Trump Nominee for Benefits Chief Poised to Pivot From Politics

President Donald Trump‘s nominee for top private-sector workplace benefits regulator appears eager to abandon hot-button political controversies that have plagued the Labor Department over the last decade in favor of a more traditional approach focused on regulation through enforcement.

Daniel Aronowitz, president of ENCORE Fiduciary, has made a career out of insuring health and retirement plans against legal liability when they run afoul of strict fiduciary conduct standards under the Employee Retirement Income Security Act. It’s molded Aronowitz, who regularly publishes his objections to DOL’s Employee Benefits Security Administration on his “Fid Guru” blog, into a vocal critic of what he calls “regulation through litigation.”

The government’s recent focus on environmental, social, and governance investing and broader fiduciary controls over 401(k) rollovers have left regulators “too focused on political objectives to do their jobs properly,” Aronowitz wrote in a Sept. 30 post. It’s a position that could put him at odds with a White House that promulgated its own ESG rulemaking during Trump’s first term, and has demonstrated an appetite for undoing Biden-era benefits regulations.

He’s been a critic of the Biden administration’s reach into retirement plan rollovers through its embattled fiduciary rule and is no fan of ESG-themed investing, but he’s less likely to make it a prime focus of the agency, said Brad Campbell, a partner at Faegre Drinker Biddle & Reath LLP and former EBSA head. With Senate confirmation, Aronowitz is poised to usher in a reset for EBSA to prioritize fundamental enforcement and guidance functions.

“He’s steeped in this stuff,” Campbell said. “His nomination is a very positive signal.”

Slowed Enforcement

Aronowitz would take the helm at EBSA as its total monetary recoveries for plan participants and beneficiaries remain in a decade-long slump that dropped by more than a billion dollars from 2021 to 2022.

Agency investigations have drawn out over months and sometimes years, prompting congressional ire.

It’s created a “huge backlog” of cases, said David Donaldson, president and CEO of Smart Trust Services LLC and a former senior EBSA investigator. The agency and government watchdogs have chalked up EBSA’s enforcement slow-down to inflation and low staffing.

But with an 80% cut in economic recoveries in spite of only a 20% reduction in staffing over the past 10 years, the numbers just don’t add up, said Campbell. He said he’s been “deeply troubled” by EBSA’s effectiveness and believes Aronowitz, who has come face-to-face with EBSA investigators as an insurance executive, knows better than many how critical efficiency is.

Aronowitz is used to finding ways to stretch limited resources, said Justin Bove, the chief underwriting and business development officer at ENCORE Fiduciary. Bove, who met Aronowitz more than 20 years ago, followed him to his start-up venture and has watched him build expertise in a niche insurance field, he said.

“I can’t imagine a better choice to advocate for legislative and regulatory change,” Bove said.

Aronowitz declined to comment for this story, citing his pending Senate confirmation.

Clearer Guidance

The EBSA nominee has said the DOL’s focus on more politicized issues—such as its rule promoting ESG’s consideration in retirement investing and the fiduciary rule—have put primary responsibilities on the backburner. This allows the plaintiffs’ bar to target plans while the DOL has been “abdicating its role” to issue clear, consistent regulations, according to Aronowitz.

Benchmarks and best practices are important for plan sponsors, said Anne Mayerson, who represents multi-employer plans and tax-exempt organizations as a member of Bredhoff & Kaiser LLC. Protecting plan sponsors also shields participants by making it easier to offer plans in the first place, she said, noting that the costs of litigation ultimately trickle into higher premiums.

“After all, it’s a voluntary system, right?” she said. “No one is required to provide a 401(k) plan.”

She cited a November blog post in which Aronowitz outlined ways to make 401(k) plan disclosures more understandable for workers as evidence that he could be friendlier to plan participants than some expect.

But that could be a tough sell to plaintiffs’ lawyers.

The DOL could always improve its interactions with plans, but some of Aronowitz’s suggestions make it seem like he wants them to have a “get-out-of-litigation-free card,” said Jeffrey Lewis, a Keller Rohrback LLP partner who has led class actions against retirement plans over excess fees.

Personal Reflection

Aronowitz’s views on some health topics reflect his personal experiences. It’s not clear how he views the Biden administration’s September 2024 rule strengthening requirements under the Mental Health Parity and Addiction Equity Act, but he has blogged about his struggles to get insurance approval for his son’s inpatient mental health treatment. It’s a signal he may not be afraid to go after some bad actors.

In a post about a case involving United Behavioral Health’s denial of inpatient treatment to a suicidal teenager, Aronowitz said he and his wife paid “hundreds of thousands of dollars” out-of-pocket after UBH denied coverage for their son’s treatment. He called the treatment of the plaintiff by UBH, a subsidiary of UnitedHealth Group, “egregious” and “callous.”

“It takes time to cure mental health challenges,” he wrote. “Parents of children with mental health challenges need time for their children to heal.”

The ERISA Industry Committee is challenging the rule in court following significant Republican and industry backlash to what they say are vague, unworkable requirements for employers providing mental health benefits.

Aronowitz also said he sees employee lawsuits over high prescription drug costs against companies like Johnson & Johnson and Wells Fargo & Co. as “scapegoat litigation,” and called on pharmacy benefit managers like Express Scripts Inc.—which is not named as a defendant in either suit—to intervene. Express Scripts didn’t respond to a request for comment.

“If PBMs have done nothing wrong, then step up and prove it,” Aronowitz wrote. “Take on the plaintiff trial bar, but don’t make your clients take a bullet for your business model.”