DOL Rescinds Prior Guidance on Cryptocurrency and Announces Plans for New ESG Rule for 401(k) Plans

Cryptocurrencies and Digital Assets

On May 28, 2025, the U.S. Department of Labor (DOL) issued Compliance Assistance Release No. 2025-01, "401(k) Plan Investments in 'Cryptocurrencies'" (CAR 2025-01), that rescinded in full its prior guidance on the same topic contained in CAR No. 2022-01 (2022 Release). The 2022 Release advised plan fiduciaries to proceed with "extreme care before they consider adding a cryptocurrency option to a 401(k) plan's investment menu…" and stated that "[a]t this early stage in the history of cryptocurrencies," direct investments in cryptocurrencies or other products whose value is tied to cryptocurrencies present "significant risks and challenges to participants' retirement accounts." 

In a May 28 press release announcing CAR 2025-01, Secretary of Labor Lori Chavez-DeRemer stated that the Biden administration put a "thumb on the scale" with respect to 401(k) plan investments in cryptocurrency and described the decision to rescind the 2022 Release as "rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats." According to CAR 2025-01, the 2022 Release's "extreme care" fiduciary standard is not found in ERISA and differs from ordinary fiduciary principles under ERISA. The DOL further stated that the rescission of the 2022 Release "restores the Department's historical approach by neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan's investment menu is appropriate." The DOL also made clear that although CAR 2025-01 "specifically references 'cryptocurrencies,' the same reasoning and principles also apply to a wide range of 'digital assets' including those marketed as 'tokens,' 'coins,' 'crypto assets,' and any derivatives thereof."

While the DOL asserts it is not taking a stance on cryptocurrencies, the rescission of the prior guidance is likely to encourage more cryptocurrency investment opportunities for 401(k) plans. CAR 2025-01 cites to Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 425 (2014), and its context-specific "all relevant facts and circumstances" test as governing a fiduciary's evaluation of any particular investment type. The potential effect of more investments in digital assets on future class action retirement plan litigation focused on plan fees and investment performance is not to be underestimated. 

ESG Factors 

Also on May 28, 2025, the Department of Justice (DOJ) wrote a letter on behalf of the DOL to the Fifth Circuit in Utah v. Chavez-DeRemer, No. 23-11097 (5th Cir.), advising that the DOL is planning to reconsider its current rule on environment, social, and governance (ESG) factors in investment decisions. The current version of the rule, issued in 2022, permits ERISA fiduciaries to consider non-pecuniary (including ESG) factors that bear on financial risk and return and when selecting among financially equivalent investment options for retirement plans. The letter came at the court's direction in response to the DOL alerting the court on April 25, 2025, that it was considering rescinding its ESG rule. Specifically, the court requested that the DOL to "inform the Court what specific actions [the DOL] will take, if any, as a result of its reconsideration of the challenged [ESG rule]—either to maintain the rule or to rescind it." In the letter, the DOL advised that it will begin "new rulemaking" on the ESG rule and that it anticipates the rule's inclusion in its Spring Regulatory Agenda with intentions of "expeditiously" moving through the rulemaking process. 

Issuer Lawsuit Asserts Provider Misuse of No Surprises Act IDR Process 

On May 27, 2025, Blue Cross Blue Shield of Georgia (BCBSGA) filed a complaint in the U.S. District Court for the Northern District of Georgia against a group of affiliated healthcare providers and their third-party biller "for conspiring and executing a scheme to steal millions of dollars from BCBSGA, employer plan sponsors, and other Blue Cross and Blue Shield companies by flooding the federal No Surprises Act (NSA) independent dispute resolution (IDR) process with thousands of knowingly ineligible disputes against BCBSGA." BCBSGA v. HaloMD, Inc., et al., No. 1:25-mi-99999. The complaint alleges violations of the NSA, ERISA, and federal and Georgia Racketeering Influenced and Corrupt Organizations (RICO) Acts, along with multiple state statutory and common law causes of action. The suit seeks damages, vacatur of "improperly obtained" IDR awards, an injunction preventing the providers from continuing the complained-of practices, and declaratory and other equitable relief.

The factual allegations in the complaint center on the provider defendants' use of the NSA IDR process to obtain a large number of allegedly fraudulent payment determinations at or even above the defendants' originally billed charges by falsely attesting that the underlying claims were eligible for IDR. According to the complaint, BCBSGA insures or administers multiple different types of health plans, including self-insured, fully insured, and Medicare and Medicaid plans. BCBSGA alleges that the providers, some of the "most prolific filers of IDR process disputes," initiated thousands of disputes over the past three years on claims for participants in BCBSGA plans, knowing that nearly 70 percent of those claims were ineligible. According to the complaint, the providers' recourse to the IDR process was a three-step "coordinated scheme" in which the providers allegedly (1) submitted false attestations of eligibility for claims that are not eligible for reasons including that the providers did not properly exhaust the negotiations period on the claims or that they are governed by state law or Medicare/Medicaid, (2) "strategically initiat[ed] massive volumes of IDR disputes" such that the IDR entities reviewing the claims were not able to carefully review the claims for ineligibility, and (3) proposed "outrageous payment offers that far exceed what the [defendants] could have received from patients or health plans in a competitive market." The complaint includes a number of examples of IDR-ineligible claims on which the providers initiated disputes and obtained determinations at or above billed charges.

The complaint asserts both federal and state causes of action. BCBSGA alleges that, pursuant to the NSA, improperly obtained payment determinations should be vacated under section 10(a) of the Federal Arbitration Act (FAA), incorporated into the NSA, which provides for judicial review of arbitral awards "procured by corruption, fraud, or undue means." The complaint also seeks:

• Equitable relief under ERISA section 502(a)(3) to BCBSGA in its fiduciary capacity for alleged violations of NSA provider obligations, incorporated into ERISA in 29 U.S.C. § 1185e, that caused overpayments by ERISA-governed BCBSGA plans
• Damages to compensate for the alleged $5,941,796.72 in wrongly obtained IDR determinations
• An injunction prohibiting defendants from submitting ineligible claims
• Vacatur of past improper awards
• A declaration that "IDR awards issued on unqualified IDR items or services are non-binding and are not payable on a go-forward basis"

HaloMD is one of a series of recent lawsuits regarding IDR determinations. Here, unlike in some of the other cases we have covered, the plaintiff seeks to invalidate the IDR awards rather than enforce them.

In the News

Counsel Elizabeth Jonas was selected to be a member of the American Bar Association's Section of Labor and Employment Law's 2025 Leadership Development Program. Congratulations, Elizabeth!

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