add lifetime income or other solutions that have been enjoyed by government workers and professors in 04/2003 b plans for years, that they will have the confidence that they have the discretion and flexibility to act in the best interest of participants, and then a court should give them a presumption of prudence.
So that's how we've acted decisively. It's a proposed rule. We're in a comment period, but we hope to get many comments to help us put out a great final rule that will give confidence to plan fiduciaries in America.
Speaker 5
Yeah. I would hope that that would work out because the creativity that's needed to develop plans and to give opportunities for employees, from the employer, is so important. Good to hear. The investment decision that workers and retirees make has a profound effect on the value of their savings at retirement and through their retirement years. Can you discuss briefly the importance of investment returns and the role that market volatility plays in retirement savings?
And following along that line, how can alternative assets such as private market investments help an asset allocation fund in a 401(k) plan to mitigate market volatility?
Speaker 4
Thank you for that question. Under our investment selection proposed rule, we highlighted for fiduciaries the relationship between risk and reward. We mentioned modern portfolio theory, which is an investment framework that maximizes risk-adjusted returns through diversification and optimal asset allocation. Diversification is the key to protect against market valid volatility. Again, we were asset neutral.
We're not picking winners and losers, but we hope to give planned fiduciaries confidence in a roadmap to offer alternatives that may or may not be right for their planned participants. We also give multiple examples of risk mitigation strategies that can be confidently used in risk plans to protect against market volatility.
Speaker 5
That gives them the choice. Yeah. In March, EBSA published a proposed rule on fiduciary duties in selecting designated investment alternatives. The preamble to the proposed rule states, and I quote, the goal is to alleviate certain regulatory burdens and litigation risks that interfere with the ability of American workers to achieve a dignified and comfortable retirement. How has litigation risk impaired innovation in retirement and health plans?
Speaker 4
Thank you, Mr. Chairman, for raising that. I was a fiduciary liability underwriter, and I underwrote some of the most creative companies in America. And what I saw is these companies are very creative in their products, one company that was electrifying cars and putting people on, with the goal to put people on the moon and in Mars, but they were risk adverse in their retirement plan. It stifles innovation because they're instead of asking what is in the best interest of planned participants, they're asking, how do I keep from being sued? That's the problem that we're trying to address.
That's what litigation abuse has done.
Speaker 2
The gentleman yields. And now I'll call on Mr. Courtney for his five minutes of questioning.
Speaker 6
Great. Thank you, Mr. Chairman. Mister Renowitz, I'd like to ask you about an issue on health care price transparency, which I think we can find some common ground on. Earlier this year, Congress passed, for the bipartisan majority, the Consolidated Appropriations Acts 2026. It included a provision from a bill which I had introduced, the Hidden Fee Disclosure Act, which would clarify who is a, quote, covered service provider for purposes of ERISA's health plan fee disclosure requirements.
And as you know, the bill explicitly itemized who covered service providers are. My colleagues, Mister Scott and Mister Designee, and I wrote to you about this issue a few weeks ago, and I appreciate you responded promptly. But I do wanna get a little more clarity, if I could, this morning. As you know, all group health plan covered service providers now must disclose their direct and indirect compensation to plan fiduciaries. And, again, that includes a broader spectrum than just PBMs.
So can you clarify your understanding of what services would make a covered services provider under this provision?
Speaker 4
Thank you for that opportunity. Our transparency regulation focused on PBMs. We put out an extended comment period in which we asked the regulated community to give comments on how we can harmonize with your legislation. And I got a letter from you the other year. Even yesterday, and we appreciate that you said that we were in a good head start, and we do have common ground. And so we just got 584 comments.
The comment period ended yesterday, and we fully intend to review those comments. I don't wanna prejudge what we're going to do, but we I heard you loud and clear in your own comment letter in which you told us that we should go bolder and broader beyond just PBMs. And so I don't wanna prejudge our rule, because we're following the administrative procedure act, we do have significant common ground. The goal of EBSA under president Trump's leadership is to drive value and to hold health care companies accountable. Never been done at EBSA before, and that's what we're doing.
Speaker 6
Sure. So, again, but I wanna just go back, and I again appreciate that you're moving forward with the PBM rule, but there is another former employer, you know, there's a lot of other providers that, you know, are covered by the statute in terms of disclosure. And, I mean, I could read it out here. I mean, it's about a dozen or so different groups there. And our letter, you know, really was looking not necessarily for a regulation to cover, you know, sweeping regulation to cover all of them, but really just to have guidance from the department so that stakeholders understand what their obligations are under the law, which, again, the ink is barely dry.
But, again, it's something that has been worked on for a number of years in this committee and across congress.
Speaker 4
Thank you for highlighting that. We're the first EBS administration that ever put out transparency, notice of proposed regulations, and we are clearly focused on using the full power of ERISA. Never been done before to hold health insurance companies accountable, to hold service providers accountable, and to drive better value and lower costs. You have my commitment. That is what we're focused on, and you can see what we've already done.
We agree with you.
Speaker 6
And I appreciate that. I guess, you know, there's been always, I think, you know, claim of uncertainty out there in this sort of sector about whether or not they're required to disclose, and that's where, again, I think, our letter was really seeking to get guidance that actually was, you know, pretty clear, to folks. So, mister chairman, again, I just ask that the letter which I referred to, as well as mister Oranjewicz's response, be added to the record.
Speaker 6
Thank you. One other sort of, part of your portfolio is claims denial, which, again, president Trump, you know, put out, in his great American health care plan that they proposed requiring health insurers to publish the percentage of insurance claims they reject. Again, this is another consensus issue. The Affordable Care Act actually has language in it that mandated the same requirement for insurance companies. The inspector general's office in 2016 recommended that the form 5,500 be updated to allow DOL to, you know, collect this information.
So, again, this is a big one out there for patients and constituents of ours in terms of the just sort of sometimes arbitrary-seeming denial of claims. And, hopefully, you know, you could comment quickly if, you know, that's one of your priorities.
Speaker 4
It is absolutely our priority. It's in our national priorities. We are moving Ebsa from lopsided efforts against retirement plans and moving significant resources to health care denials and other health care accountability.
Speaker 2
The gentleman yields, and now I recognize myself for my five minutes of questioning. I was interested in your testimony. I served in the last congress on the healthy future task force. And what I could not get was a breakdown of where every dollar goes in health care cost. Nobody could give me that information, not even the former Secretary of Health and Human Services.
I hope that you will continue to work on that, so we know where the dollars are going and how they're being used. The other thing that I'm interested in under ERISA is to give ERISA a waiver from the Affordable Care Act so that it does not have to comply with all this stuff. I mean, self-insurance is the way of the future. All the 50 to 500 largest companies self insure, and, you know, they are very pleased with what they're able to do in the marketplace. My legislation protecting, now getting on to my questions.
My legislation protecting prudent investment of retirement savings act ensures that ESG impact investing does not take priority over the retirement security of pension plan participants and beneficiaries. What steps has EBSA taken to reverse the harmful Biden-Harris administration policies that would put impact investing for special interests over the retirement security of American workers?
Speaker 4
Thank you for the question. I can't talk about any specific rulemaking, but I can tell you that we told the fifth circuit that we were addressing this. And so, unfortunately, I can't talk about what we're doing, but we obviously believe in the exclusive purpose rule, and exclusive means exclusive.
Speaker 2
And for five decades, employee stock ownership plans or ESOPs have waited for regular regulatory guidance on the valuation of employer stock. My legislation, the retire through ownership act, passed this committee unanimously by a vote of 35 to 0. My legislation would adopt long-standing guidelines issued by the Department of Treasury for stock valuation. This legislation gives certainty to ESOP fiduciaries on stock valuation. For years, DOL attempted to regulate ESOPs with litigation rather than definitive valuation guidance.
