satisfy their duty to disclose critical information to their claimants that materially affects their
interests.

Accordingly, the DOL’s proposed regulation regarding disclosure of the internal rules or criteria
used to make a disability benefit decision, 29 C.F.R. §2560.503-1(g)(1)(vii)(B)[proposed
regulation], is helpful because internal rules, guidelines, protocols, standards, claims manuals,
and similar materials often create hidden plan terms that the claimant is unable to learn of or
discover in order to address them in the appeal. As is true in the healthcare context, plans
sometimes argue that internal criteria are confidential or proprietary. But keeping the rules that
are used to administer a plan a secret is inconsistent with the most basic premise of ERISA.
Benefits must be administered “in accordance with the documents and instruments governing the
plan.” 29 U.S.C. §1104, In addition, much litigation would be avoided if the claimant could
know what criteria he or she needed to meet in an appeal. See e.g. Cook v. New York Times Co.
Long-Term Disability Plan, 2004 WL 203111, at *10 (S.D.N.Y. Jan. 30, 2004); Craig v.
Pillsbury, 458 F.3d 748, 754 (8th Cir. 2006)(decrying the use of “double-secret” plan terms);
Samples v. First Health Group Corp., 631 F. Supp. 2d 1174, 1183 (9th Cir. 2007). Given that
the regulations require adverse benefit determinations to include the reasons for the denial and
the applicable plan terms, this additional requirement should not be onerous and would promote
the dialogue between claimant and plan that ERISA contemplates. Booten v. Lockheed Med. Ben
Plan, 110 F.3d 1461, 1463 (9th Cir. 1997) (“in simple English, what this regulation calls for is a
meaningful dialogue between ERISA plan administrators and their beneficiaries.”).

Thank you for the opportunity to comment on the Claims Procedure Regulations for Plans
Providing Disability Benefits.

Very truly yours,



A statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to the claimant’s claim file, including copies of all
documents, records, and other information relevant to the claimant's claim for
benefits. Whether a document, record, or other information is relevant to a claim
for benefits shall be determined by reference to paragraph (m)(8) of this section.

Ill. Other Issues of Concern with the Regulations

Disclosure of Internal Rules, ete.

An insurance company, typically the party obligated to pay benefits and the administrator given
discretion in construing and applying the provisions of a group health or disability plan and
assessing a participant’s entitlement to benefits, is an ERISA fiduciary. See 29 U.S.C. §
1002(21)(A)(i) and (iii); Aetna Health Inc, v. Davila, 542 U.S. 200, 220, 124 8, Ct. 2488, 2502
(2004); Mondry v. Am. Fam, Mut. Ins. Co., 557 F.3d 781, 803 (7th Cir.), cert. denied, 130 S. Ct.
200 (2009). Significantly, as a fiduciary, an insurance company is required to carry out its duties
with respect to the plan “solely in the interest of the participants and beneficiaries and—(A) for
the exclusive purpose of: (i) providing benefits to participants and their beneficiaries;...[and] (B)
with the care, skill, prudence, and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims...” 29 U.S.C. § 1104(a)(1). Under the law of
ERISA an insurance company owes the participants in its plan and their beneficiaries a duty of
loyalty like that borne by a trustee under common law, § 1104(a)(1)(A), and it has to exercise
reasonable care in executing that duty, 1104(a)(1)(B). Mondry, 557 F.3d at 807. In my
experience, this rarely happens.

