"Restoring Trust: Enhancing Transparency and Oversight at EBSA"

Chairman Rick Allen (R-GA)SPEAKER_16

The Subcommittee on Health, Employment, Labor, and Pensions will come to order. I note that a quorum is present. Without objection, the chair is authorized to call a recess at any time. Today's hearing is about protecting the retirement savings of American workers and shielding the employers who voluntarily maintain retirement savings plans from abusive governmental overreach. Employer-sponsored retirement plans are the backbone of the American retirement. Private employers voluntarily sponsor more than 800,000 ERISA-covered retirement plans holding more than $9 trillion in assets. More than 70 million workers and millions of former employees and retirees are covered by these plans. Savings rolled over from employer-sponsored retirement plans also total more than half of the $15 trillion in IRAs. Employers should be encouraged to maintain these plans. Due to the Biden-Harris policies, inflation and the cost of living rose dramatically, throwing many Americans into financial jeopardy. Few people are more vulnerable to this kind of financial instability than retirees. Americans are working later in life without a chance to enjoy retirement. The biden-Harris administration punished employers for maintaining these plans. Specifically, the Employee Benefits Security Administration, also known as EBSA, ran burdensome and inefficient employee benefit plan investigations that lasted for years without repetitive document requests, staff turnover, and delayed findings. The Biden-Harris playbook wasted the taxpayers' money and the money of the employers under investigation. Endless and aimless investigations conducted by EBSA wasted precious time and resources and ultimately hurt the American savers. We will hear testimony today that EBSA has also abused the legal system and aided plaintiffs' attorneys. The Department of Labor's Office of Inspector General announced in June that it will investigate EBSA's secret sharing agreements with lawyers

SPEAKER_UNKNOWN

and

Chairman Rick Allen (R-GA)SPEAKER_16

such as class-action plaintiffs law firms. EBSA's mission is to ensure the security of retirement, health, and other workplace benefits of America's workforce and their families. Instead of upholding this mission, the Biden-Harris administration used EBSA to deliberately attack the voluntary employee benefits system with endless and aimless investigations. Today, we will learn more about those practices and their efforts on workers and the employers who provide benefits to those workers. Members of our committee have proposed legislative solutions to the problems we will hear about today. Representative Lisa McClain has introduced the EBSA Investigations Transparency Act, and Representative Mike Rulli has introduced the Balance the Scales Act. I look forward to discussing these bills and other efforts to protect ERISA plan participants and their benefit plans. With that, I yield to the ranking member for an opening statement.

Ranking Member Mark DeSaulnier (D-CA)SPEAKER_17

Thank you, Mr. Chairman, and thank you to all the witnesses for being here. I also want to welcome one of the witnesses, Mr. Banducci, for coming back to the committee. I know he served for many years on the Republican committee staff, so I'll be interested to see what it's like on the other side. The Department of Labor's Employee Benefits Security Administration, or EBSA, for short, is a vital agency charged with protecting workers' hard-earned health and retirement benefits. EBSA oversees approximately 800,000 private retirement plans covering over 153 million people, 2.6 million health plans, and 514,000 other benefit plans. Many significant laws are within EBSA's jurisdiction, and several more have been added in recent years. Yet despite EBSA's critical mission and growing responsibilities, its funding and staffing have not kept pace. EBSA has been essentially flat-funded for years, and the Trump administration's fiscal year 2026 budget only makes things worse by requesting $10 million less than last year's level. The administration is effectively proposing a further cut of $20 million by failing to extend bipartisan No Surprises funding. Inadequate funding has resulted in steep declines in full-time employees at EBSA. We are incredibly fortunate to have Mr. Ali Khawar as one of our witnesses. Welcome, Mr. Khawar, this morning. He's worked at EBSA in various capacities for nearly 20 years. His testimony details how EBSA's budget once supported over 960 employees and how the Trump administration recent budget would support just over 600. Clearly, EBSA is being asked to do far more with much less, but it is still delivering for workers and their families, protecting their benefits and putting money back in their pockets, and is a good return on investment to high-road employers and the taxpayers. In fact, in fiscal year 2024, EBSA recovered almost $1.5 billion in payments. In a time when federal workers are being unfairly targeted and fired by the Trump administration, it is even more important to recognize the value they provide to American taxpayers and our constituents. Every day, Americans get assistance from EBSA's benefit advisors, who help workers navigate the complex issues with their plans. They and all of EBSA's staff in D.C. and its regional and field offices deserve our respect and appreciation during what I'm sure has been an incredibly challenging year for them and their families. I understand that today's hearing will focus on two bills that harm EBSA's ability to do its job. Last year, committee Republicans opposed the Department of Labor's legally permissible yet rarely used common interest agreements in litigation. I say rare because, as Mr. Khawar notes in his testimony, over the past 15 years, there were only 12 such agreements. Let me repeat that: over 15 years, 12 such agreements out of over 31,000 investigations. Nevertheless, committee Republicans demanded that the department's inspector general look into these rare agreements, and the IG agreed. Rather than waiting for the results of the IG investigation, the requested committee Republicans the request today in this hearing is rushing to judgment, seemingly intent on advancing a one-sided bill that goes way beyond common interest agreements and severely limits EBSA's ability to communicate with attorneys representing participants. We all believe in efficiency and would be happy to work with the the majority to look at objective analysis of how we make the program more efficient for everyone, particularly employees. The other bill relates to EBSA's enforcement activities. We all share an interest in seeing that enforcement by federal agencies is completed in a timely and, as I said, efficient manner. That's in the best interest of all parties involved and should be nonpartisan, bipartisan. If that's our shared goal, then the best way to achieve it is to ensure EBSA has the funding, resources, and personnel necessary to do its job and to wait for the IG's investigation. What doesn't accomplish that goal is a bill to add to EBSA's administrative burden and require them to produce a biased report that doesn't provide a complete picture of the agency's work. These bills don't solve problems, they create new ones and strike at the heart of EBSA's mission. As we've seen from the devastation wrought in recent months by the so-called Department of Government Efficiency, DOGE, and the catastrophic one big ugly law—our language—which will leave at least 10 million Americans without health insurance and cut over a trillion from Medicaid, undermining core government functions does a disservice for the American people. We can and should do better and are willing to work in a bipartisan way if we really want to improve oversight. Thank you, and I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

I thank the ranking member. Pursuant to Committee Rule 8(c), all members who wish to insert written statements into the record may do so by submitting them to the committee clerk electronically in Microsoft Word format by 5:00 p.m., 14 days after this hearing. Without objection, the hearing record will remain open for 14 days to allow such statements and other extraneous material noted during the hearing to be submitted for the official record. I will now turn to the introduction of our four distinguished witnesses. Our first witness is Mr. Golumbic, a principal at Groom Law Group in Washington, D.C. Our second witness is Mr. Andy Banducci, the senior vice president for Retirement and Compensation Policy at the ERISA Industry Committee in Washington, D.C. Our third witness is Mr. Khawar, the founder and president of FCP, LLC in Washington, D.C. And our last witness is Mr. Jim Bonham, the president and CEO for the ESOP Association in Washington, D.C. We thank the witnesses for being here today, and we look forward to your testimony. Pursuant to committee rules, I would ask that you each limit your oral presentation to a three-minute summary of your written statement. As committee members have many questions for you, the clock will count down for three minutes. Pursuant to Committee Rule 8(d) and committee practice, however, we will not cut off your testimony until you reach the five-minute mark. I would also like to remind witnesses to be aware of their responsibility to provide accurate information to the subcommittee. I will first recognize Mr. Golumbic for your testimony. Mr. Golumbic.

Mr. Lars GolumbicSPEAKER_08

Good morning, Chairman Allen, Ranking Member DeSaulnier, and members of the subcommittee. Thank you for the opportunity to testify today about the Balance the Scales Act, which will compel the U.S. Department of Labor to do what it should have done for years: inform American citizens and businesses when it shares their confidential information with others. My name is Lars Golumbic, and I'm a principal at Groom Law Group, Chartered, a law firm specializing in employee benefits. I'm co-chair of our ERISA litigation group, and I've been practicing in this area for nearly 25 years. Last year, in an ongoing lawsuit, my law firm uncovered concrete proof of what many had long suspected: that the DOL uses its authority to collect confidential information from American businesses, then surreptitiously supplies it to private plaintiffs' attorneys under the guise of so-called common interest agreements. The federal district court in that lawsuit rightfully chastised the DOL and the plaintiffs' firm involved, Cohen Milstein, for their cozy relationship that enabled the DOL to, as the court put it, litigate in the shadows. Unfortunately, we've since learned that this was not just a one-time occurrence. Documents produced in response to at least one FOIA request show that the DOL's secret arrangements have infected many other class action lawsuits over the years. These documents show the DOL providing information to class action lawyers, coordinating on discovery and legal strategy, and much more. The DOL's actions circumvent important legal protections, including FOIA's confidentiality and notice provisions, the rules governing litigation in federal court, and the enforcement scheme Congress created within ERISA. The DOL stomps on the scales of justice when it sidesteps these protections, handicapping plan sponsors, fiduciaries, and service providers trying to defend themselves in class actions, while gifting lucrative information to favored plaintiffs' attorneys. It wasn't always this way. Earlier in my career, the DOL was viewed as a welcome partner in a collaborative regulatory process. Now, the sentiment that the DOL is on the same team as the ERISA plaintiffs' bar, with the regulated community on the other side, seems to have metastasized within the DOL. Common interest agreements are but one symptom of this broader problem. The revolving door between the DOL and the ERISA plaintiffs' bar is one driver of this unwelcome development. Frequently, attorneys departing the DOL slide directly into private practice with the very plaintiffs' firms to which the DOL backchanneled information during their tenures. This incestuous relationship creates an alarming conflict. The Balance the Scales Act represents a crucial step to restoring public faith in a regulator by bringing their activities out into the light of the public eye, as they should have been from the very beginning. Thank you, and I look forward to your questions.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

Thank you. Next, I'll recognize Mr. Banducci for your testimony.