How is EBSA changing its approach to ESOPs?
Speaker 4
Thank you for the opportunity to address that. I live the American dream by having ownership in an American business, and we firmly, in the Trump administration, believe in giving maximum opportunities for Americans to have stakes in their companies. We are pro-ESOP. What I have done so far is we just put out guiding principles that we've been using where we will not regulate through enforcement. And until we put out the valuation guidance that Congress has asked for for decades, we will not second guess planned fiduciaries in their judgments.
We'll be focused on the duty of loyalty. We are reviewing every single one of the 90 pending ESOP cases in our office against those priorities. We are going to treat ESOPs fairly, like all other retirement plans. We're ending the war on ESOPs.
Speaker 2
Good. Good. Thank you. For years, pharmacy benefit managers have benefited from opaque pricing tactics, while health care costs continue to soar. My legislation, the PBM Kickback Prohibition Act, would prohibit PBMs from paying consultants and brokers who give trusted advice to employers and group health plan fiduciaries from taking compensation for steering businesses to PBMs.
Can you talk about absence of work to curb PBMs abusive practices, and how might Congress be able to assist you with this effort?
Speaker 4
Thank you for the opportunity to highlight our notice of proposed rulemaking on PBM transparency. We broadly defined what a PBM is. We prod broadly defined all types of compensation. We wanna remove the black box for planned fiduciaries so they know what they're paying for, can drive better value, and get better and lower cost. And we look forward to reading all of the comments, including from this committee.
If we can do better on our final rule, we absolutely intend to shine a light on the black box of all types of health care pricing.
Speaker 2
Good. Well, thank you very much. And per my original comment, we have got to do something to compete. We gotta the only way to drive down cost is competition, and we've gotta create a program, and I think Arista is the perfect place to allow every small business and large businesses to self insure and also receive a waiver, as the unions and the faith-based community received from the Affordable Care Act. So we can have a completely private program, and it would also be great to include self-employed people under the ERISA laws.
And I think, you know, that that's something I just wanted to leave with you. And, you you've got ten seconds if you'd like to comment on that.
Speaker 2
Okay. Great. Thank you. Alright. Next, Mister Norcross, you're recognized for five minutes of questioning.
Speaker 7
Thank you, chairman and ranking member, for what you do each and every day. And in spite of many differences that we have on this committee, there is much alignment on issues like retirement, as the chairman spoke of in his meeting. But I want to talk about something I think there is certainly, over the last decade, much focus on the silent side of health benefits, and that's mental health. And if you go back just ten years, the way not only the citizens viewed this, how this committee and certainly benefits look at that. So the idea that mental health is as real and is as important as any physical ailment.
Yet, we understand that there is no parody, and this is where you come into play. The parody act says if you're treating the physical, you have to treat the mental. And that includes one of the biggest killers for those 25 years of age, and that's the disease of addiction. We've worked together over the last few years trying to bring those health insurers to the table because, as you know, in the information you get, it is difficult to find out where there is not parity going on. But as you say time and again, holding health insurers, PBM, and service providers accountable.
The core issue, you are completely right on that. Yet when we look at the enforcing the parity act, I'm concerned about the number of actions this administration has changed over previous administrations where we work together on these things. It appears, and I'd love to hear when we're finished here, your views on the announcement you made that you no longer will enforce the requirements of the parity final rule. It seems that you don't seem. It is that you are backing away from some of those key elements that we do not get from health insurers, and then there is no way to enforce it.
There are no penalties. They get a slap on the wrist. So collecting that information, yet you're backing off from that. And in addition to that, President Trump's own bipartisan opioid task force provided the department with the authority to oppose those monetary penalties. Yet, here we are, going back.
Would you explain to me the difference of what we were trying to do before? And since the new administration has come in, the backing off of those issues.
Speaker 4
Thank you for the opportunity to correct the record. My personal experience is I have two children that have been in 8 different residential treatment facilities. Only one of those was paid for. And then, retroactively, the insurance company said it was no longer medically necessary. And then my appeal rights were taken, even though I hadn't used them.
So I have significant personal experience. This EBSA is 100% committed to knocking down every possible barrier to mental health. We are in litigation, and so I can't talk about the comparative analyses. But we restated the national priorities of EBSA for the first time in 20 years, and number one on that is knocking down barriers to mental health. There are many doors.
It's not just comparative analysis, which I don't believe got us anywhere. It just created cost and a burden. We are doing investigations on burdensome claim denials and medical necessity, unjustified blank exclusions for ABA therapy and medication-assisted treatment for opioid, ghost networks, conflict of interest.
Speaker 7
If I could, I only have a minute left. I appreciate it. My heart goes out to you for what so many families have gone through, is watching addiction take over the lives of people they love. But the idea of you can assess, and let's just assume for the sake of argument, that you find they are not enforced, the parity act is not being adhered to. So if you don't have any penalties for any of us who drive anywhere, you understand that if there's a radar and a policeman out there, you're going to watch what you're doing.
We don't have that. We were heading in that direction. Can I at least get from you that you will do whatever your ability gives you to do to make sure this parity act is enforced and saving the lives of whether it's your children or my children?
Speaker 4
You have my commitment that I will knock down every barrier to good mental health treatment for all American workers and their families.
Speaker 2
The gentleman yields, and now I'll recognize mister Owens for his five minutes of questioning.
Speaker 8
Thank you, mister chair, for your convenience. A very important committee meeting. I look forward to hearing today from how employee benefits security administration is working to serve American people and help them achieve more stable financial future. Mister Aronowitz, this subcommittee received testimony earlier this year saying that the retirement plan participant education needed to meaningfully improve in retirement decision-making. This is because petition participants' overall financial literacy is essential to enable invest savings and spending decisions that are foundational to retirement planning.
I'm grateful for work that's already been done by this administration to improve financial literacy and stability through Trump accounts. With parents giving their children treasury issued stock ownership, it will incentivize as they grow to be literally illiterate financial literate. They'll also learn how to access tax advantage savings and to participate and benefit from the market. My question to you is, what are the steps that retirement plan sponsors can take to improve the financial literacy of plan participants?
Speaker 4
Thank you for highlighting this important issue. Whenever I speak about financial literacy and retirement, I always say three things. Start early, maximize your employer match, and diversify your investments. The important thing, but as head of EBSA, my job as I see it is to empower fiduciaries to give good education and financial literacy. Our job is to empower the fiduciaries to do it.
And one thing that we did in the 2000 fiduciary, 2024 fiduciary rule, we saw a survey where 25% of employers were now afraid to give participant education because of liability. We withdrew that. The SEC will monitor IRAs, and we will promote good education from EBSA, but we're going to empower fiduciaries to do an even better job, and that's what we're focused on.
Speaker 8
Okay. Thank you. Under the Biden administration, ERISA fiduciaries were committed to consider the environmental, social, and governance (ESG) impact as part of the investment decision and proxy voting. However, the American people have spoken. They are more concerned about making sure their money gets the best return on investment than going to woke investments.
Can you tell me more about how EBSA is working toward ensuring the retirement plans are generating the best return for investments for Americans?
Speaker 4
Thank you for identifying that. Several things. President Trump asked us to give guidance if necessary on whether proxy advisors can be seen as fiduciaries, and we gave guidance on when and if they can be fiduciaries under the five part tests that has been around over fifty years. Importantly, also, our investment selection rule is designed to give a road map on what a prudent fiduciary process looks like, what an objective, thorough, and analytical prudent investment selection looks like. And we make clear that planned fiduciaries have discretion and flexibility to do what they think is in the best interest of planned participants.
