EBSA Rescinds 2023 Advisory Opinion on Employer's Diversity Initiative on Civil Rights Grounds

On July 21, 2025, the U.S. Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) issued Advisory Opinion No. 2025-01A, its first advisory opinion of the year (2025 Opinion), to rescind a September 29, 2023, advisory opinion, Advisory Opinion 2023-01A (2023 Opinion), regarding the application of ERISA's fiduciary duty and prohibited transactions provisions to Citibank's (Citi) Racial Equity Asset Manager Program (the Program). The 2023 Opinion described the Program as aimed at advancing racial equity practices in the financial services industry and involving a commitment by Citi to pay the investment management fees for certain diverse managers retained by Citi-sponsored employee benefit plans. According to the 2025 Opinion, investment managers are "diverse" "if they are 50 percent or more minority or women owned."

The 2025 Opinion rescinding the 2023 Opinion does not address the application of ERISA's fiduciary duty and prohibited transaction provisions, but rather states that the 2023 Opinion incorrectly "assumed that the [Program] was lawful and went on to discuss fiduciary issues that follow from that assumption" and that the Program "is not lawful—its allocation of benefits on the basis of race clearly and unambiguously violates the civil rights laws." The 2025 Opinion cites several authorities for this assertion including 42 U.S.C. § 1981, which provides for the right to make and enforce contracts regardless of race. In addition, the 2025 Opinion cites a January 31, 2025, executive order, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," and a recent Supreme Court decision, Ames v. Ohio Dep't of Youth Servs., 605 U.S. ___ 2025, 145 S. Ct. 1540 (2025), in which the plaintiff, a member of a majority group, alleged discrimination under Title VII, 42 U.S.C. § 2000e-2(a)(1). 

Also of note, the 2025 Opinion reaches beyond the confines of the Program, stating that "Citi should take immediate action to end all illegal activity within... any other initiative, plan, program, or scheme it operates under the banner of diversity, equity, and inclusion" and that "ERISA does not shield Citi or the fiduciaries of the Plans from the application of the civil rights laws." The 2025 Opinion includes the common disclaimer that the opinion letter "relates solely to the application of Title I of ERISA and is not determinative of any particular treatment under any other federal or state law."

Second Circuit Affirms Dismissal of Provider No Surprises Act APA and Due Process Challenge

On July 22, 2025, the Court of Appeals for the Second Circuit affirmed a lower court's dismissal of a complaint filed by a group of neurosurgeons challenging the federal government's implementation of the No Surprises Act (NSA) under the Administrative Procedure Act (APA) and on constitutional grounds. Neurological Surgery Practice of Long Island, PLLC v. U.S. Dep’t of Health and Human Servs., No. 24-1884. The plaintiff-appellant alleged that since the NSA was implemented, a backlog of disputes awaiting resolution accumulated, causing substantial harm in the form of unpaid or delayed reimbursement from healthcare plans. According to the plaintiff-appellant, these delays are the result of a failure on the part of the U.S. Departments of Health and Human Services (HHS), Labor (DOL), and the Treasury (collectively, the Departments) to lawfully implement the NSA, in violation of section 706 of the APA and the Due Process Clause of the Fifth Amendment. 

On appeal, the plaintiff-appellant asked the Second Circuit to vacate the district court's holdings that (i) its claims related to the Departments' temporary pause of the independent dispute resolution (IDR) portal used by providers to initiate NSA IDR proceedings were rendered moot by the government's reopening of the portal; (ii) it lacks standing to compel the Departments to enforce the NSA's deadlines for reimbursement on third parties; (iii) its claim that the Departments failed to certify a sufficient number of arbitrators is foreclosed by the APA because the NSA does not identify a discrete action that the Departments must take to comply with that mandate; and (iv) its claim that the Departments have failed to provide guidance on New York's surprise billing law is foreclosed by the APA for the same reasons. 

The Second Circuit substantially agreed with the district court's conclusions but disagreed with the district court on the mootness question, finding that only one of the plaintiff-appellant's claims relating to the IDR portal was rendered moot due to the reopening of the portal. In affirming the lower court's decision on standing, the court stated it read the complaint to suggest plaintiff-appellant's alleged injury "has been caused by the actions of healthcare plans and arbitrators, not the Departments." Consequently, the court concluded the plaintiff-appellant failed to plausibly allege causation and redressability necessary to support Article III standing. 

On the APA claims, the court agreed with the lower court that the complaint failed to state a viable claim because it did not allege "a discrete agency action that the Departments are required to take" with respect to certifying a sufficient number of arbitrators or issuing guidance on New York's surprise billing law. The court explained: 

We take this opportunity to emphasize again why APA review is not available in cases like the one before us. The Supreme Court has explained that the principal purpose of limiting APA claims to discrete agency actions that agencies are required to take "is to protect agencies from undue judicial interference with their lawful discretion, and to avoid judicial entanglement in abstract policy disagreements which courts lack both expertise and information to resolve." 

This decision is one in a series of recent decisions where the courts are grappling with their role in NSA implementation and enforcement.

Congressional Hearing on Legislation Seeking to Enhance Transparency and Oversight of EBSA

On July 22, 2025, a congressional hearing was held titled, "Restoring Trust: Enhancing Transparency and Oversight at EBSA." The hearing included testimony asserting that EBSA has "abused the legal system and aided plaintiffs' attorneys" with its enforcement practices and addressed two proposed bills intended to combat these problems. 

The first bill, the EBSA Investigations Transparency Act, seeks to amend section 504 of ERISA by requiring DOL to "submit to Congress a report on the status of cases in enforcement status, including investigations...." The bill would require DOL to provide the date the investigation started and generally sets a 36-month time period whereby, if the investigation has not concluded, DOL will have to explain why the investigation has not concluded and provide an estimated date for conclusion. The bill draws attention to the length of EBSA investigations and the expenses incurred by targets of those investigations, which in some instances appear to remain open indefinitely. 

The second bill, the Balance the Scales Act, seeks to amend section 504 of ERISA by adding a section called "Collaboration with Plaintiff Attorneys." The amendment aims to add transparency to situations where DOL collaborates with plaintiff attorneys. In instances where DOL provides "adverse assistance to an individual," DOL would be required to enter into a written agreement with the individual detailing the "nature and scope" of that assistance and provide a copy to "any employer, plan sponsor, or fiduciary that may be directly and adversely impacted by such assistance." The bill seeks to balance the playing field by notifying the adversely impacted party as to what information has been provided to assist plaintiffs, which has not been done in the past. The bill also seeks to add a provision to ERISA affirming that the purpose of ERISA is to "promote, encourage, and facilitate" pension plans. The regulated community will surely welcome this addition to the statute, as in many instances the enforcement positions of DOL have not appeared consistent with this statement.

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