Mr. Andy BanducciSPEAKER_05

Thank you, Mr. Chairman. Ranking Member DeSaulnier and members of the subcommittee, thank you for the opportunity to testify today. My name is Andy Banducci. I'm the senior vice president for retirement and compensation policy at the ERISA Industry Committee, or ERIC. We're a national organization, an advocacy organization representing the largest employee benefit plan sponsors in the United States. More than 150 million Americans have employer-provided health coverage. Nearly 100 million private sector workers have access to workplace retirement plans like 401(k)s. To start, it's a real honor to be a witness today. I had the privilege of staffing this committee on benefits issues for several years ending in 2017. During that time, I saw serious legislators advance creative bipartisan solutions that have helped the benefits community. The committee deserves credit for its leadership, and similarly, today's hearing is very important. Benefits are protected by federal law, including the Employee Retirement Income Security Act of 1974 and other laws and regulations overseen by the Employee Benefits Security Administration at the DOL. At its best, EBSA is an agency that protects workers and retirees from bad actors, assists employers with legal compliance, helps correct problems with benefits plan design and administration, and reduces red tape. Sadly, despite the key role that EBSA plays, ERIC members have reported for years that enforcement has been unbalanced. First, EBSA's investigations are taking too long. Among our membership, we've heard numerous stories of plan audits taking 5, 6, 7, even 8 years. Second, internal DOL handoffs, either between offices or personnel, slow things down, resulting in years and thousands of dollars wasted. Third, ERIC members also complain about a double standard in these investigations. DOL expects the timely production of requested documents and interviews with plan officials, but DOL officials too often go radio silent for months or even, in some cases, years on end. Fourth, too often the investigations appear to be fishing expeditions without a detailed focus. And fifth, there's just not enough transparency about DOL's coordination and, in some cases, even collusion with class action plaintiffs' attorneys. EBSA does very important work. We are hopeful DOL leadership will address these longstanding issues. The recently announced emphasis on compliance assistance is a positive first step. In the interim, policymakers should consider reforms to ensure that EBSA officials act with transparency and accountability. For example, ERIC supports the EBSA Investigations Transparency Act, which would impose modest annual reporting requirements, such as disclosure about the nature and number of active investigations. We see this as just good government 101. EBSA also supports the Balance the Scales Act, which would bring transparency to EBSA's coordination with the plaintiffs' bar. If EBSA is determined to provide information to attorneys suing benefit plans, then surely it's reasonable that the scope of this cooperation should be documented and transparent to the employers and to Congress. Members of the committee, large plan sponsors provide health and retirement benefits to tens of millions of their employees and their families, and on their behalf, we look forward to working with members of this committee on both sides to improve the benefits landscape. Again, thank you very much for the opportunity to testify, and I look forward to your questions.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

Thank you. Next, I'll recognize Mr. Khawar for your testimony.

Mr. Ali KhawarSPEAKER_13

Thank you, Mr. Chairman. Ranking Member DeSaulnier and Ranking Member Scott, thank you for the invitation, along with members of the subcommittee. I really appreciate being here. I want to start with maybe a moment of personal privilege. It is a pleasure to be here with Mr. Banducci. I always knew that one day we would end up on the same side. I didn't anticipate it would be here, but I'm looking forward to today's conversation with you. I left EBSA in January after spending almost 20 years at the agency, and in my time there, I served in a variety of roles in the enforcement, policy, and leadership capacities. I am appearing in my personal capacity today. EBSA is an agency with vast responsibilities. It is responsible for millions of private sector employment-based retirement, health, and welfare benefits plans. Those plans cover over 153 million people and collectively hold about $14 trillion in assets. In addition, EBSA has responsibilities over the IRA market, which holds about $17 trillion in assets, and for the Federal Thrift Savings Plan, which is approaching $1 trillion in and of itself. In my testimony today, I want to highlight several significant challenges that EBSA faces. First, we have a base budget that has not kept pace with increases in costs. Things like salary, travel, building maintenance, security—those costs have all gone up as EBSA's budget at a base level has remained relatively static. Second, we have DOGE-driven activity that has led to the loss of about a third of EBSA's investigative staff. Third, a Trump budget request in the FY26 in FY26 that not only drops the Biden administration's request to replenish the bipartisan No Surprises Act fund, but also cuts the base budget by $10 million. And fourth is the simple reality that you have an agency that is very small relative to its responsibilities. This disparity is even more stark when you compare it to peer agencies. The SEC, the ratio of investigators or auditors to the regulated entities is about—it varies, but you could say one to about a dozen. For EBSA, the number right now is 1 to 17,000. You're going to hear a lot today about purported widespread problems with EBSA's enforcement program, but the statistics tell a very different story. Just last fiscal year, the agency recovered $1.4 billion. That's direct payments to participants and beneficiaries. Almost $742 million of that was from the civil enforcement program. That program also got over 320 non-monetary corrections. These are really important corrections, things like removing bad fiduciaries or improving plan practices. In addition, in the criminal program, there were 161 guilty pleas or convictions. The bottom line is simple: EBSA's enforcement matters. There are two specific topics of today's hearing that I want to share some thoughts on. First is the timeliness of EBSA's investigations. As of November 7th, 2023, only about 3% of EBSA's investigations were still being actively investigated 48 months later. Two-thirds of those had taken so long because in the intervening period, Congress had passed a law. In the No Surprises Act, there was another provision related to mental health parity that required a written comparative analysis for MHPA benefits. And so EBSA began to request and analyze those written comparative analyses. But the primary driver of delay is underfunding. Second are the claims of widespread collusion between EBSA and the plaintiffs' bar. Congress, in passing ERISA, gave the department explicit authority to share information with a variety of interested parties. Again, the statistics tell a different story. Over a 15-year span, there were only 12 investigations that had a common interest agreement out of over, as the ranking member mentioned, 31,000 investigations. That's a ratio of 0.04%. Make no mistake, today's hearing is really a conversation about whether participants and beneficiaries across the country—workers, retirees, and their family members—should have any recourse at all when they're wronged. In FY22, EBSA's investigators recovered $16,776 per investigator per day. I should repeat that. That's almost $17,000 per investigator per day. I urge this committee to focus on the real issue at hand. Don't invest in red tape. Invest in EBSA. Thank you again for the opportunity to testify today, and I'm happy to answer any of your questions.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

Thank you. And lastly, I'll recognize Mr. Bonham for your testimony.

Mr. Jim BonhamSPEAKER_06

Thank you to Chairman Allen, Ranking Member DeSaulnier, and subcommittee members for this hearing and the opportunity to testify on behalf of our membership. I am Jim Bonham, the president and CEO of the ESOP Association. Our association is the largest employee-owner organization in the world. We enjoy an active membership of more than 3,400 ESOP companies and professional service providers such as lawyers, accountants, and plan fiduciaries. I have a reputation for being very direct, and I'm going to serve you the courtesy of being so today. The enforcement and investigative actions by the Employee Benefits Security Administration are broken. They're misaligned. And they're abusive. And have been for decades. Sadly, the chilling effect of this longstanding posture on plan formation has denied potentially millions of workers the chance for a better retirement and a better workplace. When people ask me why there are not more ESOPs, the answer is this, the subject of this hearing. This is why EBSA needs substantial reforms. Our members have been investigated arbitrarily and relentlessly by EBSA for decades. Indeed, it is difficult to find an ESOP that has not been investigated by EBSA in some form. The environment EBSA has created is so bad that when a new ESOP is formed, the professionals feel it is their obligation to warn the ESOP founder to expect and budget for the near inevitability that EBSA and the DOL will investigate them. It is the expectation they will be investigated, not the exception. I want to share with you four specific areas of serious concern and, in our view, abuse of EBSA's authorities. One: never-ending, stop-and-start, multiyear investigations that often result in companies, directors, and fiduciaries agreeing to tolling agreements under the threat of lawsuit or even criminal penalty, which effectively waives ERISA's six-year statute of limitations. These multiyear investigations regularly involve multiple changes to EBSA personnel who often just start over. The result often is the plan and its insurer simply throwing in the towel and agreeing to some form of settlement, typically the insured amount under their policy, just to finally bring an end to the process. Two: secret, so-called common interest agreements where EBSA investigators use taxpayer resources and extrajudicial governmental investigatory powers to subsidize private law firms' class action lawsuits. We have long suspected these secret agreements existed, and that suspicion has recently been confirmed through discovery in an ESOP case in litigation. While we do not yet know the full extent of these secret arrangements, both formal and informal arrangements, it is clear that EBSA is using its investigatory authority to support private law firms and their litigants, thereby violating plan sponsor due process and fairness. Three: taxpayer-funded government expert witnesses who have poor knowledge and little background in ESOP plan formation. These so-called experts have been paid millions of dollars in fees, yet often fail to meet the very standards to which EBSA desires to hold plan fiduciaries. An excellent example lies in the failed and blatantly incorrect valuation put forward as expert testimony in the Bowers and Kubota Consulting case, where EBSA lost every single point in its complaint against the plan sponsor, and the solicitors were even fined and sanctioned by the judge during the proceedings for their behavior. And four: indiscriminate, fishing-expedition-style investigations designed to dragnet the ESOP community and impose EBSA's views, notably views that have never been published as regulations or subjected to notice-and-comment public input as required by law. Following heated criticism from the Congress for the volume of direct plan investigations, EBSA changed tactics to create the appearance of reduced plan investigations. Rather than looking at specific ESOP transactions, EBSA instead began issuing dragnet-style letters to professional fiduciary firms that represent multiple ESOP plans. These investigatory letters indiscriminately seek information on all plans under the fiduciary's purview, thereby capturing information on multiple plans simultaneously, all the while telling Congress that the number of plan-specific investigations are dropping. I once again thank you for the opportunity for testifying and would be pleased to elaborate on any or all of these main points.

Chairman Rick Allen (R-GA)SPEAKER_16

Thank you, sir, and thank you to all our witnesses for your opening statements. Under Committee Rule 9, we will now question witnesses under the 5-minute rule. I will recognize myself for 5 minutes. Mr. Golumbic, the Biden-Harris administration's Assistant Secretary for EBSA stated that information sharing in the form of common interest agreements is a normal tool in litigation. In December of 2024, a DOL spokesperson said that EBSA had entered into nine common interest agreements since 2022. What is a common interest agreement, and how does a common interest agreement differ from EBSA's assistance to plaintiffs' attorneys that you have observed?

