The Proposed Delay Of The Effective Date Of The Final Rule. The U.S. Department of Labor (the “DOL”) has proposed a delay for ninety (90) days – through April 1, 2018 – of the applicability of the Final Rule which amends the requirements in the ERISA claims procedure regulations that apply to claims for disability benefits. The proposal is here.
The Final Rule was published in the Federal Register on December 19, 2016. It is currently scheduled to apply to claims for disability benefits under ERISA-covered employee benefit plans that are filed on or after January 1, 2018.
Expanded Requirements. The expanded requirements pertaining to disability claims include:
- Benefit denial notices must contain a more complete discussion of why the plan denied a claim and the standards it used in making the decision.
- Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents. Benefit denial notices also must include the internal rules, guidelines, protocols, standards, or other similar criteria of the plan that were used in denying a claim, or a statement that none were used.
- Plans may not deny benefits on appeal based on new or additional evidence or rationales that were not considered when the benefit was denied at the claims stage, unless the claimant is given notice and a fair opportunity to respond.
- Plans must ensure that disability benefit claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision.
- If a plan does not adhere to all claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the plan, unless the violation was the result of a minor error and other conditions are met. This allows the claimant to proceed to court immediately, and the court will not provide any deference to a decision by the plan administrator when reviewing the case.
- Rescissions of coverage, including retroactive terminations due to alleged misrepresentation of fact (e.g., errors in the application for coverage), must be treated as adverse benefit determinations, thereby triggering the plan’s appeals procedures.
Questioning The Final Rule. Following publication of the Final Rule, various stakeholders and members of Congress asserted that it will drive up disability benefit plan costs, cause an increase in litigation, and in so doing impair workers’ access to disability insurance benefits. Pursuant to Executive Order 13777, the DOL has concluded that it is appropriate to give the public an additional opportunity to submit comments and data concerning potential impacts of the Final Rule. The DOL will carefully consider the submitted comments and data as part of its effort to examine regulatory alternatives that meet its objectives of ensuring the full and fair review of disability benefit claims while not imposing unnecessary costs.
The DOL accordingly seeks public comment on the proposal to delay the Final Rule, in order to solicit additional public input and examine regulatory alternatives. If, based on the comments received, the DOL decides that it will implement the proposal, the amendments made by the Final Rule on December 19, 2016, would become applicable to claims for disability benefits that are filed after April 1, 2018, rather than January 1, 2018.