Department of Labor Proposes Lowering Bar for ERISA Disability Claims, Requests Public Comments

[Update 1/15/16: instructions for submitting comments here and additional guidance for your comments here]

I am happy to report a rare positive development for disability claimants, one that is important to get behind. As most of you know, the rules under the Employee Retirement Income Security Act (“ERISA”) regarding employees’ long-term disability (“LTD”) claims are abysmal; the deck is clearly stacked against claimants. It seems, that the U.S. Department of Labor (“DOL”) has taken notice and is attempting to level the playing field somewhat. On Wednesday, November 18, 2015, the DOL published proposed regulations, which, if and when adopted, would provide employees who claim disability benefits under their LTD plan with additional procedural protections and safeguards that would afford some claimants benefits that would otherwise have been improperly denied, as happens all too often. I will discuss the proposal in more detail below, but here is the bottom line: While there still won’t be punitive damages—in my opinion, the most needed change under ERISA—or the right to a jury trial (Neither are in the purview of the DOL, but would require legislative changes to the statute instead.), the proposed changes would impose significant additional restrictions on LTD plans that would make it more difficult for them to improperly deny LTD benefits, which they are so highly motivated to do for obvious financial reasons.

In order for the DOL to move forward with enacting the proposal, it is crucial that it receive comments from the public in support of the proposed changes. Even just a few dozen public comments could tip the scale. If there is no expression of support from the public, that will substantially decrease the likelihood of the proposal being put into place because it is a near certainty that disability carriers and representatives of employer organizations will provide comments opposing these regulations, lobbying to retain the status quo that favors them so heavily. The easiest way to provide comments is by email to Comments have to include “RIN-1210-AB39” (best placed (also) in the subject line) and the agency name, “Department of Labor.” Comments need to be submitted within 60 days. Please note that all comments will be published online without redactions; therefore, do not include any sensitive information.

Unlike HHS and its component agencies, such as CDC and NIH, the DOL seems genuinely interested in effecting desperately-needed change. Citing the “aggressive posture” of LTD insurers and plans, the agency took the initiative to attempt to strengthen the current procedural requirements imposed on LTD plans “[b]ecause of the volume and constancy of litigation in this area….” In fact, the department realized that “disability cases dominate the ERISA litigation landscape today.” Therefore, the DOL “recognized a need to revisit, reexaime, and revise the current regulations in order to ensure that disability benefit claimants receive a fair review of denied claims….,” as “insurers and plans looking to contain disability benefit costs are often motivated to aggressively dispute disability claims.” As opposed to comments sent to HHS or its component agencies, which are completely ignored as a matter of course, comments to the DOL on this matter have a real chance of making a meaningful difference for future claimants and those currently in the claims process. Therefore, in addition to input from individuals, this strikes me as an excellent and unprecedented opportunity for our advocacy organizations to potentially effect some meaningful change. It’s a low-hanging fruit.

As a matter of background, employer-sponsored LTD plans are required, under ERISA, to have in place so-called claims procedures that set forth the process for disabled employees to make claims and appeal the denial of claims under an LTD plan. These requirements have been in place since ERISA was implemented in the mid-1970s. Recently, comparable rules for health plans were strengthened as a result of provisions in the Affordable Care Act (“ACA” or Obamacare, as it has come to be known). What the DOL is proposing with these new disability plan claims procedure rules is to apply many of the stricter ACA health-plan rules to LTD claims.

Note: These proposed regulations do not apply to Social Security disability claims.

Here is a summary of the key aspect of the proposed regulations:

  1. Independence and impartiality—avoiding conflicts of interest.

The proposal explicitly requires that plans ensure—in the interest of a “full and fair review”—that all disability benefit claims are adjudicated in a manner designed to ensure independence and impartiality of the persons involved in making the decision. More specifically, the proposal requires that claims adjudicators and so-called “medical experts” utilized by the plan not be hired, compensated, terminated or promoted based on the likelihood of their denying disability benefits or supporting the denial of such benefits. Tying bonuses for claims adjudicators to the number of denials would not be permissible anymore. Furthermore, the hiring of a medical expert based on his or her reputation for outcomes in contested cases rather than based on his or her expertise would no longer be allowed. I predict that this provision would knock out pretty much every “medical expert” currently engaged regularly by LTD insurance companies because most of them are squarely in the insurance industry’s pocket. This new rule would be much more than an inconvenience for the insurance industry; it could change the game and is, thus, a crucial potential improvement.