Mr. Lars GolumbicSPEAKER_08

Thank you, Chairman Allen. A common interest agreement, as used in legal proceedings, involves two parties who share a common interest in the outcome of a litigation, or a proceeding, or dispute or controversy. So, in the case I was involved in, there was a common interest agreement that had been entered into between the Department of Labor and a plaintiff's firm. But as we found out in the lawsuit, the department had not yet reached a decision about whether there was merits to the underlying investigation, whether it actually wanted to bring an action against the target in question. So, there was not a common interest in the outcome of the of the dispute, but the DOL nevertheless had entered into that common interest agreement at that time. And the court found on that basis there was no common interest between the department and the plaintiff's law firm.

Chairman Rick Allen (R-GA)SPEAKER_16

I understand that you were the attorney who first discovered that the Department of Labor was secretly sharing investigative— investigation information with the plaintiffs law firm known for class action lawsuits against employee benefit plan sponsors. Can you share how you learned this?

Mr. Lars GolumbicSPEAKER_08

Yeah. Yes, at one point in the proceeding, we had produced in discovery a copy of a findings letter from the Department of Labor indicating their preliminary findings with respect to an investigation of the transaction that was subject of that litigation. The department, in that same findings letter, issued preliminary findings with respect to other, unrelated investigations. So when we produced a copy to the plaintiffs' firm, we produced a redacted copy, redacting the names of these other investigations. The plaintiffs' firm pushed back for months, said that they needed an unredacted copy. On the eve of key depositions, the plaintiffs' firm produced to us an unredacted copy of that findings letter. At that point, I went to the DOL government lawyer in charge of the underlying investigation. He confirmed he had provided an unredacted copy of that letter to the plaintiffs' firm pursuant to a common interest agreement.

Chairman Rick Allen (R-GA)SPEAKER_16

Yeah. Surprise, surprise. Were you surprised to learn of the secret sharing arrangement? And if so, when did it come as a surprise?

Mr. Lars GolumbicSPEAKER_08

Well, we always had a suspicion, Chairman Allen, that that this practice was occurring because it was too coincidental. There'd be an opening investigation, there'd be documents exchanged, witness interviews, and then a year or two later, a plaintiff's firm is bringing a lawsuit with respect to the underlying investigation. But this was an instance where we had concrete proof that this type of sharing arrangement was occurring between the government and a class action law firm.

Chairman Rick Allen (R-GA)SPEAKER_16

And when you found out about this, you brought it to the court's attention. As a result, the magistrate judge stated the plaintiff's arrangement with the DOL has given plaintiffs access to information they can leverage, use to take shortcuts, and rely upon to circumvent discovery protocols. Could you tell us more about how the court viewed the arrangement?

Mr. Lars GolumbicSPEAKER_08

Yeah, I think the court was very disturbed that you had, um, litigation in the shadows with the government supplying information to the plaintiff's bar And it really can create an uneven playing field. You have a plaintiff's firm who's getting information they otherwise could not get at the outset of a lawsuit, and it maximizes their ability to get beyond what we would call a motion to dismiss, an early-stage dismissal of a case. As the Supreme Court's recognized, the decks then are stacked against defendants regardless of the underlying merits, given the, the crushing burden and cost of discovery. And so it, it creates an uneven playing field, and the magistrate was concerned about that.

Chairman Rick Allen (R-GA)SPEAKER_16

How could a plaintiff's law firm circumvent discovery rules by using a secret sharing arrangement with DOL without consequences? Obviously, lawyers have peer reviews and that sort of things. This sounds like it's really outside the standard of practice. Could you comment on that?

Mr. Lars GolumbicSPEAKER_08

Yeah, well, it gets to the very heart, heart of the, the bill that's, uh, that we're talking about today— transparency. So in the lawsuit I was involved in, we did not know that there was a common interest agreement between the government and the plaintiff's firm. We did not know that the government was sharing key information with the plaintiff's firm. So in the absence of that, we had no way of utilizing our own discovery tools to subpoena the government for emails, informa— the information that they shared, all the things that we did when we found that out in the lawsuit that I was involved in.

Chairman Rick Allen (R-GA)SPEAKER_16

All right, thank you. All right, call on Mr. Takano from California for his question.

Rep. Mark Takano (D-CA)SPEAKER_11

Two gentlemen from California, I wasn't sure which one. Okay. Thank you, thank you, Mr. Chairman. I want to thank the witnesses for being here today and to thank you for scheduling, you, Mr. Chairman, for such an important hearing. Mr. Khawar, would you like to respond to any of the earlier statements that were made?

Mr. Ali KhawarSPEAKER_13

Um, not so far. I mean, there's a, there's a lot to unpack and there's a lot of, I think, problematic statements that were made, but Um, I'll probably reserve the right to do

Rep. Mark Takano (D-CA)SPEAKER_11

Okay, thank you. In your testimony, you spoke about an individual who was denied a life-saving heart transplant by his employer-sponsored plan. EBSA intervened and successfully appealed the denial, something even this patient's doctors could not do. The doctors tried to get the plan to do this. If an insurance company refuses to cover an essential treatment for one of the millions of people who have employer-sponsored who have an employer-sponsored health plan, which happens far too often, how does EBSA assist with an appeal like this?

Mr. Ali KhawarSPEAKER_13

Thank you for that question. I would love to tell you that this was the only time in my career at EBSA that we had a story like that. Unfortunately, that's not the truth. It is too frequent that, in the context of employment-based health arrangements, people's benefits are denied. And one of the things that they can do is contact the EBSA benefits advisors. We have a toll-free number. It's 866-444-3272. And when they contact that number, what used to happen—I should caveat all of this with this is only up until January 20th, because with staffing cuts, I really can't give you any assurance about what kind of service people receive now. But what used to happen is that calls were answered live if they were made during business hours, and you would get someone that is very highly trained who would answer your questions if you had basic questions and then act as an advocate in trying to informally resolve that issue between you and your plan, the service provider, the doctor, the insurance company, and try to get them, if it was appropriate, to get that benefit approved. You made the example of a heart transplant. There's another example I'm thinking of right now of a young mother who had cancer and was being denied a liver transplant, and her insurance company essentially gave her a death sentence. And not—but for EBSA's engagement, I'm confident that she would have died.

Rep. Mark Takano (D-CA)SPEAKER_11

So EBSA is like this government agency that can help ordinary citizens who know about EBSA to call that number and to get help when they have a dispute with their health plan, when that health plan may be refusing to pay on a claim that even their doctors say that that health insurance company should should be looking at it. Is that right?

Mr. Ali KhawarSPEAKER_13

That's correct. Unfortunately, not enough people know about this. I think of the BA program as a hidden jewel, frankly.

Rep. Mark Takano (D-CA)SPEAKER_11

I didn't know about this. I would love to have known about it so I could tell my constituents, this is where you can go when you have a problem with a claim with your insurance company, they're refusing to pay, or they're refusing to cover a life-saving, a vital, urgent, life-saving procedure, this is where you can go. And you're saying that EBSA has had reduced staffing and that you're not really sure that people can connect with a live technically trained person to guide them?

Mr. Ali KhawarSPEAKER_13

Yeah. Yes, Representative, it's, um, it is truly unfortunate because you have situations like the one that you're describing And it used to be a point of pride in the agency that calls were answered live, and then it was something like 95% of calls were returned within one business day if someone called after hours.

Rep. Mark Takano (D-CA)SPEAKER_11

Okay, we just heard Mr. Golumbic describe this situation where EBSA has colluded with plaintiffs' attorneys and how unfair it is to these defendants. And the defendants in this case are mostly these huge health plans or huge pension plans. Go ahead.

Mr. Ali KhawarSPEAKER_13

Well, um, in the health context, it's very frequently, I, I believe, the bad actor is a health insurance company even more than the health plan itself.

Rep. Mark Takano (D-CA)SPEAKER_11

So the health insurance company that's refusing and stopping the claims—do we think of the little American citizen who's trying to get a heart transplant or a liver or any—a liver transplant approved against the big insurance company? Are they the ones that are such the an unfair sort of claimant against this big insurance company? Do we think that—I mean, I think of this EBSA as kind of a very important advocate for the ordinary consumer.

Mr. Ali KhawarSPEAKER_13

I agree, Representative, and I think when you're talking about the people that are impacted, it is often in the health context individuals with pretty significant health needs. I also believe that when we are talking about these common interest agreements and what this bill would do, it is a bit more than transparency. Because, for example, there's a requirement in the bill that before sharing any information with an attorney that that attorney might use in essentially bringing a lawsuit under ERISA, you have to enter into this agreement, you have to share it with the relevant fiduciaries, and all of that kind of stuff. The problem is, if you think about these benefit advisors, they're getting a phone call, they're getting a question. Now we're telling them that, no, you need to make sure that these things are done, here's some additional paperwork you need to do, you can't help this individual.

Rep. Mark Takano (D-CA)SPEAKER_11

Thank you, Mr. Khawar. I'm sorry for going over, but it just seems like this bill is going to weaken the protections for the consumer, weaken the advocacy that, that would be so costly. Thank you. I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

The gentleman from California yields. Now I recognize the gentleman from Ohio, Mr. Rulli, for 5 minutes of questioning.

Rep. Michael Rulli (R-OH)SPEAKER_09

Thank you, Chairman. Employer-sponsored retirement plans are the backbone of American retirements. Over 70 million workers are covered by these very plans. Private employers voluntarily sponsor more than 800,000 ERISA-covered plans holding more than $9 trillion in assets. We're not talking millions, we're not talking billions, we're actually talking trillions. $9 trillion in assets. When I learned that the Biden-Harris Department of Labor shared confidential employee benefit information with plaintiffs' law firms, I had to get involved immediately. It was shocking to understand that this was being shared. The DOL should never be sharing secret or sensitive information with anyone unless the employers consent to do this. So, the question would go to Mr. Bonham. Can you speak on how the DOL's actions are hurting American workers and employers right now?