And what we nudge planned fiduciaries to do is to look at the risk adjusted return net of fees, and that's their goal. What is in the best interest of planned participants? And we don't necessarily know what that is in the future, and we wanna give them the tools so they can continually, in every fiduciary plan meeting, ask what is in the best interest of plan participants. And right now, what I'm afraid of is planned for fiduciaries are asking, how do I not get sued? Mhmm.
And we have to change that paradigm so that they're asking, how do I help my employees?
Speaker 8
And, Mike, kind of leading to this next question I have. Under the EBSA advised administration, what was recognized to carry out punitive and aimless investigations that went on for years, without sign of ending. Can you tell us more about the multiyear and meaningless investigations carried out under the previous administration?
Speaker 4
Well, I was a fiduciary liability underwriter, and I insured thousands of plans. And I paid for many of those investigations that went on for years. And an insurance company wanna close out claims, and I frustratedly couldn't close them out. So I was a firsthand consumer of that type of abuse. Now what I learned when I got to EBSA is we have really good investigators.
These are really good employees, and they just needed better leadership. And so what we did was we put out guiding principles so that we know what we stand for. And when we're looking at an investigation, we can say, well, should we do this investigation or not? We the four part guiding principles are to make sure that we are following ERISA, that we are not regulating by enforcement. And one of the guidance is we specifically have all investigations are now on a shot clock.
Simple investigations must be done unless there are exigent circumstances in 18 months and 30 months for a more complex investigation. There's always exigent circumstances. The point is that we have management best practices in which there's accountability. And the thing I'm most excited about is the investigators are excited to follow this guidance, and they're already fought a file. It's a course correction that all investigators are excited about.
We're bringing a better EBSA in which we are thoughtfully demonstrating integrity and accountability in what we're doing.
Speaker 8
Well, thank you so much. I'm looking for this new chapter for our young and old Americans, for sure. Thank you so much, and you're back.
Speaker 2
Gentlemen Yields, and now I call on Miss Macbath from Georgia for her line of five minutes of questioning.
Speaker 9
Thank you, Chairman Allen and Ranking Member Designa, and thank you to our witness today. The employee benefits security administration has the important responsibility of protecting the health benefits of more than 150,000,000 hardworking Americans on employee sponsored health insurance. Unfortunately, a growing number of Americans who have actually put in their time at work and paid into their health care plans are not receiving the benefits, the health care benefits that they are entitled to. With the increasing complexity of the health care system, the employee benefits security administration's responsibilities have grown significantly over the years, yet the agency remains chronically underfunded and understaffed, with the president's newest budget requesting a further $10,000,000 cut to an already overworked agency. The lack of resources at this agency means that patients continue to face cruel and unnecessary delays that limit access to necessary life-saving care.
In the last session, Congressman Rick Allen and I sent a letter to the Employee Benefits Security Administration regarding our concerns about the role of alternative funding programs in self-funded plans. Under the guise of saving money, alternative funding programs misled employers and pushed them to plans that ultimately exclude certain specialty drugs or deny timely coverage for treatments. These middlemen abandon patients, pushing them to patient assistance programs that are not meant for them, or pressuring them to use illegal importation methods. Ultimately, and far too often, these alternative funding pathways fail our patients, leaving them to shoulder the full cost of their life-saving medication or experience delays that can result in harmful complications. Like a cancer patient who relies on an oral oncolytic when they know other therapy actually works.
Prior authorization deemed this medication medically necessary, but the patient's alternative funding program denied coverage for the treatment, forcing the patient to jump through unnecessary hoops that caused him to miss treatment for an entire month. Or like a cystic fibrosis patient who relies on a modulator therapy, which is critical for treating their chronic disease. Because of an alternative funding program, their covered treatment was denied, resulting in a six-month gap in their care. Six months. Six months of waiting that resulted in irreversible lung damage, that caused the patient's health to deteriorate, ultimately forcing them to be hospitalized and leave their employer plan to find coverage on the marketplace.
Assistant Secretary Aronowitz, do you think that it is acceptable for an employee who is entitled to health benefits through their employer to have to wait for six months for lifesaving treatment?
Speaker 4
Thank you for that explanation. I agree with you. It's outrageous. If the facts are as you stated, that is wrong. And I took this job to remedy exactly what you just articulated.
I have challenged all of our investigators, our great head of heaven and head of enforcement, our regional directors. I told them, find more health care cases to use the full power of ERISA, which includes improper claims denials, and we're gonna hold health care companies accountable. These promised benefits to Americans must be upheld. That's my job, and I guarantee you I'm doing it.
Speaker 9
I'm glad to hear that, because no one should have to wait for life-saving treatment. And the reality is not everyone can wait for the life-saving treatment. And while the agency is tasked with this important role that has financial and profoundly personal impacts for all those who, in our health care system, years of underfunding and understaffing have threatened to undermine that mission that you speak of. Assistant secretary, I share your vision of making the employee benefits secretary administration more efficient and more fair so that patients are not left hanging while bills are piling up and life-saving treatments go delayed. With your commitment to improving the efficacy of the agency, I hope you will provide timely oversight of alternative funding programs.
Their conduct hurts both employers and employees alike, misleading employers and leaving employees in the lurch. Patients are not getting the answers that they need. Claims continue to be denied, and more Americans are left without the treatments that keep them healthy and whole. On behalf of the millions of Americans who rely on health insurance through their jobs, it is our duty, your duty as well, to support oversight, cut through red tape, and protect patients' lives. NIY.
Speaker 10
Thank you. Mister assistant secretary, I wanna start by thanking you and your team for your work on the proposal of how best to expand access to alternative investments in 401k plans. It's clear that you and the secretary and everybody else on your team have put a lot of time into this proposal, including coordinating with your colleagues at the Department of Treasury and the SEC. These types of investment options have been available to pension funds for decades, and I think it's important and fair that all retirement savers have equal access. I also share with many of my colleagues the belief that investor protections should remain a critical focus of this proposal.
And in fact, there are many layers of protection and fiduciaries between a retirement saver and the underlying investments being discussed here today. Can you please describe the level of scrutiny and protection when it comes to the selection of 401(k) investment options offered by plan sponsors?
Speaker 4
Thank you for highlighting our work on this. We're really proud of it. We outlined in our rule 52 years of prior guidance, sort of gave a history lesson on what EBSA has done in the past, and then we built on that. And we demonstrated what a prudent process looks like, with different factors. But the key of it is that plan fiduciaries in selecting the plan menu must act objectively, thoroughly, and analytically.
And we give them, for the first time, real examples on how to do that with different factors, whether that's how to look at fees, or how to look at valuation, or if there's liquidity issues. So we try to arm plan fiduciaries so that they can confidently do their jobs to maximize risk-adjusted returns for all of their workers.
Speaker 10
Thank you for that. A stated goal of your recent proposal was, let me say this. It was to alleviate litigation risk associated with voluntary offering, retirement plans to employees. What other actions can EBSA take to help curb excessive ERISA litigation?
Speaker 4
Thank you for highlighting it. We are very concerned, and so is the president, that excessive litigation abuse is stifling innovation. And anytime someone plans does something new, they get sued, even if it's a risk mitigation strategy. So what have we done? First, at the president's directive in our investment selection rule, we reaffirmed that ERISA is a law process straight from the statutory text, in which planned fiduciaries have flexibility and discretion in choosing the investments.
