Fiduciary Rule Should Have Involved Treasury, Labor Nominee Says

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By Kristen Ricaurte Knebel

President Donald Trump’s nominee to head up the Labor Department’s benefits agency easily answered the one question senators posed to him on the fiduciary rule at his Nov. 15 confirmation hearing.

When asked by Sen. Patty Murray (D-Wash.) about his “discomfort” with the Obama-era fiduciary rule, Preston Rutledge said he’s not uncomfortable with the rule itself. His discomfort comes from the lack of Treasury Department input on formulating the rule, he said.

A violation of the fiduciary rule would trigger a need for the Internal Revenue Service to impose excise taxes, which means that Treasury should have been involved in the rulemaking process, Rutledge told the Senate Health, Education, Labor and Pensions Committee. The fiduciary rule aims to cut down on conflicted investment advice given to retirement savers.

If he’s confirmed by the Senate, Rutledge will lead the Labor Department agency in charge of retirement, health, and other employee benefit plans. The Employee Benefits Security Administration’s activities include writing regulations that govern retirement plans and filing lawsuits against plan fiduciaries who break the rules.

Rutledge would come to the EBSA during a critical time, as the agency is in the process of reviewing the fiduciary rule. He would also be tasked with readying guidance related to association health plans, as directed by Trump in an Oct. 12 executive order. That project was received by the Office of Management and Budget Nov. 14.

Health-Care Questions

While Rutledge was strong on the fiduciary rule, he stumbled a little when asked about the health-care laws that EBSA oversees and enforces.

Sens. Maggie Hassan (D-N.H.) and Christopher Murphy (D-Conn.) asked about his approach to enforcing certain provisions of the Affordable Care Act, including changes to the birth control mandate and mental health parity. Rutledge committed to enforcing the law on both while also admitting to not being fully up-to-speed on the issues.

In October, the Trump administration issued interim final rules allowing employers to opt out of providing health plans that cover birth control, weakening a requirement put in place by the ACA as part of a wider push to expand religious freedom.

Hassan asked Rutledge if he would commit to ensuring that plan sponsors choosing to opt out of this benefit communicate the change clearly.

Rutledge said he hadn’t fully read the regulations, but that if the law is to disclose a plan change, he will do his “best” to enforce the law.

The ACA required employers to cover birth control and an array of other preventive health services with no out-of-pocket costs. The Obama administration had allowed some religious organizations to opt out of the contraceptive requirement, but the religious groups said the exemption process didn’t go far enough.

Rutledge also said he wasn’t “particularly familiar” with mental health parity but promised to get up-to-speed and fully implement the law.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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