Mr. Jim BonhamSPEAKER_06

Where to start? The investigatory actions by EBSA, there I would put into two categories of how it's hurting American workers. First are the millions of Americans who are never even given the opportunity to benefit from a plan because of the chilling effect that EBSA has on plan formation. We did a survey about a year ago of businesses who were looking at their succession plans and whether or not they would be interested in forming an ESOP. Close to 80% of all business owners who were looking at retirement were highly interested in forming an ESOP. Once we introduced the idea of EBSA and their enforcement powers, it plummeted. They just don't want to deal with the risk that the introduction of EBSA's enforcement capabilities introduce. Second, it introduces for plan sponsors significant cost, and that cost can range from as little as $80,000 to $100,000 for a basic response to an investigatory letter to literally millions of dollars. I was speaking to a CEO just yesterday who was the subject of one of these investigations: 3 years of discovery, $3 million worth of legal fees, there were no findings at all. Immediately after they received the conclusory letter from the Department of Labor, they were then slapped with a class-action lawsuit that cost them another $2 million. Was it a coincidence? We don't know. We hope that some of the investigations will find out. But those are just a couple of examples of where the investigatory abuses at EBSA have had a dramatically chilling effect on plan formation. And we should all remember that offering retirement plans and offering benefits are voluntary on the part of the employers. And unfortunately, employers are now going to the least common denominator so they can offer just the basic plan, but nothing more, because it becomes too complicated.

Rep. Michael Rulli (R-OH)SPEAKER_09

Really appreciate that answer. We introduced H.R. 2958, the Balanced Scales Act, requiring the DOL to enter into written agreements detailing what type of assistance will be given before sharing confidential information with attorneys and to share those agreements with the employer or the plan sponsor that could be negatively affected by this. Could you perhaps speak on why this legislation is actually needed in the industry?

Mr. Jim BonhamSPEAKER_06

Thank you for that question as well. First, it's a basic matter of due process and the rights of the accused. As the magistrate judge in Colorado said in the case that Lars was working on, as she said in her decision in the case exposing the practice, these secret common interest agreements would, quote, allow a government agency to weaponize private litigation against some target before confirming the target should even be a target. Transparency helps build trust. Second, EBSA has a history of ignoring both Congress and the industry. The ESOP community knows this well from our decades-long struggle for proper regulation. Therefore, legislation is needed to force these needed, long-lasting reforms.

Rep. Michael Rulli (R-OH)SPEAKER_09

Thank you very much for your work and your support. Really appreciate it. And we need to stop the madness and get back to protecting our American employers and more importantly, the American workers. And with that, Mr. Chair, I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

The gentleman from Ohio yields. Now I recognize for questioning for 5 minutes the gentlelady from Georgia, Ms. McBath.

Rep. Lucy McBath (D-GA)SPEAKER_10

Thank you, Chairman Allen and Ranking Member DeSaulnier. The Employee Benefits Security Administration has the important responsibility of protecting the health benefits of over 150 million hardworking Americans on employer-sponsored health insurance. And unfortunately, a growing number of Americans who have put in their time at work and paid into their healthcare plans are not receiving the health benefits that they are entitled to under the federal law. With the increasing complexity of the healthcare system, the Employee Benefits Security Administration's responsibilities have grown significantly over the years, yet the agency remains chronically underfunded and understaffed. The lack of resources at this agency means that employees continue to wait on their healthcare benefits, and investigations are delayed when trying to stop bad actors who take advantage of the patients. Last session, Chairman Rick Allen and I, we sent a letter to the Employee Benefits Security Administration about our concern over alternative funding programs in health insurance. Under the guise of saving money, alternative funding programs are pushing health plans to exclude certain medications. They abandon patients, leaving them to seek out assistance programs that are already overloaded. Ultimately and far too often, these patients unexpectedly have to shoulder the full cost of oftentimes their life-saving medications or experience delays that can result in harmful complications. And no one should ever have to wait for a lifesaving treatment. Trust me, I know. I'm a two-time breast cancer survivor. And the reality is is not everyone can actually wait for a lifesaving treatment. The cases that have been submitted to the Employee Benefits Security Administration, they tell the stories of people who are just basically at their wit's end, needing help to fight an insurance denial for their lifesaving treatment, or begging for oversight to investigate alternative funding programs that have cut off access to the care the patient thought that they had. And while the agency is tasked with this important role that has financial and profoundly personal impacts for all those in our healthcare system, years of underfunding and budget cuts have threatened to undermine its original intent and mission. Just this year, we have seen career federal employees pushed out of their jobs, and an additional $10 million in cuts that are still being proposed. On behalf of the millions of Americans in this country who rely on health insurance through their jobs, it is our duty to support oversight and to cut through the red tape and to protect those patients' lives. Mr. Khawar, if you will, what impact would strong investments in the Employee Benefits Security Administration have on its ability to better protect health coverage for the American people?

Mr. Ali KhawarSPEAKER_13

Thank you for that question, and I agree with everything that you've said. Investing in this agency means investing in the Americans that are struggling with insurance company red tape today. It is investing in Americans who have done the right thing and saved through their job in their retirement, and want to make sure that that retirement is there when they ultimately reach the right age. Unfortunately, with the budget cuts, it is hard to see how the agency is going to be able to continually continue to successfully achieve its mission. Things like the benefit advisor program are going to be really heavily impacted. Investigations are going to be very heavily impacted. They're going to take longer. The agency is going to be able to do fewer of them, and there are going to be people that are really in need of help, who deserve the government's help, that aren't going to be able to get it, and it is 100% going to be because of resource constraints.

Rep. Lucy McBath (D-GA)SPEAKER_10

So why has the workforce at EEOC at EBSA declined so dramatically, if you can tell us, and what can just really be done about it?

Mr. Ali KhawarSPEAKER_13

Yeah, I mean, there is a long-term problem of chronic underfunding. Costs increase, and when budgets don't, then that means you have to find somewhere. I think that it's something like 70, 75% is about the percentage of EBSA's budget that is kind of taken up by just pure personnel costs. And so, as very normal things and appropriate things like increasing salaries to account for inflation, that money needs to come from somewhere, and when you don't have many other places to look, the place you end up having to look is by reducing your headcount. So there is a longer-term issue here. The proximate cause, however, is, since January, there has been a pretty concerted effort to push federal employees out of their jobs. EBSA has not been immune to that, and so there has been, as far as I can recall, pretty unprecedented attrition rate in the last few months.

Rep. Lucy McBath (D-GA)SPEAKER_10

Well, thank you so very much, and I'm out of time. Thank you, each and every one of you, for being with us today as our witnesses, and I yield.

Chairman Rick Allen (R-GA)SPEAKER_16

I thank the gentlelady for yielding, and now I call on Mr. Mackenzie from Pennsylvania for 5 minutes of questioning.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

Thank you, Mr. Chairman, and I want to thank all of our testifiers here today. It's an important conversation that we're having about EBSA and the ability of a government agency to help in the marketplace where individuals are getting their health insurance all across the country, making sure that the benefits they are owed are being paid to them when necessary, but at the same time, also making sure that there is transparency and oversight going on at this agency to make sure that they are conducting themselves in a proper fashion. So pretty concerning, some of the testimony that we're hearing today. And my first question is going to be for Mr. Golumbic regarding EBSA and the secrecy of the information that was being shared with plaintiffs' attorneys. Obviously, confidentiality was breached there. And what does this do to the willingness of different stakeholders to actually cooperate and engage with the DOL? If they have this concern as a defendant or a potential defendant, why would they even come forward and cooperate or engage with DOL, ultimately, in the furtherance of benefits for the individuals? But why would they why would they participate in something like that if they're afraid their confidentiality might be breached?

Mr. Lars GolumbicSPEAKER_08

Thank you. That's a great question, Representative Mackenzie. And just to put a finer point on it, in the the matter that I was involved in that I testified to today, my client, in response to requests for information from the government, designated documents as exempt under FOIA, meaning they deserve confidentiality designations. And to the extent the government was going to furnish it to any outside third party, they needed to give notice to my client so we had an opportunity to object to it given the confidential nature of the information. That didn't happen. So I think what we're finding as a consequence, in light of this disclosure that these common interest agreements exist, I'm finding that with my clients who are involved in active Department of Labor investigations, they're quite reluctant to turn over information because there's no they're worried about the government maintaining the confidentiality of it, even if we designate it as exempt under FOIA. And the Department of Labor historically has been reluctant to enter into normal routine confidentiality agreements ensuring the safeguarding of information. So, it's a quandary, and we have active clients who feel like they're between a rock and a hard place trying to respond responsibly in responding to government subpoenas and requests for information.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

Yeah, I think it could have a chilling effect on the willingness of participants to participate and engage with DOL, and again, ultimately, that would be a problem for the whole system. I would also ask this: Are you aware or do you know if this practice is still occurring at DOL with maybe career employees there?

Mr. Lars GolumbicSPEAKER_08

I don't know the current state of the practice of the government. I would, though, add a note in response to other testimony today. What we are aware of are several instances of those type of agreements by the government and class action firms being reduced to writing, but I'm sure there are—and the Office of Inspector General may get to the bottom of this—countless examples of the government picking up the phone and contacting plaintiffs' counsel, talking about legal strategy, talking about underlying case, supplying information that doesn't necessarily have to be reduced to writing in a formal common interest agreement.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

As somebody who's not an attorney, I'll ask your legal opinion on this, and just an opinion, but could this affect the outcomes of previous decisions that were rendered if somebody entered into an agreement where they were not made aware of a confidential side deal with DOL and a plaintiff? Could that be revisited?

Mr. Lars GolumbicSPEAKER_08

I don't know that. That's pretty speculative. I do know just in terms of matters we're involved in and matters I know that other lawyers in this industry are involved in, they are taking a closer look in active lawsuits to see if there is a connection between the government and the plaintiff's firm and seeking discovery to find out if any such agreements have existed.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

Thank you. And just with the remaining time that I have, Mr. Banducci, can you elaborate on your statement about providing suggestions for EBSA on what they should do with the limited resources they may have and how they could conduct themselves more efficiently?