And when they follow an objective, thorough, and analytical process, they should have deference and be presumed innocent. The second thing we've done is we have filed a number of amicus briefs in cases where we think that it needs to be reaffirmed to the judicial branch that they need to weed out the sheep from the goats, and that's their job. Only plausible claims should go forward. And we have, in cases like pension risk transfers, which are specifically allowed under ERISA, we have reestablished and reaffirmed in these amicus briefs that ERISA's law process. Now by one of the briefs, we were pro participant in which the Eleventh Circuit had created a judicially created administrative exhaustion requirement.
We came down and told the eleventh circuit, no, that's not allowed under ERISA. So what we're trying to do, representative, is to be pro ERISA and follow ERISA wherever it goes, and reaffirm what ERISA is. A process statute that does not police outcomes. It polices a prudent process. That's what we're trying to do.
It's decisively pro-ERISA.
Speaker 10
Well, that's great. I appreciate your focus on the actual statute, making sure that everybody is following it in full accordance with the law. So I would just like to say, again, I wanna thank the department for all their work that they've done thus far on all these different initiatives. When it comes to alternative investments, we wanna make sure that everybody, when they're investing in their retirement plans, they are getting the best return they can for the risk that they wanna assume, making sure that they're still protected by their fiduciaries who are doing investments on their behalf. But, again, opening up all the options for them, I think, is critically important.
And, when it comes to curbing excessive litigation, this is, again, about the employees, making sure that the benefits that they have earned for their retirement plans actually go to them as opposed to going to litigation costs and legal fees, taking money away from the fund and away from those employees and their retirements. I think is critically important. So I appreciate the focus, again, always on what is best for the employees and, ultimately, their retirement savings. I think is the right focus. And so, I appreciate your work again. Thank you, and I yield back.
Speaker 11
Thank you. Good morning, and thank you, Secretary Aronowitz, for testifying today. The Employee Benefits Security Administration, or EBSA, is critical to promoting the health and retirement security of more than 155,000,000 workers, retirees, and their families across the country. In your testimony, you state one of the most important ways that EBSA protects American workers is the benefits advisors program. The EBSA benefits advisors based in the regional field office in Boston are critical to assisting constituents in my hometown of Connecticut.
These individuals answer questions to help workers navigate employee benefits plans and track complaints and violations that can lead to enforcement actions to ensure employers comply with federal laws. The enforcement actions alone helped EBSA investigators recover more than $530,000,000 in health, retirement, and other benefits owed to workers last year. Despite the tremendous return on investment, the Trump administration is proposing to cut the EBSA budget by 10,000,000 in fiscal year 2027, which would lead to a continued reduction in full-time staff. The proposed cuts are concerning, considering the number of full-time staff at EBSA has already declined from over 960 full-time employees in 02/2015 to fewer than 690 full-time employees today. The results show that their work is important.
Does the administration plan to prioritize the outreach and compliance support that benefit advisors provide amid plan budget and staffing cuts?
Speaker 4
Thank you for letting me correct the record. I agree with you. Our benefit advisor program helps all Americans, and you correctly cite how they helped Americans last year. They help with life-saving medicines and claim denials. They're the front lines for EBSA in helping Americans with health care denials or when retirement money is not put into the plans.
We just hired 40 new benefit advisors. We had 74. We just added 40, and we're not done. We, under my leadership, we're gonna have more benefit advisors than ever because it's a priority. When I look at EBSA, we do outreach, we do clear regulations, and we do enforcement.
The number one thing we do is answer the phone with compassion when Americans need help, and thank you for highlighting those amazing employees at EBSA.
Speaker 11
Well, I must admit I wasn't expecting that as an answer. That is encouraging, and I truly appreciate it because these roles are really important. And I'll be watching to see, ensure that we're continuing to make progress in this area, because it is so important. EBSA also has jurisdiction over many laws, including oversight of employer-sponsored health plans under the Affordable Care Act. It's my understanding that EBSA has previously sent benefits advisors into the community to support outreach and education efforts.
Can you explain what role benefits advisors are currently playing in helping participants navigate health care market changes following the expiration of tax credits and many of the perceived cuts that are looming to Medicaid?
Speaker 4
Thank you for the opportunity. Our benefit advisers, their foremost job is to answer the phones, and our number one job is to make sure the phones can be answered. We also do outreach, and I have authorized every single event that our head of outreach, Becky Marshond, has put forward. And I have encouraged her to be as thoughtful as possible to educate both inside EBSA so that we're experts and educate the public as well. So I'm approving every single good idea that she comes forward with.
Speaker 11
Thank you. Actually, you've eliminated my last question, which was, do you plan to hire additional benefits advisers? So I appreciate the opportunity for you to clarify the record, but I hope that I can leave you with the fact that, for many of these retirees, the number one benefit that they are concerned about is their health care and how to navigate the landscape that we are in right now. So I truly hope that these benefits advisors are educated in those areas and can provide the most complete, proactive information, because it is incredibly scary. As you've heard all of my colleagues down the line talk about when you have health issues and you're waiting for an answer or being denied a claim.
So those things are really important.
Speaker 4
Thank you for highlighting what our benefit advisers are doing. I've told the secretary multiple times, it's the most important thing done at the entire Department of Labor. Answering the phone with compassion to help Americans in their time of need.
Speaker 11
Answering the phone and providing real concrete answers or direction for where people can find those answers is important. Thank you. Thank you. I yield back.
Speaker 8
Thank you. I'd like now to recognize my friend from Missouri, Doctor Anders.
Speaker 12
Thank you, Mr. Chairman, and thank you for being here today. As a physician, I've witnessed firsthand the financial strain that unexpected medical bills place on patients. The No Surprises Act, which was enacted during President Trump's first term, banned the practice of surprise medical billing, which is when patients unknowingly receive out-of-network care and are left with unexpected medical bills. While the law established penalties for providers who improperly balance-bill patients, it did not establish parallel penalties for insurers or, for that matter, any other penalty or any other enforcement mechanism on the insurance side of the equation. And over the years, insurers have unfortunately abused this imbalance.
Bloomberg reported last year that after the arbitration process set up by the No Surprises Act, some insurers would send an updated bill to patients to make up the difference. We've even seen insurers refuse to cover out of network services altogether, such as childbirth anesthesia and neonatal resuscitation, even though under the law patients should only pay what they would owe if the provider were in network. So, essentially, the insurers are violating the No Surprises Act by passing out-of-network bills onto patients, and we need to have some sort of enforcement mechanism, some sort of penalties when this happens. And that is why my friend, doctor Murphy, filed the No Surprises Act enforcement act for House Resolution 4710, which applies the same penalties that would apply to providers to insurers who break the law. I'm co-leading this important legislation, which would close this critical loophole and reinforce the law's original purpose, protecting patients.
Can you describe the types of complaints Ebse has received regarding the No Surprises Act violations in balance involved balance billing.
Speaker 4
Thank you for highlighting this important issue. Our benefit advisers have been flooded with thousands of calls from providers, sometimes from individual patients. The bigger issue is less about the surprise bills. I think the law has mostly worked, but it's not perfect.
Speaker 4
And I just wanna mention, one of our enforcement national priorities that we just updated is to enforce the No Surprises Act. So I have the team on this to ferret it out. But where we learn about problems on the front lines is the calls that we get. But we're getting thousands of calls a month. That's one of the reasons we're hiring more benefit advisers.
We now have contractors specifically trained on this issue, and we're seeing small doctors' offices that win in arbitration and not get paid. Yes. Thousands of those calls a month. We're trying to figure it out, and so we try to learn from everything. And so I ask our outreach head, what are we learning, and how can we do it better?
So we're all over this issue, but it's a work in progress, because it's really complicated. The other thing I wanna point out is that we're working on a final IDR rule to fix some of this. Can't talk about what's in it because I can't pre-judge.
