In a personal blog, Daniel Aronowitz, President Trump’s nominee to head the Employee Benefits Security Administration, recommends establishing a specialized court focusing on ERISA lawsuits because, he argues, the current judicial approach to these cases is inconsistent and unfair to sponsors.
“ERISA was enacted with the stated purpose to encourage plan sponsors to offer voluntary benefits plans by giving them a nationwide, uniform law to guide fiduciary duties,” Aronowitz wrote in a March 17 blog post.
“The goal of predictability, uniformity, and consistency of ERISA law has not been achieved,” wrote Aronowitz, decrying “regulation by litigation” as a need for ERISA reform.
Aronowitz was nominated to the EBSA post — assistant secretary of labor for the Employee Benefits Security Administration — by President Trump on Feb. 12. A confirmation hearing hasn’t been scheduled yet. Lisa Gomez led EBSA during the Biden administration. The leadership job remains vacant for the unit of the Department of Labor responsible for regulating more than 801,000 private retirement plans, 2.6 million health plans and 514,000 other welfare benefit plans, which hold approximately $14 trillion in assets and cover more than 153 million workers.
Aronowitz is president of Encore Fiduciary, which provides fiduciary liability insurance. He frequently writes the Fid Guru Blog, offering commentary and analysis on ERISA and retirement legal issues.
In an interview, Aronowitz emphasized that his March 17 blog post is his personal opinion unrelated to his company’s clients or to the Trump administration. He said he withdrew the blog post March 19 “to remove any perception” that his comments reflected a Trump administration policy.
Legal inconsistency
To illustrate his concerns about legal inconsistency, Aronowitz’s blog cited several broad examples where different judges have offered different opinions on similar ERISA subjects.
“We have over forty different judges deciding whether it is breach of fiduciary duty for plan fiduciaries to choose between applying unvested plan contributions to future contributions or plan expenses,” he wrote.
“We have twelve different judges deciding whether it is a breach of fiduciary duty for an independent fiduciary to choose a private equity-backed life insurance company for a pension risk transfer,” he added. “Nearly thirty different federal judges are evaluating what factors are required in mortality tables to achieve actuarial equivalence for joint and survivor annuities.”
The various rulings allow plaintiffs’ attorneys “to divide and conquer, forum-shopping for a federal court that will allow their shotgun, copycat lawsuits asserting fiduciary-breach claims,” he wrote.
There is precedent for establishing specialized courts, such as those covering tax litigation, patents, probate issues and juvenile justice matters, he wrote. The United States Tax Court was established by Congress; patent lawsuits are handled by the U.S. Court of Appeals for the Federal Circuit.
“Fiduciary law is complex, and we need federal judges who are experienced and have ERISA expertise,” Aronowitz wrote. “We have an inefficient and unfair court system to resolve ERISA liability theories.”
ERISA reform could borrow from the Private Securities Litigation Reform Act of 1995 which told courts "to increase the pleading standard for securities filings, requiring courts to stay discovery pending a motion to dismiss, and increasing the standing threshold to require legitimate stakes in company stock to qualify as a proper class representative,” he wrote.
Although this system “is not perfect,” the law reduced securities class-action lawsuit abuse, he wrote. “Plaintiffs are not prevented from suing, but there are better pleading standards and guardrails,” he wrote.
One possible ERISA reform would be “requiring all ERISA cases to be filed in the District of Columbia federal court and build judicial expertise over time,” he wrote.
“Or, we can establish a specialized ERISA court with judges who have expertise in complex ERISA fiduciary law,” Aronowitz concluded. "Either way, the starting point in fixing a broken ERISA statute is with a specialized court dedicated and focused on ERISA.”