Mr. Andy BanducciSPEAKER_05

Thanks very much for the question, Chairman Allen. I see I've got eight seconds, so I'll try to be quick. It really starts with the foundational premise. Large employers, in particular, are mostly doing the right thing. They are providing benefits to tens of millions of workers and their families, and EBSA ought to begin with that premise and that understanding.

Rep. Ryan Mackenzie (R-PA)SPEAKER_04

Thank you, and I agree, uh, that should be the, the premise and understanding, and I think we can both do that and make sure confidentiality is protected as well. Thank you.

Chairman Rick Allen (R-GA)SPEAKER_16

The gentleman yields, and now I call on Mr. Courtney from Connecticut for his 5 minutes of questioning.

Rep. Joe Courtney (D-CT)SPEAKER_07

Thank you, Mr. Chairman. And, um, you know Just an observation before I get into the question is just that clearly there's a serious situation that's being described here. But I appreciate the fact that Attorney Golumbic said that it's speculative right now to determine whether that's a systemic phenomenon that's happening. We have an inspector general's report that's looking into this, and personally, I feel like this committee should let that process take place before we start going in and changing statutes. I just think that in my opinion would be the normal process before we make a systemic change, to find out whether there's a systemic problem. On a more positive note, I would just say that my experience with EBSA, particularly in terms of ESOPs, has been pretty positive. We had Assistant Secretary Gomez in my district about a year or so ago. We visited an ESOP proponent, which is a great aerospace parts manufacturer, very active in the ESOP Association. At that point, again, we were working on the WORK Act, which was legislation that I sponsored to, again, get the Department of Labor to finally sort of officially designate an office that would really help promote the ESOP option that's out there for a lot of really good companies that maybe, again, are hitting sort of generational sort of milestones and want to maybe consider it, but really don't have the consultant basis or the wherewithal to really understand it. And again, it was adopted as part of the omnibus in 2023, again, very bipartisan effort and something that certainly the private sector advocates worked with Congress to get that through. So the authority is there for that office. Unfortunately, the funding hasn't been there to really sort of kick it in and get it into place. So, again, just to follow up Ms. McBath question, Mr. Khawar, if we really are serious about trying to promote ESOP ownership and to expand it, which, again, I think you've got people like Bernie Sanders and conservative Republicans in agreement that that's really healthy for our private sector, but we need to, again, really get that office stood up and populated with people so that it can move forward. And maybe you can just respond to that.

Mr. Ali KhawarSPEAKER_13

Yeah, thank you for your question. I completely agree and was very pleased when the department got the authority under the WORK Act to do employee ownership promotion, because I think it is incredibly important to have programs that can highlight best practices in the private sector, can really promote things like worker voice and the benefits of employee ownership. We were able to, and because we believed in the importance of this program, divert money from other parts of our budget to kind of do the basics of standing up the program. To be very honest with you, it is not going to come close to achieving its potential in the current budget situation. We were— in the Biden administration, the leadership made a point of conducting visits to employee-owned companies, talking about the program in speeches, and really highlighting it. There are two really core functions of that office that I'm pretty worried about. The first is that, well, the head of the office got fired in the Trump administration and then later rehired, but she is kind of the staffing, and it's not going to be sufficiently staffed. We're not going to really be able to do the level of outreach and education that we want to. The second part of the bill, though, that is still unfunded was money that the department could give to states to help them do worker ownership programs within the states, and that has never been funded, unfortunately.

Rep. Joe Courtney (D-CT)SPEAKER_07

Thank you. And again, Mr. Bonham, another part of that bill was to get the adequate consideration rule finished up, and again, that's obviously still an agency process. Again, maybe you can just talk about that quickly, because I know that was an important priority for your association.

Mr. Jim BonhamSPEAKER_06

Thank you, Mr. Courtney, and and again, thank you for your questions. And I want to answer in two parts. First, in relation to the Office of Employee Ownership, and we're very, very grateful for your work and others' work to help create that office and strongly support its continuation. But it's noteworthy that one of the reasons that the ESOP community sought that office was so that there would be an internal alternative voice to the career employees at EBSA who always had a very, very negative view of ESOPs. So we needed to have somebody inside the Department of Labor who thought that they were a good idea for retirement plans for employees. Secondly, in terms of the adequate consideration regulation, this is an area that we have been seeking for almost 50 years, to have clarity on what rules a fiduciary should follow in order to fulfill their good-faith effort in valuing the company's shares. And the agency has steadfastly refused to issue those regulations. It needs to be done, and it needs to be done with reasonable input from the community.

Chairman Rick Allen (R-GA)SPEAKER_16

The gentleman yields, and now I'll call on Mr. Fine from Florida for his 5 minutes of questioning.

Rep. Randy Fine (R-FL)SPEAKER_15

Thank you, Mr. Chairman. So for 22 years, I was an entrepreneur and started, built, and grew companies. So I both created these plans and as well as was in them. And so it's an important issue, and I think you've exposed a lot of real, serious problems with how they're administered. Frankly, I didn't ever have any of these, so I'm breathing a sigh of relief sitting over here. No one ever sued me. But my question is for Mr. Bonham. The Department of Labor investigated and then filed a lawsuit against an ESOP plan sponsor, its board of directors, and its selling shareholders in the Bowers case. In 2021, the court found no violations of ERISA for a transaction that took place 9 years earlier in 2012. I know a little bit about it, and it sounds like kind of a horror story and shows government gone wild. Can you describe what happened in this case and the cost of defending it?

Mr. Jim BonhamSPEAKER_06

This is perhaps one of the best examples of the abuse that we've been talking about at EBSA that one can give, and I could go on for a much longer time than we have today.

Rep. Randy Fine (R-FL)SPEAKER_15

We have 3 minutes and 56 seconds.

Mr. Jim BonhamSPEAKER_06

You bet. So in this case, literally during the deposition, the investigator was asked, Why did you go after Bowers and Kubota? And I quote, "My supervisor, he gave me an assignment to find some ESOP cases in Hawaii," end quote. And again later, quote, "My understanding is the department needed to have some exposure in Hawaii," end quote. 9 years later and millions of dollars in legal fees, there were no findings. In fact, the so-called expert that was hired to provide the the expert valuation on behalf of the Department of Labor was completely discredited because he made an arithmetic error. And had his error been corrected, and was known during discovery, had it been corrected, his valuation would have even been higher than what the ESOP actually paid for the value of the company. Since that time, the value of the company, since it was sold to the employees through an ESOP, has gone up more than 1,700%. These employees have benefited greatly. During the the judge's ruling on this case, the judge said that this was not decided against DOL for a want of trying. It was decided because of a lack of evidence. The Department of Labor pursued this case relentlessly. The trustee died, and rather than dropping the case against the trustee, they replaced the trustee with the widow. That's how relentless they were in pursuit of this case, and they lost on every single case.

Rep. Randy Fine (R-FL)SPEAKER_15

Do you mind if I ask, and if you've got more context you can share it, but, but does the government reimburse the company that has to spend the millions of dollars defending against what sounds like a spurious and kind kind of—.

Mr. Jim BonhamSPEAKER_06

they have to sue. The, the company has to sue in order to recover some of those costs.

Rep. Randy Fine (R-FL)SPEAKER_15

So they have to go deeper into the hole to come pay more lawyers to try to get paid for the lawyers they already had to pay for because the government came after

Mr. Jim BonhamSPEAKER_06

In this case in particular, Mr. Bowers, who was the wrong Army Ranger to pick a fight with, he tried taking this all the way to the Supreme Court, and it is almost impossible for a defendant to recover their litigation expenses.

Rep. Randy Fine (R-FL)SPEAKER_15

So the government can make stuff up or actually just sort of target you for no apparent reason, it sounds like, because someone's boss needed somebody to have something to do. You can spend millions of dollars on lawyers. You win, you get clear, your name gets cleared after 9 years, and then you're still— you still lose. Like, he didn't win. You know, if you have millions of dollars of legal fees, you still lost. Lost because you lost money that you had and you had distractions from, from operating your actual business. Any other thoughts on this case that you'd want to share?

Mr. Jim BonhamSPEAKER_06

There are lots of other thoughts that I would like to share, but unfortunately, we probably don't have the time to do it. It's interesting. I've spoken at length with Mr. Bowers about this case, and when I asked him why he chose to fight, and he is a very rare example of this, because in almost every example, it is a more prudent decision to just exercise your insurance policy, settle it out, and move on with life, he says, EBSA made it so easy because they were so unreasonable in their approach. The treatment of Bowers and Kubota in this case is no surprise to just about anyone in the ESOP community who's been investigated, and it's the type of behavior that we saw from the EBSA attorneys and their approach: Go find a case in Hawaii. And like I said, 9 years later and millions of dollars in defense, and this is where they are.

Rep. Randy Fine (R-FL)SPEAKER_15

Thank you. Thanks for your context. And thank you, Mr. Chairman.

Chairman Rick Allen (R-GA)SPEAKER_16

I thank the gentleman from Florida. Yielding, now I call on Ms. Lee from Pennsylvania Sylvania for your five minutes of questioning.

Rep. Summer Lee (D-PA)SPEAKER_00

Thank you, Mr. Chair. Today's hearing is framed as a conversation about restoring trust and enhancing transparency at the Employee Benefits Security Administration, but what's really in question here is whose trust is being restored and at whose expense. Unfortunately, the majority seems to think that restoring trust means making life easier for employers under investigation. To them, balancing the scales means tipping them further towards corporations and away from the workers. EBSA, their core mission is to protect workers' retirement and health benefits, not to cater to employers. Imagine working your entire career. You make it to retirement, but you find that all your savings are gone because your employer or your benefits manager lied, misused your funds, or just outright stole from your plan. EBSA exists to put rules in place to help prevent this from happening. And when those rules are broken, EBSA has the authority and the responsibility to hold these employers or plan managers accountable. Over the years, EBSA's workforce has steadily declined and its responsibilities have increased, all while its funding has remained flat. Even so, EBSA is still taking meaningful enforcement actions to protect workers' benefits. Mr. Khawar, could you just discuss very briefly, because I also want to make sure that we can hit a couple of things, but can you discuss some of the complexities in investigating and concluding a case, particularly what factors might slow things down?

