evidence must be provided as soon as possible and sufficiently in advance
of the date on which the notice of adverse benefit determination on review
is required to be provided under paragraph (i) of this section to give the
claimant a reasonable opportunity to respond prior to that date. Such new
evidence or rationale must be provided to claimant before the decision
on appeal is issued and the claimant must be afforded up to 60 days to
respond. The time to render_a determination on review will be
suspended while the claimant responds to the new evidence or
rationale. After receiving the claimant’s response to the new evidence
or rationale or notification that the claimant will not be providing any
response, the plan will have whatever time was left on the original

appeal resolution time period or 30 days, whichever is greater, in
which to issue its final decision.

I. Notice of Right to Counsel

Although the EBSA has not chosen to regulate about this, it should do so. Very often I
am approached by prospective clients about pursuing litigation after they have exhausted
their pre-suit appeals without the assistance of counsel. These claimants frequently do
not request their claim files prior to submitting their appeal and often do not submit new
evidence in support of their appeal, not realizing that they may not have the opportunity
to supplement the record in litigation. When I ask, “Why didn’t you hire an attorney?”,
they often respond, “It didn’t occur to me,” or “The insurance company told me I didn’t
need one.” I then ask, “Would you go to a Social Security hearing without an attorney?”
to which they always respond, “No.”

I propose that the DOL adopt a regulation that benefit denials must advise claimants of
their right to hire an attorney to represent them in the appeal phase. The Social Security
Administration does __ this. (See POMS Manual DI = 32594.035,
https://secure.ssa.gov/apps10/poms.nsf/Inx/0432594035). There is no reason to hide this
right from claimants, particularly if plan administrators are to enjoy the same deference
on review as administrative law judges.

Thank you for your consideration.

Very Truly Yours,

hel

Martina B. Sherman


(8) In the case of an adverse benefit determination on review with respect to a
claim for disability benefits, the notification shall be provided in a culturally and
linguistically appropriate manner (as described in paragraph (p) of this section).

I. Responding to New Evidence or Rationales During the Appeal Proceedings

One frustration I repeatedly encounter in my practice is when a plan procures a new medical or
vocational report during the course of the appeals proceedings but refuses to disclose that report
to the claimant until the conclusion of the appeal. Another less frequent but equally frustrating
occurrence is when the plan administrator relies on a new rationale to deny benefits in the appeal
determination.? This “sandbagging” of claimants is highly prejudicial in view of the fact that
claimants often may not supplement the record in litigation. The DOL’s proposed change offers
some assurance that a claimant can contribute his or her relevant evidence to the record that the
court will review.

Plans have voiced the concern that the appeals proceedings will drag on unnecessarily, thus
unduly burdening the plan, but those concerns are unfounded. Claimants have mortgages to pay
and families to feed; they are not interested in unnecessarily prolonging appeals proceedings. At
the same time, the type of evidence claimants often need to respond to new evidence or
rationales by the plan may require hiring an expert such as another physician, psychologist, or
vocational consultant. These professionals are not always readily available for quick turn-
arounds and, depending on the new information such experts are responding to, they may need
weeks to evaluate the new information. For this reason, claimants should have at least 60 days to
respond to new evidence or rationales provided by the plan on appeal. Moreover, the period for
the decision on review to be completed should be tolled during this 60-day period. When the
claimant has responded, the plan administrator should be allowed whatever time was left under
the existing regulations or 30 days, whichever is longer, to issue its determination on review.
This rule should apply whether the new information is a new “rationale” or new “evidence.”

