Parties seek stay of deadline for fiduciary rule appeal decision

The Office of the Solicitor General has not decided whether to appeal a stay freezing the Department of Labor’s latest attempt to expand fiduciary duty.

Texas Judge Jeremy D. Kernodle issued the stay on July 25 in a lawsuit brought by the Federation of Americans for Consumer Choice.

Attorneys for both plaintiffs and defendants jointly asked Kernodle to extend the stay to the government’s “deadline to answer or otherwise respond.” The parties agreed to file a status report on Sept. 27, according to a status report filed Friday.

Judge Kernodle granted the request in an order filed Monday.

Parties generally have 30 days to appeal a civil case in federal court. However, that deadline becomes 60 days when one of the parties is the federal government.

“The United States may not pursue an appeal without authorization by the Solicitor General,” the status report reads. “Once this decision is made, the parties can more efficiently confer regarding next steps in this case. The parties agree that it would conserve the resources of the parties and the Court to address next steps in this case after Defendants decide whether to take an immediate appeal.”

Two lawsuits

The DOL Retirement Security Rule was published April 25 in the Federal Register. It extends a fiduciary standard of care to most annuity transactions. FACC is joined by several independent insurance agents in the lawsuit filed in the Eastern District of Texas.

Judge Reed O'Connor granted a second stay in a second lawsuit filed in the U.S. District for the Northern District of Texas.

Plaintiffs in the Northern District case are: The American Council of Life Insurers (ACLI), National Association of Insurance and Financial Advisors (NAIFA), NAIFA-Texas, NAIFA-Dallas, NAIFA-Fort Worth, NAIFA-POET, Finseca, Insured Retirement Institute (IRI), and National Association for Fixed Annuities (NAFA).

The rulings mean the DOL's latest attempt to extend fiduciary duty to insurance agents will not take effect Sept. 23 as originally scheduled.

After the stays were granted, a DOL spokesperson said regulators continue to believe in the strategy.

"When investors get advice from a trusted financial professional about their retirement savings, they expect that advice to be in the customer’s best interest, not the financial professional’s," the spokesperson said in a statement. "This rule makes that a reality. The Department continues to believe that this rule is essential to ensuring that retirement investors are protected."

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.