Mr. Ali KhawarSPEAKER_13

Yeah, thank you for your question. I will try to be brief, but there is a lot. So, the size and complexity of the entity being investigated, the volume of evidence that they produce, what that evidence shows, including there is not a practice that if you ask a question about X and then you get evidence of wrongdoing somewhere else that we ignore it, so it may lead to additional document requests or questions, how cooperative the entity is. It's not infrequent that EBSA starts with voluntary production of documents and then doesn't get the documents that it asked for, needs to move to a subpoena, needs to enforce that subpoena in court. All of that is leading to delays between when the investigation opens and when EBSA is kind of done with just the very first stage, which is they have a conclusion of what they think has happened. They present that to the fiduciaries and say, These are our findings. Can we talk about how we proceed?

Rep. Summer Lee (D-PA)SPEAKER_00

And if I could, uh, add, just what impact will the agency's proposed budget cuts have on the department's ability to close those cases quickly then?

Mr. Ali KhawarSPEAKER_13

I mean, I think given the severity of the cuts that we've seen just in this year, there's going to be a pretty unfortunate choice between do you allow these cases to drag on for longer because you need to reshuffle personnel, or do you just close them even though you're convinced that there's something there and people have been harmed?

Rep. Summer Lee (D-PA)SPEAKER_00

So instead of cutting funding, we should be strengthening this agency, because what's being presented as a push for transparency is, in reality, just a set of proposals that risk bogging down the enforcement with additional red tape, slowing investigations, shielding employers, and draining resources that should be used to protect those workers. Mr. Khawar, in your testimony, you stated for every dollar that Congress invests in EBSA, the agency has consistently returned many multiples of that amount in direct payments to plans, participants, and beneficiaries. Is that—

Mr. Ali KhawarSPEAKER_13

Yeah. I mean, one figure is $17,000 approximately per investigator per day. Another figure for one specific category of cases that shifted to, in, in light of budget cuts, trying to find more impactful cases that were going to impact more people. The number for that is about $150,000 per investigator per day.

Rep. Summer Lee (D-PA)SPEAKER_00

Thank you. So in other words, cutting EBSA's funding actually costs taxpayers and workers more money. So why are we uplifting bills that would further drain EBSA's resources through burdensome reporting requirements while doing nothing to help workers recover their stolen benefits? I can speak to EBSA's importance firsthand. In my district, a Pittsburgh-area administrator overseeing 240 or so retirement plans embezzled at least $5.5 million from workers' accounts. EBSA stepped in and took swift action. Freezing the assets and securing court orders led to a $50 million settlement and likely saved my constituents millions more. Yet instead of supporting EBSA's critical work, such as this, the majority wants to undermine it. Today's bills don't restore trust or improve transparency. They shift EBSA's focus away from defending workers' benefits and towards easing the burdens on employers. They frame investigations as too long, without regard for the complexity or for the stakes, and they call for transparency measures that actually make it harder for EBSA to do its job, shielding employers from scrutiny while creating new hurdles for enforcement. If this committee is serious about restoring, improving the function of EBSA, the solution is clear: increasing the agency's funding. That's how you build trust, not just with employers, but with the workers whose futures are on the line. I thank you also so much for your time, and I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

The gentlelady yields. I now call on our great chairman, Walberg from Michigan, for his five minutes of questioning.

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

Thank you, Mr. Chairman. Thanks for this hearing, and thanks, committee. Andy, it's great to see you back.

Rep. Mark Takano (D-CA)SPEAKER_11

I

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

just always know that people can be elevated, and they're, they're stolen from our committee, some of the best people. So good to have you back. Mr. Golumbic, and Mr. Banducci, Mr. Bonham, employers voluntarily sponsor retirement plans, and in doing so, the employer commits to comply with the laws governing those plans. EBSA investigations also rely on the voluntary cooperation of the employer, although voluntary cooperation is not necessary. Now that the public has learned, and this is my question, since the public has learned that EBSA has secretly shared information with plaintiffs' attorneys, stacking the deck, how will employers' willingness to cooperate with EBSA's investigations change? Mr. Golumbic.

Mr. Lars GolumbicSPEAKER_08

Thank you for that question. I think it's had a chilling effect in the cases that I'm involved in where we're representing plan sponsors and fiduciaries in active Department of Labor investigations. There's a natural reluctance to produce information and to cooperate in the in the absence of any assurance that information that has been produced that is that is designated as exempt under FOIA will be treated that way. That did not happen in the lawsuit I was involved in.

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

Mr. Banducci,

Mr. Andy BanducciSPEAKER_05

I think from an employer standpoint, right, when when we're on the other end of these audits or investigations, there's a desire to get to a resolution. And it's really hard to get to a resolution if you don't know exactly who's on the other side, right? And so if it's the Labor Department, that's one thing. But if it's the Labor Department and then other attorneys and other law firms, I think that's even more challenging.

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

Okay. Mr. Bonham,

Mr. Jim BonhamSPEAKER_06

I hate to say this, but voluntary cooperation is imaginary. If you receive a letter from EBSA, you hire a lawyer and you respond. So EBSA's breach of trust in these agreements is actually increasing costs not just for plan sponsors, but it's actually increasing cost for EBSA because everybody lawyers up immediately. If there's no trust, there is no voluntary cooperation.

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

Okay, thank you. Mr. Golumbic, Banducci, and Bonham, a 2019 Practical Law publication titled "Guide to Dealing with Department of Labor Investigations of Retirement Plans" gives tips to reduce administrative burden, cost, and stress associated with EBSA investigations. In your experience, what is a ballpark range of the amount an employer spends when responding to and potentially defending against an EBSA investigation? Mr. Bonham, we'll start with you.

Mr. Jim BonhamSPEAKER_06

I would say the minimum expense is going to be in 6 figures. The high end of expense is going to be in multiple millions of dollars.

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

Well, Mr. Banducci, give us, give us better news.

Mr. Andy BanducciSPEAKER_05

I don't have better news, unfortunately. Obviously, it depends on the complexity of the investigation, how long it goes on. But if you're dealing with a very complex plan with very broad sort of fishing expedition type requests and scope, it's going to be very, very, very expensive.

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

Mr. Golumbic.

Mr. Lars GolumbicSPEAKER_08

Yeah, I think the potential expenses and costs can be astronomical. You're going to be producing documents to the government, collecting those documents that could be in the millions. Often you need to get an electronic or e-discovery vendor to assist you. There's then going to be often interviews of key witnesses, as Mr. Bonham alluded to, that often you're almost invariably going to be hiring outside legal counsel to assist you in preparing for those interviews. And then the department may issue a preliminary findings letter that would result in putting together a response back, negotiations over potential resolution. So the costs are, are going to be— they, they can be potentially catastrophic.

Full Committee Chairman Tim Walberg (R-MI)SPEAKER_02

It's, it's apparent in looking at, at least from my perspective, that something that's supposed to be a partnership to make sure that good is rewarded and bad is disciplined through the process that government has in oversight has become one-sided in many ways. And ultimately, cost and distrust and automatic assumption of guilt, one-sided, doesn't work. And I think that's— as I address the concerns of my colleagues on the other side, that's our concern. That the system works and choice is given and opportunity is given and ultimately costs aren't escalating because of this wrongheaded, one-sided, suspicious approach. Uh, thank you. I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

I thank the gentleman for yielding, and now I call on Ms. Hayes from Connecticut for her 5 minutes of questioning.

Rep. Jahana Hayes (D-CT)SPEAKER_12

Thank you. And thank you to the witnesses for testifying today. The work of EBSA is critical to protecting the health and retirement security of more than 156 million workers, retirees, and their families. At its core, EBSA provides protection, education, and oversight of retirement, healthcare, and other employee benefit plans. In FY24, EBSA benefit advisors helped recover more than $540 million in health and retirement benefits owed to workers and their families after closing almost 200,000 inquiries. The 2024 figures represent an increase in inquiries and money recovered by EBSA compared to previous years, illustrating the importance of benefit advisors for workers and retirees. The benefit advisors who work from the regional field office in Boston are invaluable to assisting constituents in my district in Connecticut. In a recent case, benefit advisors assisted a Connecticut retiree in accessing $2 million in retirement benefits from a former employer. Despite the tremendous return on investment, the Trump administration is proposing to cut the budget of EBSA by $10 million in FY26 and has laid off probationary and other employees through DOGE. As mentioned in the testimony by Mr. Khawar, the Trump administration recognizes the impacts of its proposed cuts to EBSA, providing lower enforcement targets in the 2026 annual performance plan to, quote, "reflect anticipated reductions in staffing," end quote. Today, my Republican colleagues are discussing bills that focus on the ability of EBSA to conduct enforcement while ignoring the resources and staffing cuts that are the main barrier to completing those investigations. Mr. Khawar, can you share how the proposed budget cuts by the Trump administration would impact the services and work provided by EBSA benefit advisors?

Mr. Ali KhawarSPEAKER_13

Thank you for your question. The benefits advisors are truly amazing individuals. They are very highly trained. You can call them on a variety of topics, anything that's covered by ERISA, and they will do their best to answer you. And the number of benefit advisors that the agency has has already shrunk and is going to continue to shrink. The volume of calls that they receive is not going to shrink. And so that's going to just mean delays. It's going to mean unanswered calls. It's going to mean that an agency that took pride that we would get letters where constituents remarked, I thought I was going to be calling the DMV, and I never imagined a government agency would be responsive like this—they're now going to get DMV-level service. No offense to anyone that works in the DMV.

Rep. Jahana Hayes (D-CT)SPEAKER_12

I think that leads me to my next question, because I want to discuss the additional strain that may be placed on benefit advisors if Congress does not act to extend the Affordable Care Act enhanced subsidies before they expire at the end of the year, throwing the healthcare marketplace into chaos. Among its many important responsibilities, EBSA oversees more than 500,000 benefit plans through the Affordable Care Act and other legislation. Due to staffing and funding cuts, I'm worried there may not be benefit advisors available to answer phones in regional field offices when people lose their ACA coverage and are looking for help to navigate the options available through their employer. Do you anticipate any— Mr. Khawar, again for you, do you anticipate any increase in demand for the services of EBSA benefit advisors to help employees navigate healthcare plans if Congress does not extend ACA subsidies?