Speaker 4
But we know the problems. It's a mess, and I like to fix things. That's what I like to do.
Speaker 12
So that's what we're trying. No. Thank you for your commitment to this issue. Yes. Providers continue to complain that they are not being paid within the thirty-day statutory timeline.
That's an understatement, a dramatic understatement as you well know. Practices cannot go years waiting for payment. You know, and I would just say even apart from this issue of the Surprise Billing Act, this is not just a matter of a physician standing up for fellow physicians. This is really a matter, is another thing that is driving enormous consolidation in our health care system. When we drive small independent practices out of business, patients are driven to more expensive care, more expensive places of care.
Does it do you, in your opinion, does Ebsen need additional enforcement authority for Congress, you know, such as monetary penalties for insured noncompliance, or are there things you can do administratively or both?
Speaker 4
So thank you for highlighting that issue. I make it a practice not to tell Congress what to do, but it is my job to use the tools that I have with our team to enforce the laws as you execute. So And we are 100% focused on helping Americans that have balanced billing and helping providers and working through those issues as efficiently as possible. So that's what we're working on. And if you give us more authority, we will use it to help Americans.
Speaker 12
Well, thank you so much for your commitment to this important issue. I appreciate it, and you I yield back.
Speaker 13
Thank you, Mr. Chairman. The Employee Benefits Security Administration exists to protect retirement and health care benefits for millions of workers, retirees, and their families. EBSA investigations have put billions of dollars back in people's pockets, and the agency pays for itself seven times over with the amount of money it recovers each year. But under your leadership, Mister Roanowitz, EBSA has dramatically shifted its priorities towards protecting corporate interests and limiting access to justice for workers and their families. The Department of Labor is touting self-audit programs that allow companies to conduct oversight on themselves.
And DOL and EMSA have filed amicus briefs in favor of companies like JPMorgan Chase, Seizmen, and Honeywell International. So to be clear, you're using taxpayer dollars to advocate against workers on behalf of corporations, many of which don't even pay federal taxes themselves. But, of course, none of this is surprising because in 2024, you did write in a blog post that, quote, the ERISA statute is a balance of the interests of plan participants and plan sponsors. With respect to bias, we are guilty as charged. We are advocates for America's benefit plan sponsors, and biases don't just disappear when you switch jobs.
Your record as assistant secretary is consistent with that statement from 2024. So, mister Aronowitz, are you aware that under 29 United States Code section 551, the purpose of the Department of Labor shall be to foster, promote, develop the welfare of the wage earners of The United States, to improve their working conditions, and to advance the opportunities for profitable employment?
Speaker 4
Thank you for letting me address this, and thank you for reading my blog post.
Speaker 13
Just really quickly, if you could just, if you are aware of that statute, that is what it says. And that is what.
Speaker 4
It's aware of that statute. May I address the concern if I'm biased for plan sponsors?
Speaker 13
Actually, yeah, I would like to know if you've overcome your biases for benefit plan sponsors.
Speaker 4
In my job as an insurance fiduciary liability insurance company, I was allowed to have biases. As the assistant secretary of EBSA, I am executing the mission of the agency, which is to protect the system. And it is a balance between, in a voluntary system, plan sponsors voluntarily providing benefits, and then helping plan participants. That's what we're doing. All of our Migas briefs are decisively pro-ERISA.
We're not pro plan sponsor, we're not pro participant. We follow ERISA wherever it goes. We are the most pro-ERISA EBSA administration ever.
Speaker 13
Okay. So while we're on the subject of just putting corporate and private interests over workers and retirees, we can debate how you have approached your biases to overcome them. I would like to talk about some of your decisions around cryptocurrency. There's plenty of evidence on how risky it is to invest in crypto, which is why DOL previously issued guidance that cautioned fiduciaries to exercise extreme care prior to adding crypto to 401k plans. Yet, in the past year, DOL rescinded this guidance.
You also proposed a role providing a litigation shield for plans who would want to add crypto to workers' 401(k)s. So this seems beneficial to people like President Trump and his family who have billions in crypto holdings. Would you agree?
Speaker 4
Thank you for that question. We are not pushing crypto on Americans' retirement plans.
Speaker 13
Not pushing, but the question was more so that the guidance that was previously suggested had been rescinded.
Speaker 4
The prior guidance put the thumb on the scale up it, which was, for which was, it's basically saying that if you put this in your plan, we will audit you. That is not the role of EBSA or the Department of Labor to pick winners and losers. What we did was put out a pro erissa that's faithful to the statute investment selection rule.
Speaker 13
With or without regard to the riskiness of investing, of crypto being added to 401k plans?
Speaker 4
We absolutely put guidance so that planned fiduciaries can assess whether it's risky or not. And we put out guidance that says if planned fiduciary must objectively, thoroughly, and analytically review. So if they wanna review crypto, it needs to meet our rigorous tests. And I don't even know if there's a current product that can meet our rigorous tests. But the point is, it's not my job to pick winners and losers.
It's not my job to say what should be in the plan. It's my job to put out thoughtful guidance that is true to the ERISA statute in which it's a process. We put out a rigorous process for any planned fiduciary to review critical.
Speaker 13
I do only have a couple more seconds. I just wanna say that people stay in jobs they might not otherwise choose because they rely on their health care benefits. People work their entire lives to retire with dignity. Workers and retirees are entitled to support from the federal agencies their tax dollars pay for. It is not Ebsa's job to advocate on behalf of large corporations or to protect them.
I yield back.
Speaker 2
Jenny, yep. Excuse me. The gentle lady yields, and now I'll call on Mister Fine from Florida for his five minutes of question.
Speaker 14
Thank you, Mr. Chairman, and thank you for being here today. Your answers have been great. I have a couple of questions.
Speaker 14
they'll be so ridiculous, but we'll try to make them more useful. Mister Ronowitz, this committee has championed legislation to increase transparency in the health care market. Why do you think it's important for an employer to have access to the health data of its own plan in order to design a plan that provides quality health care for lower costs?
Speaker 4
Thank you for that question. Right now, much of the health care spend is in a black box, and the reason we wanna shine the light on PBMs and other health care costs is to empower planned fiduciaries to get lower cost and better value for their planned participants. That's how we help all American workers.
Speaker 14
Okay. Great answer. What are the limits on health care data transparency under current law? And how can we in Congress give employers the tools that they need to lower those costs?
Speaker 4
Thank you for letting me answer that question. When I got to EBSA, what I saw was an EBSA that was primarily focused on retirement plans, like, percent. We changed that. And what we're trying to do is use the power of ERISA for the first time to hold health insurance companies accountable, drive better value, and lower cost. That's what we're trying to do.
Speaker 14
Well, your passion is obvious, and, again, I appreciate it. I wanna change topics to a bill of mine. So, mister Aronowitz, I introduced HR 6884, the ERISA litigation reform act, to deal with this sort of spate of frivolous litigation, which enriches lawyers and not the beneficiaries of these plans. It clarifies the burden of proof in certain fiduciary-related claims. It establishes a targeted stay of discovery during the early stages of litigation.
Last year, the Supreme Court interpreted ERISA to permit any claim brought in court against an employee benefit plan for hiring a service provider to survive a motion to dismiss the claim automatically. What's the significance of a motion to dismiss in one of these, you know, ERISA lawsuits?
Speaker 4
The motion to dismiss is the whole ball game. If the plaintiff lawyers get past the motion to dismiss, they won because they can leverage a settlement because it costs millions of dollars to defend the case even if it's frivolous. I would point out to you that there's been about eight trials over the last five years, and plan sponsors have won seven out of the eight trials. And why is that? Because many of these cases are against plans that have an excellent fiduciary process, and judges are allowing cases to go forward.