Accordingly, I suggest the following amendment to the proposed regulation (new language
indicated by bolding and underlining):

2560.503-1(h)(4)(ii) [proposed regulations]

(ii) Provide that, before the plan can issue an adverse benefit
determination on review on a disability benefit claim, the plan
administrator shall provide the claimant, free of charge, with any new or
additional evidence or rationale considered, relied upon, or generated by
the plan (or at the direction of the plan) in connection with the claim; such

2 In the Seventh Circuit, such “post hoc” rationalizations are prohibited unless the claimant is provided an
opportunity for further review. See Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 696 (7th Cir. 1992) (“A post hoc
attempt to furnish a rationale for a denial of . . . benefits in order to avoid reversal on appeal, and thus meaningful
review” is not acceptable.) However, this additional round of appeals is inefficient and unnecessarily prolongs the
proceedings.

4


DeBofsky & Associates, P.C.

200 West Madison Street, Suite 2670, Chicago, Il. 60606
Phone: (312) 561-4040 + Fax: (312) 929-0309 * Toll Free: (855) LTD-LAW1 (855-583-5291)
Web: www.debofsky.com

Mark DeBofsky
Martina Sherman Marie Casciari William Reynolds

January 19, 2016

Office of Regulations and Interpretations,
Employee Benefits Security Administration
Room M-5655

U.S. Dept. of Labor

200 Constitution Avenue NW

Washington D.C. 20210

VIA EMAIL
Re: Claims Procedure Regulations for Plans Providing Disability Benefits
RIN No.: 1210-AB39

Regulation: 29 C.F.R. §2560.503-1
Dear Assistant Secretary Borzi:

I write to offer comments on the proposed regulations for amending the claims procedure
regulations applicable to disability benefit plans. I am interested in the content of these
regulations because I am an attorney whose practice is focused on the representation of claimants
in ERISA-governed disability benefit disputes.

Although I have been a practicing law for only four years, I am well poised to comment because
I have represented over one hundred individuals in lawsuits and/or pre-suit appeals for disability
benefits under the ERISA statute. Most recently, I helped litigate Fontaine v. Metro. Life Ins.
Co., 800 F.3d 883 (7th Cir. 2015), upholding the validity of Illinois’s ban on discretionary
language in group policies of health disability insurance. We were fortunate to have the DOL
provide amicus support in that case. In addition, I have drafted amicus briefs in support of the
plan participants in Montanile v. Bd. of Trustees of the Nat'l Elevator Indus. Health Benefit Plan,
No. 14-723 (U.S. cert granted Mar. 30, 2015) and Rochow v. Life Ins. Co. of N. Am., 780 F.3d
364 (6th Cir. 2015) (en banc), and I am a frequent speaker on disability benefit claims at
conferences of the American Bar Association Employee Benefits Committee.

Whether by design or through decades of judicial interpretation, the ERISA statute presently
provides fewer protections to disability claimants than they enjoy under state law. Participants in
disability plans subject to ERISA are denied jury trials, compensatory and punitive damages, and
discovery outside the so-called “administrative record.” Very often, plan participants are
confronted with a standard of review that gives deference to the decision of the plan
administrator, as though the plan administrator is a neutral government agency and not a self-
interested private actor. See Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 112 (2008)


(acknowledging that an ERISA plan administrator that both evaluates and pays claims operates
under a structural conflict of interest).

The only protection ERISA disability claimants enjoy over participants in non-ERISA plans is
ERISA’s requirement of a “full and fair review” and the regulations interpreting that
requirement. See 29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1. Although I doubt ERISA’s drafters
intended to require exhaustion of appeals prior to filing suit, disability claimants undoubtedly
benefit from the opportunity to review their claim file and have their appeal reviewed by a new
person not involved in the prior claim determination. Plan participants and administrators alike
benefit from the reduction in litigation, as many claims that would otherwise result in litigation
can be resolved in pre-suit appeals.' I commend the DOL for seeking to strengthen the ERISA
claims regulations. I believe any additional administrative burden to plan administrators is
substantially outweighed by the benefit to plan participants in terms of increased transparency
and due process — which, in turn, will result in less litigation.