Mr. Ali KhawarSPEAKER_13

Yes, absolutely. I mean, it's pretty simple. If your healthcare coverage is more expensive, then you're going to look at other options. That is absolutely going to mean that people are looking at their employer plans, they're thinking about these questions during open enrollment, they're contacting benefit advisors. One of the ways in which, in, I would say, a normal budget environment, EBSA might manage that is by conducting more outreach, going out into communities and doing events to kind of proactively educate people so that you don't get the calls on the back end. I don't know what the status is of those, but I would imagine that is one of the areas that will face pretty significant cuts, because if you can't afford people to just answer the phone, sending them out into communities and doing educational events on whether it's the ESOP-related stuff or health-related stuff, it's hard to find the money for that.

Rep. Jahana Hayes (D-CT)SPEAKER_12

A normal budget environment, what a novel concept. I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

gentlelady yields, and now I call on our chairman emeritus, Mrs. Foxx, North Carolina, for her 5 minutes of questioning.

Rep. Virginia Foxx (R-NC)SPEAKER_01

Thank you very much, Mr. Chairman. I appreciate that. Mr. Khawar, EBSA under the Biden-Harris administration engaged in burdensome and inefficient investigations that lasted for years and included repetitive document requests, staff turnover, and delayed findings. Endless and aimless investigations conducted by EBSA wasted precious time and resources, and they ultimately hurt American savers. The committee took note, Mr. Khawar. In September and November 2023, the committee requested a list of all open investigations, the duration of the investigation, the specific purpose of the investigation, and an explanation of all steps taken to close out persisting investigations. In response to these inquiries, DOL provided only general explanations, but not underlying data. In response to the November 2023 request, you provided a briefing to committee staff, but you did not provide any specific information on how long EBSA's stale investigations have been allowed to remain open. Your written testimony states there's a lack of significant evidence of problems that need to be addressed which would justify the the two EBSA reform bills that the committee is considering. Yet EBSA has withheld the information that would allow us to gain a full picture of the problems that need to be addressed. In addition, we have proof that EBSA secretly shared information from an investigation under what you are calling a, quote, common interest agreement, but which a court has condemned. Can you assure us that no one in the Biden-Harris DOL, whether career or political appointee, passed confidential information or provided assistance to outside attorneys when there was not a common interest agreement in place?

Mr. Ali KhawarSPEAKER_13

Thank you for your question, Representative. I mean, I believe this is exactly the subject of an OIG inquiry right now, and I think, importantly, what the IG is looking at is also going to involve hopefully the context of any information sharing. There are times when the department has had conversations with plaintiffs' attorneys, for example, in the context of a common interest agreement. It is typically where the department believes that it may be bringing a lawsuit itself and wants to protect any evidentiary privileges. Unlike in FOIA, where disclosure to one is disclosure to all, the benefit of the common interest agreement is that it allows the government to kind of maintain the privilege over its materials.

Rep. Virginia Foxx (R-NC)SPEAKER_01

Throughout my questioning, you've appeared to be very uninterested in the questioning, so I hope that what you're saying to us is something you've carefully thought out. We received information from EBSA over a year after our initial inquiry that a total of 54 cases were still open almost 8 years after they were opened. Worse, only 3 of these cases were being actively investigated, meaning the rest were still being held open without resolution. You are not in a position to tell this committee that there is no evidence to support additional transparency and oversight at EBSA. Sunlight is the best disinfectant. I yield back, Mr. Chairman.

Chairman Rick Allen (R-GA)SPEAKER_16

The gentlelady yields. Now I call on Ranking Member Scott of Virginia for his 5 minutes of questioning.

Full Committee Ranking Member Bobby Scott (D-VA)SPEAKER_03

Thank you. Thank you, Mr. Chairman. Mr. Khawar, we've been talking generally about investigations. Exactly what, what are you investigating? What violations or infractions are you investigating?

Mr. Ali KhawarSPEAKER_13

Thank you for that question. I might note at the outset that I have yet to see anyone provide any evidence when they're talking about timeliness and delays that the agency isn't actually trying to move these cases as quickly as possible. But to answer your question more directly, when we are talking about investigations, these are investigations into either civil or criminal violations. In the criminal context, the easy example I would give you, because it tends to, people remember it, is the Madoff incidents, where there was a Ponzi scheme, retirement savers, among others, lost a lot of money. EBSA was one of the agencies that was investigating that. In the civil context, it could be issues around your health insurance premiums not getting paid. They weren't transmitted to the health insurance company, and your insurance was canceled. It could be a claim that was denied. In the retirement context, it could be something as simple as money not making it to your 401(k), or as complicated as, we had issues, for example, a number of years ago where foreign exchange transactions that employee benefit plans were asking the financial services industry to carry out were being carried out on very, very poor terms. So the bank would take advantage of whatever the best rate was of the day, the customer would get the worst rate of the day, and that was not disclosed in any contracts. It was just kind of pure additional compensation that that financial entity was was getting for itself. EBSA put a stop to that practice.

Full Committee Ranking Member Bobby Scott (D-VA)SPEAKER_03

How do you select targets for investigation?

Mr. Ali KhawarSPEAKER_13

There are a variety of different ways. One source, one very important source, is actually the Benefits Advisor Program. A lot of referrals come from the benefits advisors when they're not able to informally resolve a case. They— This is

Full Committee Ranking Member Bobby Scott (D-VA)SPEAKER_03

where somebody's complaining to the benefit advisor.

Mr. Ali KhawarSPEAKER_13

Exactly.

Full Committee Ranking Member Bobby Scott (D-VA)SPEAKER_03

And it is apparent that something is going wrong.

Mr. Ali KhawarSPEAKER_13

Exactly. So the benefits advisors will try to resolve that, but they're not always able to. We, or the agency, has believed it's an important source because you have kind of— you have this person calling you, they're telling you something, and so there's, there's more than the level of suspicion or, or belief that you would have otherwise. But it's not the only source. There are reports that are filed with the government and other data sources that the agency has that it kind of mines to figure out where it can devote those resources to get something that's more effective.

Full Committee Ranking Member Bobby Scott (D-VA)SPEAKER_03

We've heard a lot about common interest agreements and working with private lawyers secretly. What does the EBSA law say about sharing information?

Mr. Ali KhawarSPEAKER_13

So there is a specific provision in ERISA that allows the department to share information with, essentially, with interested parties. Frequently, that's actually used to share information with the people that you're investigating, right, because you want to tell them information about the investigation. It is also used in the context of these common interest agreements. I will point out that when we're talking about the context, we should be, I think, and I'm hoping that the IG report does this, is to not just look at kind of a numerical, there are this many conversations with these kinds of parties, but to look kind of broadly at what's going on and understand what EBSA's role was in these things. I will tell you my own experience is that I talked far more to people in the defense bar than people in the plaintiffs' bar in the entire time of my tenure at EBSA.

Full Committee Ranking Member Bobby Scott (D-VA)SPEAKER_03

Is there anything that you supply that couldn't be gotten by the other side through discovery?

Mr. Ali KhawarSPEAKER_13

I think it's a question of when. My understanding is that for private plaintiffs, they don't— I've never brought a private litigation, but my understanding is that it can sometimes be difficult for them to get their hands on information, even when they're entitled to it by law. I'm thinking right now of some guidance that we put out because an insurance company had denied someone's claim. Claim. The attorney wrote to us and said, I'm not— they have tapes that they're using as the basis of the denial. They're not turning over those tapes to us. We put out some guidance that said that no, that is covered. But that's one example where people wouldn't be able to get information.

Full Committee Ranking Member Bobby Scott (D-VA)SPEAKER_03

And finally, we've heard that ESOPs are being investigated. What problems can workers have with ESOPs that would require EBSA to

Mr. Ali KhawarSPEAKER_13

So, the primary issue that EBSA looks at is really around the acquisition of the ESOP and the debt that the ESOP or the entity incurs. It's actually quite uncommon for EBSA to investigate ESOPs kind of on an ongoing basis. I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

gentleman yields. And I call on our conference chair, McClain, from Michigan, for your five minutes of questioning.

Rep. Lisa McClain (R-MI)SPEAKER_14

Thank you, Mr. Allen. Thank you all for being here. Really important. As a former business owner, I understand the importance. Mr. Golumbic, Mr. Banducci, and Mr. Bonham, my legislation, EBSA Investigation Transparency Act, requires the EBSA to report annually to Congress on investigations in enforcement status, right? The report, which will not include the names of any private parties, will include the office that opened the investigation and how long it has been open. I'm curious as how you think how this bill would help your organization's members determine whether they are being treated fairly or not, right? Because we have all these different regionals and every the sharing of information isn't actually there, and we all know some of these cases are open way longer than 36 months. So, I'd like to know whether how you think this legislation would help in terms of the employers. Mr., you can all answer if you'd like.

Mr. Lars GolumbicSPEAKER_08

Yeah, I, I think that level of transparency can be immensely helpful. There was you know, a number of questions today about the timeliness of investigations. Um, one issue— and I don't represent a trade organization, I'm just a private attorney— but often in investigations that we're involved in, um, there's no closing letter. So the department makes a decision, we're not— we're going to close the file, and my client never hears about it. So, you know, again, it's one level of transparency to make sure that everyone understands that there's an investigation and it's closed and closed with no results. That would certainly be helpful.

Rep. Lisa McClain (R-MI)SPEAKER_14

Why would anyone oppose that?

Mr. Lars GolumbicSPEAKER_08

I, I personally don't— do not know.

Rep. Lisa McClain (R-MI)SPEAKER_14

Thank you.