But once they see the evidence, they see many of these plan sponsors have an excellent fiduciary process, and then they're vindicated. But it costs millions of dollars to vindicate yourself, and that's why we're losing and stifling innovation where plan sponsors are gonna keep asking, how do I keep from getting sued, as opposed to thinking, what is in the best interest of my plan participants? And that's a shame.
Speaker 14
And losing a motion to dismiss doesn't mean that you're wrong. The motion to dismiss is sort of the lowest level of, you know, of litigation.
Speaker 4
What's the first gate? But that gate that you go through is supposed to separate the sheep from the goats, and that's not happening. And that's the problem because courts are supposed to do their job and remove frivolous cases from the system. And if you add the prohibited transaction cases, you can now sue with no proof of wrongdoing. That's not America.
You're not supposed to be guilty until proven innocent. It's supposed to be the opposite.
Speaker 14
So I don't know how familiar you are with my bill, HR 6084. But do you think it would close if you do, do you think it would close the loophole for service provider contracts and employer stock ownership plans?
Speaker 4
We gave technical assistance on your bill. I it's not my job to comment publicly on your legislation, but I'm for anything that allows plan sponsors to do their jobs effectively and responsibly.
Speaker 14
So my bill also strengthens pleading standards for lawsuits brought under ERISA. Frivolous class action lawsuits, they put quick payouts against truly meritorious cases. That's what you're talking about. What's the difference between a frivolous class action lawsuit and those seeking redress for real harm? I mean, are there examples where people really do deserve to be sued?
Speaker 4
I can give you examples of a sheep from the goat in meritless cases versus case of merit. There was a case against a major health care company that's now over, in which they had a breach of loyalty in which the CFO, in discovery, it was shown that he steered the target date funds to a company that he wanted to do business with the company. That's a breach of loyalty. That's potentially a case with merit as long.
Speaker 14
And that would have survived the motion to dismiss, and they probably would have won in the end.
Speaker 4
In the summary judgment, the court said that they had their hand in the cookie jar. That has a case that has potential merit. You still have to prove causation, but many of the cases that are using circumstantial evidence of outcomes that the plaintiff lawyers don't like, and trust me, these are plaintiff lawyer generated cases, not participant cases, in which they're using disfavored outcomes to then bootstrap and ask the court to infer a bad fiduciary process. Well, those are the ones that lack merit because you and under wristle, you need to show that it's a process based defect.
Speaker 2
The gentleman yields, and now I call on Mr. Deconto from California for your five minutes of questions.
Speaker 15
Thank you, Chairman Allen. Mister Ronowitz, you have stated that your last organization that your employee was, quote, advocate for America's benefit pensions plan sponsors benefit me. Benefit plan sponsors, unquote. Would you characterize your former company's primary clients as America's benefit plan sponsors or American workers?
Speaker 15
Understand, sir. The administration has highlighted your dedicated decades of commitment, as a, quote, unquote, advocate for sponsors of employee benefit plans, end quote, not employees. Miss Roanowitz, you oversee benefit plans covering 155,000,000 people. And despite your past role, are you committed to fulfilling the department's charter of protecting the wage earner?
Speaker 4
I absolutely am committed to the mission of the Department of Labor and the mission, which is of the employee benefits security administration, which is protecting the retirement and health systems in America, ensuring the security of the system. And I'm doing them the most prepared abscess assistant secretary ever to do that.
Speaker 4
We are in the Trump administration, we are American workers first. Everything we do is for the American worker.
Speaker 15
Thank you, sir. It seems as though you have, but it is as though you have more experience protecting corporations and people. So let's move on. Let's take a look at what's happened at the department of labor. Mister Ronald, are you aware that the department of labor's inspector general is investigating the labor secretary for professional misconduct, including drinking on the job?
Speaker 15
York, you are high, you know, kind of fairly high-level lawyer experience. It's hard to believe that an assistant secretary would not be reading The New York Times. But, anyway, let's go on. Miss Arontos, are you aware of reports that several members of the secretary staff have been fired, forced to resign, or placed on administrative leave because they used taxpayer dollars to fund the secretary's personal travel?
Speaker 15
So you are aware. Thank you. Mister Rowets, have you read the reports that the secretary is the subject of three civil rights complaints filed by women who allege the secretary has fostered a hostile work environment?
Speaker 15
So you're not aware, Mr. Aramach. Thank you. Mister chairman, I wish to enter into the record the investigative report about these complaints of the three women involved. Actually, he has consent for that to be undergone to record.
Speaker 15
Mister Oronowitz, how are you protecting your staff after the secretary's husband reportedly was banned from the department's headquarters, when at least two staff members accused him of making unwanted sexual advances?
Speaker 15
Mister secretary, the question was whether or not you're taking any steps to protect your staff, given the reports about the secretary's husband being banned from the office. Yes or no? Have you set in place plans?
Speaker 15
Secretary is not responsive. I take the answer to be no. You've not put any plans in to protect your staff.
Speaker 15
Mister secretary, do you have confidence in the leadership of secretary, Chavez de Rummer?
Speaker 15
You do. Thank you. My Republican colleagues were very interested in the secretary's predecessor during her scandal-free term, where she fought fiercely for the American people and American workers. However, Republicans have been silent on the chaos, dysfunction, and potential fraud being perpetrated by the current secretary. And occurring and apparently the indifference of the assistant secretary.
American workers deserve a Department of Labor that is focused on protecting their rights and hard-earned benefits, not the secretary's latest scandal. Thank you, I'll yield back.
Speaker 2
The gentleman yields. Now I call on Mister Manion from New York for your five minutes of questioning.
Speaker 16
Thank you, Mr. Chair. Thank you, assistant secretary. I appreciate you being here today and addressing our questions and concerns. As we all know, the work of the Employee Benefits Security Administration is wide-ranging and critical. EBSA oversees the retirement and health plans of over 155,000,000 Americans and carries out essential investigative, educational, and enforcement activities.
Workers and retirees across the country expect the agency to protect their hard-earned benefits and diligently respond to all cases of plan mismanagement. With that in mind, I want to echo the concerns of some of my colleagues that they have raised about EBS's capacity. The agency has been under considerable strain for a long time, and just over the last year, the majority of this committee has taken issue with the length of EBSA investigations. We are concerned, certainly, that as the budget request is proposed, there are fewer resources for the agency and, therefore, potentially less personnel to carry out these important responsibilities moving forward. Beyond the budget, Mister Secretary, I wanna ask you about the recent changes to EBSA's national enforcement projects and priorities.
From your testimony, I understand that EBSA has removed terminated, vested participant searches from its list of priorities. What we're talking about here are folks that are entitled to a pension or have accrued retirement savings, but maybe they switched jobs a couple times and lost track of their 401k that they had with a former employer. Plan sponsors often have a tough time locating these folks, who are sometimes referred to as missing participants. Thanks to the leadership of the members of this committee, including ranking member Scott and congresswoman Bonamici, there was a provision in the bipartisan Secure 2.0 legislation that established a retirement savings lost and found database at the Department of Labor. The database is intended to help missing participants find and recover their lost retirement savings.
So, mister assistant secretary, did the existence of the lost and found database factor into EBSA's recent decision, and can you give an update on how the database is functioning?
Speaker 4
Thank you for the ability to address that and correct the record somewhat. The reason I made changes is I saw 50% of EBSA's enforcement was on a single issue. We absolutely care about missing participants, but I need to use our resources strategically. So I moved that to health care and to vindicate health care benefits and rights, and I challenge the team to find a technological solution to find missing participants. And so we're coming up with a way that we'll find more missing participants than ever, using technology.
