DOL Fiduciary Shift Could Apply During Long Litigation Battle

The department sent the final version to Office of Management and Budget regulation reviewers March 8, and Fred Reish, an ERISA attorney at Faegre Drinker, predicted the regulation could show up in public by May.

Chevron: Kile-Maxwell suggested that, depending on what the final regulation and PTE updates look like, suits against the new rules could start immediately and rely on strategies similar to those used to block the 2016 and 2020 Labor Department fiduciary standard efforts.

One new wrinkle that could slow resolution of litigation is the U.S. Supreme Court’s decision to hear two suits challenging the court’s “Chevron doctrine.” The doctrine holds that the federal courts should give deference to reasonable federal agency interpretations of federal laws within the agencies’ area of expertise.

The Supreme Court’s decision could come out by late June. Court observers say the justices seem to be inclined to overturn or narrow the Chevron doctrine.

A ruling overturning or narrowing Chevron could help opponents of a new Labor Department fiduciary rule effort, by giving the federal courts more ability to disagree with the department’s interpretation of ERISA, but some lower courts may be reluctant to rush to apply the Supreme Court’s new ruling, Kile-Maxwell said.

The compliance packet: Faegre Drinker attorneys noted that the amount of documentation that insurers and producers will need to collect to comply with the updated PTE 84-24 requirements would be substantial.

In addition to a sheet describing a commission-based producer’s compensation arrangements, the packet would have to include a discussion of why the producer is recommending a rollover, a discussion of why the producer is recommending the annuity or other product chosen, a comparison of the costs of the products that were considered, and a comparison of the standards of care that apply to the products considered.

The U.S. Supreme Court building in Washington. Credit: Bloomberg