Mr. Andy BanducciSPEAKER_05

So, so, uh, thanks for introducing the legislation as well. We support it for, for a number of reasons. Um, from a transparency standpoint, obviously our member companies would benefit by being able to see, for instance, which regional offices are pursuing what kinds of cases. It helps us on the front end, our members on the front end, sort of identify those areas where maybe we really need to be, need to be looking. From, you know, not to get out of my lane, but from an appropriations perspective, I would think it would be absolutely vital for you to have all that information as well, in particular to to sort of address concerns about whether budget cuts— if there were additional funds, where those monies would actually be spent. I think that's— it's not obvious to me that they would all go to benefits advisors.

Rep. Lisa McClain (R-MI)SPEAKER_14

Right. It might help us, too, regionally, on which regions are doing best practices, and maybe we could learn from those regions, right? I mean, if we were transparent, we could say, oh, my goodness, this this region's doing really good. Maybe we could learn instead of trying to get stuff done, we could actually get stuff done. But I'll let you respond.

Mr. Jim BonhamSPEAKER_06

If I might, I would say we've heard a lot about how your bill would supposedly disproportionately tax the resources of EBSA, but I would have to say that issuing an annual report that inventories the open cases doesn't seem overly burdensome to me. You probably have on your own staff more open constituent casework that you have your staff track for you than EBSA does in the entire agency on an annual basis. So just the issuance of that type of a report from a management perspective, I would suspect our members would benefit because it would cause a lot of those cases to be closed when they otherwise would just linger on for years.

Rep. Lisa McClain (R-MI)SPEAKER_14

I'm also curious, would it— safe to say that the standards in which you hold your members to in terms of compliance, right? You know, I had a business. We actually have more people— had more people in our compliance department filling out forms and filing, you know, to, to be in compliance than we did actually have in customer service. But if we hold your members to certain standards, don't you think it would be safe to say to hold the government agencies and all these agencies to the same standard?

Mr. Jim BonhamSPEAKER_06

Yes.

Rep. Lisa McClain (R-MI)SPEAKER_14

Well, what a concept, right? Anyone disagree with that? That—

Mr. Andy BanducciSPEAKER_05

no, it's, it's in fact, you know, part of the, the sort of feedback that we've gotten from our members is that particularly in these investigations, for example, the turnaround in document requests. Yeah, right. Provide everything right now.

Rep. Lisa McClain (R-MI)SPEAKER_14

Right. I'm the employer. I got to give you everything right now. But once I give it to you, well, you can take as long as you want. It seems a little unfair, doesn't it?

Mr. Jim BonhamSPEAKER_06

It does. Yeah. I would add to that that there is an ongoing buildup of cost for the employers as well. Sure. Because we have to answer every single year, Do you have any open cases or investigations at the Department of Labor? when we fill out our insurance forms.

Rep. Lisa McClain (R-MI)SPEAKER_14

Wouldn't it make sense to hold the, the agency accountable too?

Mr. Jim BonhamSPEAKER_06

Sure.

Rep. Lisa McClain (R-MI)SPEAKER_14

Thank you.

Chairman Rick Allen (R-GA)SPEAKER_16

The gentlelady yields. Now I call on Ranking Member DeSaulnier of California for your questions.

Ranking Member Mark DeSaulnier (D-CA)SPEAKER_17

Thank you, Mr. Chairman. And to the last comments before the conference chair leaves—she's not listening—happy to happy to follow up in a in a dialogue consistent with my opening statements. These hearings drive me crazy too, as a professional healthcare patient for the last 10 years and as a former small business owner, and we've had these conversations multiple times, the Chair and I, this is something that just seems so obvious. And unfortunately, our current atmosphere in the Congress doesn't bode well that we will actually come to conclusions. I would say that waiting for the IG report would be very helpful, and hopefully the Inspector General will give us a a real objective way that we can make this beleaguered agency work, given that we have one investigator for every 17,500 plans. So, Mr. Khawar, give a moment here to talk about the cuts and efficiencies, and I I would be interested in hearing from private employers. If you're not going to fund a program to make it efficient, why would you be surprised it doesn't work well? So talk about the budget cuts, and then if you could talk about this—it was Brandeis who said sunshine is the best antidote—but how do we get to that point where it's efficient, so everybody has it? This nefarious idea that somehow the employees are getting information, and as you said to Mr. Scott comments, that's not your history. You're trying to help with a settlement that is both efficient and is acceptable to both parties. So speak to both: cutting the budget—and then we added money in the No Surprises Act, so that helped the budget—speak to the budget problems, but then this accusation from the majority that there are nefarious things going on that benefit the one side as opposed to working with both sides to a mutually agreed, acceptable settlement and conclusion.

Mr. Ali KhawarSPEAKER_13

Thank you. I will do my best in the remaining time to answer all of that. On the budget cuts, I think it is ironic to have a conversation about additional reporting at a time when the agency's personnel has been cut so much, and the budget cut is important to understand in the context of the personnel cuts that it creates. If the agency can only support 640 employees all told, which is what the FY26 budget request is for, that is not just 640 investigators. That's the investigators, that's economists, that's reg writers, that's benefits advisors. That's also people that handle personnel, travel, those kinds of things. There's an accounting function. It is everything that the agency does in 640 people. And at its peak, the agency had close to 1,000. So it is, in that context, tiny for the obligations that it has, and that the timeliness problem is going to get worse. And I just wish the conversation we were having, it's not coming at a point where the agency's been given a fair chance to do everything that it can to close investigations in a timely manner, for example. Instead, it's been resource-starved. It's been trying to figure out how to make do with less and less and less. And one function is that investigations are going to take longer. That is going to be another consequence of the budget cuts. On this issue of the trust and the relationship between the agency and its various stakeholders, I have a few thoughts. First is, just as Mr. Golumbic observed in his opening statement that he doesn't view the agency as playing the same role that it used to, I would say the same is true of the private defense bar in particular, which has become over the years far more antagonistic. Another cause of untimely investigations is that the private defense bar increasingly tells their clients that they shouldn't cooperate with EBSA, they shouldn't help us get to the bottom of it. What we really want to do is get in, get the documents, figure out the problem, fix it, move out. The agency's goal is to solve problems voluntarily. It's in no one's interest for the agency to start bringing lawsuits on everything, and what we want to try and do is have an efficient process that works for plan sponsors, works for the agency, but importantly also works for participants and makes sure that their rights are actually being realized.

Ranking Member Mark DeSaulnier (D-CA)SPEAKER_17

Thank you. I yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

All right, the gentleman yields, and, uh, I think we have no more questions. Uh, I want to, uh, now recognize the— uh, well, first I'll give my closing statement, and then— well, actually, the ranking member gives his closing statement. Would you like to close out your, your side? You did a good job on questions, by the way.

Ranking Member Mark DeSaulnier (D-CA)SPEAKER_17

Oh, thank you, Mr. Chairman. Collegiality. Maybe it'll come back, Mr. Banducci, and then you can come back as well. Well, I do appreciate that. And although we've had some serious disagreements, this is something I think it would really be constructive, Mr. Chairman, to have a conversation about. With the increase in denials that we had hearings about in this subcommittee over the last couple sessions, your predecessor Mr. Good, who is no longer a member of Congress, we actually worked to try to make corrections in a bipartisan way. But it's so important if people are going to be not be able to access Medicaid, and we have more denials in the employer-employee section. Having been on the governing body of a public hospital, you know where people are going to end up: they're going to end up in the emergency room with critical care. So if we don't get this right, it affects the whole system. If you cut police, unfortunately, there are going to be people who do bad things. You've got to have the appropriate level of funding so that people like Mr. Khawar can work in good faith with both parties. So I would just say, Mr. Chairman, there's an opportunity here. I'm afraid that ethical behavior, more and more in our culture, politically and business-wise, is making it harder for us to get people to do the right thing without regulators. And just consistently underfunding and demeaning public sector employees who are doing a good job doesn't help the situation. And from my perspective, as opposed to our conversations about our experience in the business sector, it's eroding the level of trust. And in this case where you've got denials going up and the efficiency of the system unfortunately not working, it would be really a wonderful opportunity for us to work together to see if we could fix some of the challenges we have. And just defunding it and blaming the people who are left, I don't think speaks well to our institution as trying to engage in problem solving. Mr. Banducci, Mr. Khawar, I have the feeling in a former setting the two of you could go into a room and negotiate a lot of this for everybody's benefit, particularly all of the American taxpayers, consumers, and high-road business owners, both public and private. So with that, Mr. Chairman, these bills don't solve the problem. I would argue that it would be better for us to take a deep breath, wait for the Inspector General's report, and engage in constructive bipartisan heavy work of legislating in good faith to see if we can fix the situation before we make it worse. And I will yield back.

Chairman Rick Allen (R-GA)SPEAKER_16

Okay, I thank the ranking member, and yes, I agree, we need to get to the bottom of this problem. A couple of things that I heard is obviously the insurance companies are a big problem. And of course, somehow in this country, we have got to give healthcare back to our providers and and those who are actually treating people for these sometimes fatal decisions. And so that's another matter. But going forward, the Employment Benefits Security Administration, it's a small agency with vast jurisdiction, and in these conversations, it kind of reminds me the IRS, is you're guilty until you prove yourself innocent. I don't think that's exactly the the jurisprudence in our nation. You're supposed to be innocent until you're proven guilty. So we've got it backwards in many instances here. It's important for this agency to use its investigative resources wisely and efficiently, and, it needs to be open, no behind-the-back, behind-the-scene activity. Employers sponsor retirement plans voluntarily and EBSA should are voluntary, and and EBSA should work with employers to promote and protect employee retirement savings. Republicans are committed to protecting retirement savings of workers, retirees, and their families. As we learned today, government agencies that resist oversight can run amok and their actions can harm workers and job creators. Under the Biden-Harris administration, EBSA teamed up with class action plaintiff attorneys to bypass court rules on fair litigation. That is a black eye, and it needs to be dealt with. The legislation we discussed today calls for transparency. Sunlight is the best disinfectant. And Ranking Member, I look forward to working with you and all the members of this committee to providing a workable solution that secures workers' retirement. And with that, I yield back. And I would like to thank all of our witnesses again for taking the time to testify before the subcommittee today. And without objection, being no further business, the subcommittee stands adjourned.