And the lost and found database is working. It's not perfect. We found certain issues, including the way and how you log in with some government issues. We are all over it and trying to make sure that it has maximum effectiveness. But we're trying to have a parallel for plan sponsors to give their data so we can find more missing participants, but then I free up my investigators to vindicate the rights of all health care participants in America.
That's what we're doing strategically.
Speaker 16
Thank you. You mentioned 50% of the resources were focused on one certain type of activity. What was that activity, and why was it so onerous on the agency?
Speaker 4
I'm sorry if I wasn't clear. 50% of our investigative resources were focused on missing participants. And so I've challenged the EBSA team to come up with a tech technological way to do that work in a more efficient way that's not burdensome to plan sponsors, but also finds more missing participants, freeing up all that investigatory resource to go to vindicating health care claims.
Speaker 16
Are they working on that technological fix, and is there anything we can do as a legislative body to be of assistance?
Speaker 4
Well, I need to consider that, but there we are, absolutely it's front and center. We have a task for us on it. Our head of operations, Layla Mansour, is a technology expert, and we're trying to figure it out. It's gonna take a little bit of time, but, hopefully, we've come up with a more inspired way to find missing participants and allow our investigators to do way more than just focus on one or two issues in their entire career.
Speaker 2
The gentleman yields, and now I'll call on Mr. Scott, our ranking chairman, for his five minutes of questioning.
Speaker 17
Thank you, Mr. Chairman. And I'd like to ask questions about follow-up on claim denials. And you mentioned you wanted plans denying claims. We wanna hold them accountable. Is that right?
Speaker 17
Okay. If you're aware of the responsibility of plans to have a provision that allows consumers to internally appeal a denial of claim?
Speaker 17
Okay. And the affordable care access, they also have to have an external review process.
Speaker 17
Okay. Now if a group plan or health insurer violates either of these provisions, what kind of fine or civil monetary penalty does the law allow you to impose?
Speaker 4
We have very limited ability under what we currently have, but we use every possible resource to vindicate rights, including we have more enforcement against service providers, so that we can strategically use our resources.
Speaker 17
Okay. That was a lot of words, but I didn't see anything you could actually do to somebody for violating the law.
Speaker 4
Well, we are absolutely vindicating health care rights, and we're using all of our power under ERISA, which is
Speaker 4
Well, I have the power of ERISA, the greatest statute in employee benefit history.
Speaker 17
Okay. I'm not hearing anything that you could do. If they if the plan you are familiar with mental health parity, the requirement that mental health be covered like all other health plans, problems. You're familiar with that? If an insurer doesn't have mental health parity, what monetary penalty can you impose?
Speaker 4
I can only do what's under the law, and I'm very limited, as you're indicating.
Speaker 17
Okay. And if a plan refuses to cover preexisting conditions, which, you know, is they can't do that, what can you do about it?
Speaker 4
We use the power of ARICID, and we're going after more service providers under the tools we have to.
Speaker 4
The tools I have are under disclosure rules and under fiduciary process rules.
Speaker 17
If a plan refuses to cover a preexisting condition and a patient dies, what happened? What's the recourse?
Speaker 4
Well, let me be clear. We can't tell plan sponsors what to cover and what to not cover.
Speaker 4
But what we can is enforce the law, and we do have different tools, and mental health parity is one of those things. If there is not parity between the preexisting conditions of medical, medical surgical to mental health, but we're using everything we have at our disposal.
Speaker 4
Well, I'm telling you that I have the power of ERISA in different parts of the statute, and I'm using everything I have to.
Speaker 17
What if recourse would a participant have if a family member dies because they didn't cover a preexisting condition. Heard one example where they denied. What happens if the denial if the patient dies while they're waiting for treatment?
Speaker 17
Let another me question. On the fiduciary rule, what is the present status of whether or not there's a fiduciary duty to participants under the plan and whether investment advisers have a fiduciary duty when they give advice to plans.
Speaker 4
I wanna make sure I understand, but we withdrew the 2024 fiduciary rule and restored the five-part test because that is what Congress wants us to do. You give us authority over employee benefit plans, and the SEC and state insurance commissioners will do their job of enforcing IRAs.
Speaker 17
Is there a fiduciary duty on behalf of investment advisers when they give advice to plans? Is there a fiduciary standard?
Speaker 4
If they're giving advice to the plan, they're absolutely fiduciaries, and they have the highest duty known to law.
Speaker 17
Okay. You mentioned risk-adjusted returns. Well, I'm running out of time. You're back.
Speaker 2
Alright. The gentleman has yielded. A vote has been called in the house. Pursuant to the previous order, the chair declares the commit committee in recess subject to the call of the chair. We'll plan to reconvene promptly ten minutes after the last votes have been called in the series.
The committee stands in recess. Almost.
Speaker 2
Okay. The subcommittee were reconvened, and now I'll call on Mr. Sanjay for your five minutes of questioning.
Speaker 3
Thank you, Mr. Chairman. And, to the witness, mister secretary, thank you first of all for being so forthright about your personal family situation. I appreciate it. I've had a similar situation when it comes to behavioral health with my father. And I didn't wanna admit it years ago, but a reporter sort of forced me to.
And it's taught me that our stories collectively have been really helpful for us to deal in our culture and this committee with issues around mental health and substance abuse. So being honest about it, I think, is really admirable. So thank you for that, personally.
Speaker 3
So I wanna ask these questions in the context that we talk about this a lot in this committee. And for us to have the kind of relationship that I hope for is that we can have very legitimate political differences. But in this instance, where I say this all the time, we've got the most expensive health care system in the world for developed countries, with the poorest outcomes. And there are so many inefficiencies in this. Chairman Alan and I have talked a lot about whether it's PBMs or claim to dials.
We're not serving Americans' health. And in this part of our health care delivery system, as a former employer, employers who are responsible for contributing and want their employees to get value, it seems like a simple thing to say we should really be collectively pushing for better outcomes for our investment. And this is your job, is a key part of that. So if you can get better results with lower costs, I'm all for that. If we have more efficient regulation, that's fewer lawsuits.
So there is a relationship there of your job making sure that people adhere to their contractual obligations as health plans. And you have a long history in this, and you've studied it. I loved your line about problematic, only delivered in a way that a really analytical person could say about a situation where somebody having a claim denied, and that part's not funny, that somebody died because they should have had the health care that they paid for. So in that regard, let's go right to claim denials that you've already recovered. Your predecessor told us that we had one inspector to respond to every 14,000 covered health, retirement, and other benefit plans.
Well, to the analogy of a police officer, how do we get the bad performers? So we know that, for instance, in my research, UnitedHealthcare was one that was really a bad performer, denying claims that traditionally were approved. And people don't have the resources to get an attorney and fight this. So how do we make this more efficient in the sense that people are following laws with the least amount of lawsuits or enforcement possible? And you got to this a little bit just prior to my questioning on technology.
And I'll be honest with you, as a member of the Bay Area delegation, I've been burned by the technology. It's gonna solve everything. We know that it doesn't. It can be a really good tool. So just sticking with that overall metric, but when it comes to denial of claims and what you've already said, could you add to that in the context of the tone of my question, particularly that technology may be helpful?
And lastly, you're going to cut staff in your budget proposal in the context of what I just told you about only one federal employee to respond to 14,000 plans. So I'm all in. I believe that you wanna make it more efficient, including delivery of services and quality of care. But how are you going to do that? And I will just say you're gonna be back in front of this committee in this Congress and in the next.
So I'm gonna hold this to you months from now, in terms of asking you, well, how did that work? Did we get some performance standards improved?