I. Statute of Limitations

The DOL has invited comment regarding the statute of limitations issues that have developed
since the Supreme Court’s decision in Heimeshoff v. Hartford Life & Accid. Ins Co., 134 US.
604 (2013). I agree that this is a crucial area for regulation as the Heimeshoff decision has
created confusion and much litigation. The DOL can assist by creating standards for what is a
reasonable plan-based limitations provision in the same way that the DOL used its regulatory
power to create timing deadlines for the claims process in prior versions of the regulations.
Since Heimeshoff left open the possibility that an internal limitations period could run before the
appeals process is complete (even where exhaustion is mandatory), the DOL is in a good position
to clarify that such an approach would violate full and fair review required by 29 U.S.C. §1133.
Additionally, because contractual limitations periods are plan terms, the claimant should receive
notice about the limitations period from the plan just as is the case with other plan terms. As the
DOL aptly points out in the preamble to these proposed regulations, plan administrators are in a
better position to know the date of the expiration of the limitations period and should not be
hiding the ball from claimants if the plan administrator is functioning as a true fiduciary.

I recommend an amendment to the regulations governing the manner and content of notification
of benefit determinations on review. 29 C.F.R. §2560.503-1(j) [proposed regulation]. The
amended language should require the claims administrator to notify the claimant of the date of
the expiration of any plan based limitations period and should include a definition of what is a
reasonable limitations period. Such an alteration takes care of the different courts’ views on
when claims “accrue” in that it makes clear that no limitations period can start before the internal

' In addition to demographic factors cited in the preamble to the proposed regulations, | submit that the rise in
disability benefits litigation is attributable to the lack of any meaningful deterrent under the ERISA statute to the
denial by plan administrators of meritorious claims. As Rochow v. Life Insurance Company of North America made
clear, insurance companies can earn sizeable returns on wrongfully withheld benefits, in excess of typical
prejudgment interest, even if the decision to deny or terminate benefits is ultimately reversed. 737 F.3d 415 (6th
Cir. 2013), reversed by 780 F.3d 364 (6th Cir. 2015) (en banc).

2


claim and appeals process is complete. It also makes clear that there will be at least a one-year
period after the completion of the plan’s appeals process in which a claimant can file suit. The
justification for this rule is that it would cut down on litigation devoted to the threshold issue of
the running of the limitations period. In addition, it may well lead to a standardization of internal
limitations periods that would be salutary for both claimants and plan administrators.

Accordingly, I propose amending the proposed regulation by adding a section as follows and
renumbering accordingly (added language is indicated by bolding and underlining):

29 C.F.R. 2560.503-1 (j)(6) [proposed regulation]

In the case of an adverse benefit decision with respect to disability
benefits— (i) A discussion of the decision, including, to the extent that the plan
did not follow or agree with the views presented by the claimant to the plan of
health care professionals treating a claimant or the decisions presented by the
claimant to the plan of other payers of benefits who granted a claimant’s similar
claims (including disability benefit determinations by the Social Security
Administration), the basis for disagreeing with their views or decisions; and (ii)
Either the specific internal rules, guidelines, protocols, standards or other similar
criteria of the plan relied upon in making the adverse determination or,
alternatively, a statement that such rules, guidelines, protocols, standards or other
similar criteria of the plan do not exist.

(7) In the case of an adverse benefit determination on review with respect to
a claim for disability benefits, a statement of the date by which a claimant
must bring suit under 502(a) of the Act. However, where the plan includes its

own contractual limitations period, the contractual limitations period will not

be reasonable unless:

a. it begins to run no earlier than the date of the claimant’s receipt of the

final benefit determination on review including any voluntary appeals that

are taken;

b. it expires no earlier than 1 year after the date of the claimant’s receipt
of the final benefit determination on review including any voluntary appeals
that are taken;

c the administrator provides notice to the claimant of the date that the
contractual limitations period will run; and

d. the contractual limitations period will not abridge any existing state
limitations period that provides for a period longer than one year.