  1. Improved disclosure to claimants

Adverse determination of claims would be required to contain a discussion of the decision, including the basis of disagreement with a disability determination by the Social Security Administration or a treating physician. This would constitute a big shift, as LTD benefits are often denied despite the fact that Social-Security benefits have been approved and/or in disregard of the opinion of the treating physician, with no or little explanation of the disagreement. Adverse determination notices would also have to contain the internal rules, guidelines, protocols, standards or similar criteria of the plan that were used to deny the claim. Further, a notice of claim denial would have to contain a statement that the claimant is entitled to receive, at that stage, all relevant documentation supporting denial of the claim. Currently, this is required only at a later stage, upon the denial of benefits on appeal. These new provisions would aid in claimants fully understanding the reason for a denial and meaningfully assessing the likelihood of success of an appeal.

  1. Right to review and respond to new information before final decision is made

Claimants must be given the right to review, free of charge, and respond to new evidence or rationales developed during the appeal process and not only after the claim has been denied on appeal. The evidence would have to be made available as soon as possible and sufficiently in advance of the deadline and the plan would be obligated to consider the claimant’s evidence and written testimony in response to the plan’s new information.

  1. Changes to technical rules regarding the requirement that claimants go through all the plan’s procedural requirements (in legalese, “exhaust administrative remedies”) before taking their claim to court

These changes generally allow a claimant to proceed straight to court without first jumping through more hoops on the administrative level when the plan has not followed all the procedural requirements of the regulations and also provide that the reviewing court consider the matter “de novo” in those cases where the plan has not followed the correct procedures. “De novo” means that the court gives no deference to the plan’s determination denying the claim; instead, it sets aside the plan’s decision and uses its own judgment based on its own review of the evidence. It is a much more favorable standard for claimants than the usual abuse-of-discretion standard under ERISA, which merely reviews whether the plan’s decision was arbitrary and capricious.

  1. Culturally and linguistically appropriate notices

The added language safeguards would require that adverse-benefit determinations include a prominent one-sentence statement in the relevant language about the availability of language services if the claimant resides in a county where at least 10% of the population are literate only in the same non-English language.


There are other aspects of the proposed regulations, but those described above are the most significant. Taken together, they should provide ammunition to those whose disability claims have been denied by the insurance carrier administering the applicable LTD plan.

This quote from preamble of the proposal sets out an overview of all the proposed changes:

The major provisions in the proposal largely adopt … provisions that seek to ensure that (1) claims and appeals are adjudicated in a manner designed to ensure independence and impartiality of the persons involved in the making the decisions; (2) benefit denial notices contain a full discussion of why the plan denied the claim and the standards behind the decision; (3) claimants have access to their entire claim file and are allowed to present evidence and testimony during the review process; (4) claimants are notified of and have an opportunity to respond to any new evidence reasonably in advance of an appeal decision; (5) final denials at the appeals stage are not based on new or additional rationales unless claimants first are given notice and a fair opportunity to respond; (6) if plans to do not adhere to all claims processing rules, the claimants is deemed to have exhausted the administrative remedies available under the plan, unless the violation was the result of a minor error and other specified conditions are met; (7) rescissions of coverage are treated as adverse benefit determinations, thereby triggering the plan’s appeals procedures; and (8) notices are written in a culturally and linguistically appropriate manner.

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28 Responses to Department of Labor Proposes Lowering Bar for ERISA Disability Claims, Requests Public Comments

  1. Anthony brown says:

    STRONGLY suggest you contact Linda Nee directly

    I know of no one more knowledgable in this area

    Former Ubuntu claims handler who now assists those of us that got screwed by disability insurers

    You 2 probably have a lot of topics that can be of assistance to each

  2. Pingback: Changes to ERISA – Asking For Input – A Must Read | Lindanee's Blog

  3. lovesrealitytv says:

    Linda- would you please send an email to all DCS clients explaining the importance of this info as some may miss the post.
    Your biggest fan!

  4. Ess says:

    This truly would be a most excellent change … very helpful to persons that need and should be helped with disability — rather than getting shafted by disability insurers

  5. Ess-OriG says:

    These proposed changes would be most welcome progress to help disabled persons in need — rather than the status quo where they get the shaft by the disability insurers.

  6. ERISA was intended to protect workers from losing their pension funds during a takeover by another company. Insurance companies quickly re-interpreted that to say employee suing to get insurance benefits they feel they were wrongly denied were a threat to the pension fund. So what was intended to protect labor got turned around instead to protect insurance (the administrators of the insurance plans).

    Before ERISA, states had their own insurance regulatory agencies. If you contested a decision, you would go to a jury trial and the issue was whether the decision met the “reasonable man” standard. After ERISA, it became a federal case (haha) – but there was very little on the federal level in the way of regulation. You no longer could get a jury trial – it was a trial by a single justice who was most likely appointed by somebody named Bush. AND the “reasonable man” standard was discarded for “a deliberate pattern of attempt to deceive.”

