STEPHEN R. BRUCE LAW OFFICES

1667 K ST., NW, SUITE 410

WASHINGTON, D.C. 20006

202-289-1117

FAX: 202-289-1583

stephen.bruce@prodigy.net

December 8, 2017

Submitted via: e-ORI@dol.gov

Timothy D. Hauser

Deputy Assistant Secretary

Employee Benefits Administration

Department of Labor

200 Constitution Avenue NW

Washington D.C. 20210

Re: Re-Examination of Claims Procedure Regulations (RIN No. 1210-AB39)

Dear Deputy Assistant Hauser:

As a lawyer with over 30 years experience representing employees in benefit

claims, I urge the Department not to further delay or revise the final disability claims

regulations on the basis of the disability insurance industry’s untimely, unfounded, and

transparently self-serving speculations about the “costs” of the final rules. Everyone

knows the complaints that employees of all occupations, sexes, and races have voiced for

decades about the pro-insurance company biases in disability benefit claim processes.

Nationwide class actions against UNUM and LINA for their claim processing practices

revealed the disregard for fairness that permeated the disability insurance industry. As

every federal judge knows, most of the ERISA litigation in the federal courts is now, not

about pension claims or health claims, but about long-term disability claims.

As the Department’s December 2016 Fact Sheet on the final rules announces,

these regulations simply strengthen protections for workers requesting disability benefits

by promoting fairness and accuracy in the claims review process, so that disabled

individuals stand a better chance of avoiding financial and emotional hardship by

receiving the disability protection their plan’s coverage offered (and a better chance of

not needing to invoke the federal courts). For the industry to act as though the pendulum

has swung too far in favor of the employees with the Department’s 2018 regulations is

preposterous. The parallels to the financial services industry’s efforts to overturn the

Department’s fiduciary rule are also difficult to overlook, except that here the insurance

industry has not offered its arguments in the courts but is only making them in secret

backroom meetings where the industry can offer assertions based on “confidential”

sources.
Comments on Re-Examination - 2 - December 8, 2017

of Disability Claim Regulations

As in the fiduciary rule cases, there is no credible evidence here that the direct or

indirect costs of the Department’s final disability claim regulations are any more

significant for the insurance industry than the generous allocations the Department

estimated. When the insurance industry commented on the proposed rules, it offered no

contrary evidence about greater costs, but argued against the rules on policy grounds.

When the insurance industry restyled itself as “stakeholders” after the regulations were

made final, it continued to offer no credible evidence of costs any more significant than

those the Department had estimated. Instead, the stakeholders have simply held secret

meetings with new political appointees after the change of Administrations and made

assertions based on a “confidential” survey they have yet to share. Obviously, the

assertion that the costs of the regulations exceeds the benefits is a self-serving position to

stake out for the aptly self-named “stakeholders.” But under the APA, cost assertions

must be supported, and these assertions lack any credible data or other substance. The

insurance industry’s new effort to string out the effective date of the regulations further

with the prospect of their redoing a “confidential” survey in a way that could be shared

with the Department is belied by the fact that the disability insurance industry has

cooperated for decades in surveys conducted by actuarial organizations, including the

Society of Actuaries and the American Academy of Actuaries. None of those surveys

have found, or even suggest, that the Department’s claim regulations have a significant

impact on disability insurance costs, much less that those costs outweigh the benefits of

regulations designed to protect individuals with claims for disability benefits.

The Society of Actuaries and American Academy of Actuaries surveys indicate

that by far the most significant factor for insurance costs is the rising rates of disablement

as employees, male and female, grow older. There are also correlations with professions

and industries. There is no indication that DOL regulation has any remotely comparable

significance as a factor for premiums. The disability regulations the Department adopted

in 2000 had no discernable impact on the expansion of disability coverage. Indeed, BLS

statistics show that coverage increased after the 2000 regulations. Similarly, there is no

indication that the Affordable Care Act’s 2011 claims processing regulations, after which

most of the final disability regulations were modeled, have had any appreciable impact on

costs. Finally, by far the most significant developments in disability claims over the past

two decades have been the increase in individual and class action ERISA litigation,

including the nationwide UNUM and LINA class action settlements, as well as the

burgeoning movement of state-by-state insurance legislation banning discretionary

clauses in disability policies. No evidence has been presented that any of these

developments has had a significant impact on premiums.

Finally, the tenuous grasp on reality of the stakeholders’ case becomes most

apparent when the content of the three primary regulations the stakeholders are seeking to

rescind or modify is examined. There is no reasonable case to be made that (1) requiring
Comments on Re-Examination - 3 - December 8, 2017

of Disability Claim Regulations

an insurance company to explain the basis for a disagreement with the Social Security

Administration, (2) allowing a claimant the opportunity to respond to new evidence or a

new rationale for a denial, or (3) using a “deemed exhaustion” rule when an insurer does

not comply with the claims regulations, has any appreciable impact on group costs, much

less impacts that outweigh the benefits of fairer and more accurate disability

determinations.

I urge the Department not to change the final disability regulations on the basis of

never-produced evidence and the raw assertion of backroom deals. The Department of

Labor has a responsibility under ERISA Section 503 to ensure a “full and fair review” of

a denied benefit claim. In 2015-2016, the Department took long-due steps to carry out

that responsibility, by noticing, considering, and finalizing the claims regulations. The

Department should not be deterred from making those reforms effective beyond the 90

additional days it has already given. As the Supreme Court has held, ERISA was enacted

to ensure “higher-than-marketplace standards.” MetLife v. Glenn, 554 U.S. 105, 115

(2008). The insurance industry’s displeasure with the Department of Labor performing its

statutory duty is no basis for overturning duly-authorized and already-final regulations.

Moreover, the idea that the insurance industry can comment, and then have a second or a

third opportunity to block final rules, still without producing any evidence on costs,

betrays not only the values of ERISA but also those of the APA.

If you have any questions or want me to do anything more, please contact me at

202-289-1117. Thank you.

Sincerely,

Stephen R. Bruce