Speaker 4
Thank you for the opportunity to address that. We're trying to think strategically. How come with the resource even if you gave me a thousand more investigators, I'm still not gonna have enough if you're looking at number of plans or participants to number of investigators. So we have to be strategic. And so we've asked our investigators and our head of investigations, Khaleen McKee, is going after more service providers and health care companies because they represent thousands of plans and then millions of participants.
We had a recent settlement with a major company, and we helped millions of participants. So we're trying to be more strategic with the resources we have.
Speaker 3
And this goes to parity, too. So I'm just gonna let you know I'm gonna bring this up again, and I expect you to when you come back here. And I'm happy to have a relationship where we can talk collaboratively. And I think Mister Allen and I would do that in a bipartisan way, to figure out how we can do this on this subject matter, on denials, but also on the parity issues. So.
Speaker 4
I cannot wait to show you what we're going to do to break down barriers to mental health, and what we do on mental health parity. Just give me a chance. I need more time.
Speaker 2
The gentleman yields now. I'll call on Mr. Grothman for his five minutes of questioning.
Speaker 1
Right. Oh, I gotta ask. I'll ask you some other questions, but I don't wanna be done until I ask about mental health parity. Mister Onowitz, I introduced HR 7372, the form 5,500 filing simplification act, to simplify annual reporting requirements for employee benefit plans. No one is from 5,500. I used to do taxes.
They're a pain in the butt. 5,500 is a horrible form. Currently, plans must request extensions to receive an extra two and a half months to file their automatic annual returns. This legislation would eliminate that requirement by automatically extending the filing deadline. The legislation also specifically allows for electronic signatures on the report and the schedules that are included.
Would this legislation provide relief for employers and eliminate red tape?
Speaker 4
It's not my job to comment publicly on legislation, but we are pleased to give technical assistance on that. I would also tell you we have a task force on looking at the form 5,500, which has not been modernized in decades.
Speaker 1
Great. Thank you for your response. I'd like to enter into the record letters of support for HR 7362 from the CHRO Association, NFIB, the American Benefits Council, and the Small Business Council of America. Thank you. Without objection.
Now my final question or I got one more question, two questions. My final question is, as you know, health care costs continue to rise, and provider consolidation is one of the main drivers. Perverse economic incentives have driven hospitals to acquire provider offices and incorrectly bill for services. What should be done to ensure that hospitals are not allowed to tack on hidden facility fees and upcharges billed to commercial payers?
Speaker 4
We intend to use our enforcement authority to investigate all types of improper denials or improper treatment and not standing up to the promised benefits on the contracts. That's what we intend to do.
Speaker 1
Okay. And he talked about mental health parity. And mental health is very controversial. I just have my own little subcommittee. We had a hearing.
It seems like the mental health profession is out of control with people overdrugging kids, just shockingly overdrugging them, putting them on drugs that are addicting, that they might be on for 20 years, and then tell the kids they are addicting when they put them on. It seems to me in a free country that if I've got a business, I shouldn't be forced to pay for a profession that at least I believe is out of control. Will you help provide us with information or something and see whether we should continue down this path of forcing individuals or forcing companies, anybody, to pay for these mental health benefits if we feel the mental health profession is a little bit out of control, overmedicating, and, quite frankly, excessively liberal.
Speaker 4
The beauty of the voluntary benefit system is all plan sponsors have a choice. I do want them to provide quality mental health benefits. But if there's anything Ebsa can do to educate employers on how to make good decisions, then we will try to figure out what to do.
Speaker 1
What if I've got, what about an employer, and I just don't think much of these people? I'd rather have people go to their priest or read a book or something else.
Speaker 4
It. Employers have the right not to provide benefits. I do hope, though, that they provide quality benefits for patients who want them.
Speaker 1
Okay. How about the federal government, like on Medicaid and stuff? Should they have to, should my tax dollars have to go to people, or should we put limits on these mental health benefits, particularly after we have all this evidence that these mental health professionals are overprescribing drugs to young people and old people too, for that matter.
Speaker 4
I don't have an opinion on that, but I am a believer that there are quality mental health benefits for American workers. And so I don't know enough about what you're talking about.
Speaker 1
Okay. Well, you should familiarize yourself. I'll try to get you some books or something on the topic, and we have a little more respect for the idea that maybe mental health professionals are not all they're cracked up to be. And sometimes they wind up putting very young people in a position in which they are addicted to the drugs and can wind up screwing up their whole life, quite frankly. So thank you for allowing me my full five minutes, Mr. Chairman.
Speaker 2
The gentleman yields. Thank you. And now I'd like to recognize the ranking member for his closing remarks.
Speaker 3
Thank you, mister chairman, and thank you, assistant secretary. I've appreciated the hearing. And as I said, I look forward to working together with you. We could really do a lot of good work for the American public. And I will say this too is both a policymaker for many years at every level of government, business owner, but also a consumer, having been a survivor of stage four cancer in a month in ICU.
And my primary care doctor, who's a good friend, tells me I'm not supposed to be here. So I appreciate both my good fortune, but also the Dickens aspect of our health care system, which in many ways is the best, and in a lot of ways, the very worst. Trying to negotiate the health care system, even with a lot of resources, is a challenge for people, and it's so inefficient. So I look very much forward to working with you and the chairman to see if we can change that situation. And as you know, Americans are struggling to afford everything from groceries to gas.
Health care is the number one reason why individual Americans declare bankruptcy, so we've gotta stop that. The crisis under this administration has become so urgent that Americans are tapping into their retirement savings at an increased rate, and resorting to selling their plasma, as I said in my opening. So those kind of situations are very much looked forward to changing, knowing that you work in this administration. That doesn't mean we can't work together, particularly in this type of instance. So with that, not to be redundant, but just closing on, we're going to continue this conversation, and it's my hope that our relationship goes forward.
We can collectively look at some real positive outcomes so that that person who was denied, that was mentioned by one of my colleagues under a preexisting condition who ended up dying, that we will eliminate those kinds of situations so that that person can have the benefit that I have, that I can sit here and say, I'm not supposed to be alive, but I'm here because people work to make the system work better for individual Americans and their families. And I look forward to working with you and your team so that we can have that legacy. Thank you, Mr. Chairman. I thank.
Speaker 2
The ranking member. Without objection, I will enter into the record statements from the employee-owned S Corporations of America, the ESOP Association, and the ERISA Industry Committee. Mister Secretary, thank you again for your testimony. This committee remains committed to ensuring that health and retirement benefits actually work for American families. Americans work hard to save for retirement, they deserve peace of mind that their savings are being managed with maximum performance in mind, and not politics.
Health care costs continue to rise, it's time that we, as our ranking member said, this time we shed a light on hidden and deceptive pricing with real transparency that promotes competition and brings down costs for American families. As I've said in my opening questioning, we have to have competition in health care. And the best way I know to do that is give ARISA and also self employed folks the opportunity to go and self insure and give them a waiver from the compliance requirements of the Affordable Care Act. Employers need access to health care data to allow them to design cost-effective, high-quality health plans. Another driver of health care costs is provider consolidation and perverse economic incentives.
They've driven hospitals to acquire provider offices and bill incorrectly for the services. Obviously, you know, we are doing everything we can to deal with waste. In fact, the vice president is in charge of that, I understand, and deals with waste, fraud, and abuse. This committee has championed legislation, increased transparency, and given employers the tools they need to lower cost. We'll continue our work to cut red tape and expand access to more choices and better options for families and retirees.
Simply put, we are working to put the American workers at the center of the system and ensure they have access to the benefits they deserve. Again, thank you, Mister Secretary, for taking the time to testify before this subcommittee today. Without objection, there being no further business. The subcommittee stands adjourned.
Ask anything about this video — I analyse its transcript to answer.