    In addition, what was happening was that the courts were using estate law, assuming that the insurance companies were acting in the best interests of the estate and that employees were challengers to that. A very interesting paper (that Bob brought home one day) I thought gave a new look to that – and who knows, may have been one reason behind the new changes. Here’s the link to that paper:

    Click to access discandal.pdf

  7. Pingback: Department of Labor Proposes Lowering Bar for ERISA Disability Claims, Requests Public Comments | All Things Chronic

  8. Rivka says:

    This Thanksgiving, I am thankful for Jeannette Burmeister! — Rivka

  9. ahimsa_pdx says:

    Thank you for alerting folks about this important issue!

    I would like to send a comment to the DOJ but I’m not sure I can come up with any wording that would help. I understand the general idea that the changes would be a good thing but I’m having trouble with brain fog and absorbing anything specific. It’s been a very long time since my own ERISA LTD claim.

    Is there a template somewhere for comments? Or a list of bullet points?

    I’m assuming that comments are still needed?

    PS. I found a place online with a comment button that leads to a form. Alternative to email, I think.!documentDetail;D=EBSA-2015-0017-0001

  10. lovesrealitytv says:

    Will this be on a state level and able to be shot down by the DOI of each state or a federal mandate to protect all? You really should collaborate with Linda Nee. She has been my consultant for years and my claim would have been denied if I hadn’t found her info on Google. Keep up your excellent work!
    Much appreciated!!!!!

  11. lovesrealitytv says:

    I have an idea. Please write a general email which can be copied by many others. Sick people have so many problems; if we work together much can be accomplished.
    Thank you.

  12. lovesrealitytv says:

    Also, something must be done to prevent these claim vulture attorneys from taking 40% of the back awarded benefit and lifetime forward fees. The key is to hire a consultant at the onset to prevent denials.

    • Christina Cooper says:

      First, thank you Jeanette for all that you do in behalf of ME patients! Next, lovesrealityTV mentioned hiring a “consultant” and I’m wondering where one would go about finding one in order to do so. It’s too late for me now I had Prudential Long Term Disability insurance and they paid me for two years, but in August 2015 they notified me I was no longer disabled! Well, that was a real shock to me since I’m still confined to a reclining chair after getting the flu December 24, 2009! I was an RN working full-time and bicycling 200 miles a week before I was shot down in my tracks by ME, a condition I had previously never heard of! My doctor telling them I was totally disabled and my detailed letters describing what I’m able to do were completely disregarded. I live in Southern California and just hired a lawyer who as you said will take nearly half of my future and the retroactive payments due to me! I was mortified by the amount lawyers take after struggling through talking with two different companies! It’s an robbery and an outrage to take so much from someone in such desperate need! I was supposed to be consoled by the fact that without a lawyer I would receive nothing! I’m not consoled, I’m the one who suffers pain daily, is too weak to even leave home and can barely think to follow a TV program at times! I have the burden of paying a caregiver because I can’t even go to a grocery store and only dream of cleaning my own home, but just taking a bath exacerbates my condition so severely that I often go without one! I’m the one who paid into the plan expecting it to pay me in the event I couldn’t work, it is the most despicable, dirty underhanded crime yet they sit in their self righteous castles and get away with it! I will be sending my comment requesting justice in, that’s for sure!

  13. Jeannette, thanks for bringing this to our attention. I’m attempting to write a blog to give this a push before the deadline. For #4 – does that mean that the court would end up making it’s own determination if you’re disabled or not?

  14. Thanks! Question – I looked online for public comments but didn’t see any. Do you think that they’re being held until the deadline, or that there are literally no comments?

    • My understanding is that the DOL practice is to defer publication of any comments until after the public-comment period has expired. I believe that it is possible to obtain the public comments once the comment period has ended, but that may take a specific request to the DOL. When the DOL issues its final regulations, they do refer to public comments in the preamble to those final regulations. The proposed regulations do list a contact person at the DOL and a phone number.

      From the proposed regulations:

      “For further information contact: Frances P. Steen, Office of Regulations and Interpretations, Employee Benefits Security Administration, (202) 693-8500. This is not a toll free number.”

  15. Pingback: ERISA Proposed Disability Regs: Instructions and Sample for Public Comments | Thoughts About M.E.

  16. Pingback: Deadline for Comments on Proposed ERISA Disability Regs Fast Approaching : Additional Guidance | Thoughts About M.E.

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