March 14, 2017

Mr. Gary Cohn Mr. Andrew P. Bremberg Mr, Edward C. Hugler
Director Director Acting Secretary

National Economic Council Domestic Policy Council U.S. Department of Labor n3
The White House The White House AW
1600 Pennsylvania Avenue, NW 1600 Pennsylvania Avenue, NW

Washington, DC 20500 Washington, DC 20500

Re: Department of Labor Disability Claims Regulation

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Dear Director Cohn, and Director Bremberg, and Acting Secretary Hugler: “i

We write to urge you to quickly rescind the U.S. Department of Labor’s (“DOL”) final rule amending
disability claims procedures (81 Fed Reg. 92316 (Dec. 16, 2016), the “Regulation”) under the Employee
Retirement Income Security Act of 1974 (“ERISA”). The Regulation is inconsistent with congressional intent
because it inappropriately applies the Affordable Care Act claims procedures to disability plans and will

compromise working Americans’ ability to protect themselves from the financial risk of a disabling illness or
injury.

Disability insurance provides working Americans with crucial income protection from unexpected
disability due to illness or injury. Access to disability insurance depends on affordability, which is directly
affected by regulatory, administrative, and litigation costs. Employers voluntarily provide disability insurance
plans, and they are extremely sensitive to policy cost increases. Additionally, recent data indicates that workers
typically underestimate their risk of incurring a disabling illness or injury and go without the income protection
they need, This means that any additional burdens placed on the voluntary empfoyer system must clearly

-- outweigh the costs they impose. Otherwise, employers may reduce and/or eliminate altogether disability
income coverage for their employees, and fewer employees will have adequate income protection should they
become unable to work due to sickness or accident.

There can be no doubt that the Regulation very significantly increased the administrative burden on
employers and carriers and that this additional] burden will significantly increase the cost of providing disability
income protection. For example, the Regulation — —

« Complicates the processing of disability benefits by imposing new steps and evidentiary burdens in
the adjudication of claims, and forcing plans to consider disability standards and definitions different
— from those of the plan;

e Imposes these new complications without allowing any additional time in which to consider the
claim and explain the ultimate decision to the claimant;

« Explicitly tilts the balance in court cases against plans and insurers, undoing a statutory and
regulatory scheme that has worked for decades; and

« Creates perverse incentives for plaintiff's attorneys to side-step established procedures and clog the
courts for a resolution of benefit claims.


Because of these new burdens, fewer Americans will have access to disability insurance. The practical
result is that more families and taxpayers will have to bear the financial risk of a disabling illness or injury.
Additionally, the vast majority of plans provide very helpful return-to-work assistance to help disabled
individuals return to the labor force. Without access to disability income coverage in the employment context,
many individuals who become disabled wilt not be able to avail themselves of this type of retum-to-work
assistance, with the result being increased reliance on, and cost to, related state and federal public programs
(such as federal Social Security Disability Insurance).

The Regulation is particularly probiematic because DOL failed to demonstrate that there are existing
problems associated with disability claims adjudication that require regulatory action. Disability insurance
claims procedures are highly regulated with many state and federal consumer protections, and disability
claimants already have a full and fair claims review process that balances the rights of claimants with the need
for operational and cost efficiency. Despite the existing consumer protections, DOL elected to apply the
Affordable Care Act claims procedures to disability plans. That is inconsistent with the Congressional intent
behind the Affordable Care Act and ERISA.! The Regulation is also inconsistent with DOL’s long-standing
guidance distinguishing disability and medical claims.

For the sake of working Americans and their families, we urge the Administration to take immediate
action to rescind the Regulation so that people will continue to have access to affordable, high quality disability
income protection. We would appreciate the opportunity to meet with you at your earliest convenience to
discuss our concerns. Michael Kreps of the Groom Law Group (202) 861-5415) would
be happy to coordinate such a meeting.

Sincerely,

American Benefits Council
American Council of Life Insurers
America’s Health Insurance Plans
Cigna

The ERISA Industry Committee
Financial Services Roundtable
Sun Life Financial

Unum Group, Inc.

4 Congress specifically intended for ERISA to “to create a system that is {not] so complex that administrative costs, or
litigation expenses, unduly discourage employers from offering [ERISA] plans in the first place.” Conkright y, Frommert,
130 S. Ct. 1640, 1644 (2010) (quoting Varity Corp. v. Howe, 116 8. Ct. 1065 (1996).

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