Additionally, an insurance company, as an ERISA fiduciary, is required to provide certain
information to its claimants because “[t]he duty to disclose material information is the core of a
fiduciary’s responsibility, animating the common law of trusts long before the enactment of
ERISA.” Eddy v. Colonial Life Ins, Co. of Am. 919 F.2d 747, 750 (D.C. Cir. 1990).
Significantly, this duty includes an affirmative obligation to communicate material facts
affecting the interests of beneficiaries. Jd. “This duty exists when a beneficiary asks fiduciaries
for information, and even when he or she does not.” Jd. (citing Eddy, 919 F.2d at 750); Solis v.
Current Dev. Corp., 557 F.3d 772, 777-78 (7th Cir. 2009); see, Gregg v. Transp. Workers of Am.
Int'l, 343 F.3d 833, 845-46 (6th Cir. 2003) (“‘once an ERISA [beneficiary] has requested
information from an ERISA fiduciary who is aware of the beneficiary’s status and situation, the
fiduciary has an obligation to convey complete and accurate information material to the
beneficiary’s circumstance, even if that requires conveying information about which the
beneficiary did not specifically inquire’”) (quoting Krohn v. Huron Mem. Hosp., 173 F.3d 542,
547 (6th Cir. 1999)); see also, Unisys Corp. Retiree Med. Benefits Erisa Litig. v. Unisys Corp.,
579 F.3d 220, 228 (3d Cir 2009), cert. denied sub nom. Unisys Corp. v. Adair, 559 U.S. 940
(2010) (an ERISA fiduciary “must speak truthfully, and when it communicates with plan
participants and beneficiaries it must convey complete and accurate information that is material
to their circumstance.”). However, in my experience insurance companies typically fail to


McMAHdaN LAW FIRM, ic

Barton C. Solomon Jay R. McCurdy
Licensed Georgia and Tennessee Licensed Georgia and Tennessee
bsolomon@memahantirm.com Fighting for the Injured and Disabled jmecurdy@memahantirm.com

social Socunhy Dastiy Acocacy 700 S. Thornton Avenue

P.O. Box 1607 D. Seth Holliday
Dalton, GA 30722 soatal Securty Dicey Law
706-217-6118 * 800-317-7723 Heensed Georaia, Tennessee

Fax 706-217-6880
sholliday@memahanfirm.com

January 12, 2016

Via electronic filing and by mail:

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

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, as a partner at McMahan Law Firm, LLC, I primarily litigate ERISA
disability, health and life insurance claims on behalf of individuals who have been wrongfully
denied their benefits. I also have a Social Security disability practice and am certified as a
specialist in Social Security Disability Law by the National Board of Social Security Disability
Advocacy. I am a 1996 graduate of Washington University School of Law and am licensed in
Georgia, Tennessee and Illinois. I have been a leader in prominent organizations such as the
American Association for Justice (AAJ), Tennessee Association of Justice (TAJ) and the
Tennessee Bar Association (TBA). I am past-Chair of AAJ’s Disability law Section, a former
member of TAJ’s Board of Governors, past-Chair of TBA’s Disability Law Section and past-
President of the Chattanooga Trial Lawyers Association (CTLA). AAJ, TAJ, TBA and CTLA
are all associations of lawyers who advocate on behalf of disabled or injured individuals.
Additionally, I have lectured regularly on disability issues to other attorneys in multiple
jurisdictions.

In any case, I have organized my comments as follows. First, I address the most important
substantive issues for the DOL to address as it finalizes the proposed regulations. These
comments relate to where I believe the DOL should make a substantive change in the proposed


regulations. Second, I have set out what I see as the most important technical issues in the
proposed regulations. These are matters that do not change the substance of a proposed
regulation but request language changes for purposes of greater clarity or conformity with other
regulations.

I. Comments on Substantive Matters in the Proposed Regulations
Discussion of the Decision and Its Relationship to SSDI or other Disability Awards

As the EBSA well knows, many individuals who have ERISA long term disability (“LTD”)
claims also have claims for Social Security Disability benefits. As a consequence, most
insurance companies require their disability claimants to file for Social Security disability. This
is done because most plans offset the LTD benefit by the Social Security disability benefit and
this reduction is considered by the insurers to be one of the most important cost containment
features of their LTD contracts (and is usually termed “recovery of an overpayment”). In fact,
insurance companies that issue LTD plans will commonly direct an insured to contact a specific
representative to assist him or her in obtaining Social Security disability benefits. In my
experience, however, when the Social Security Administration finds favorably for a claimant the
insurance company will commonly reject the analysis of the Administration. In other words, it is
not unusual for an insurer to require that an insured file for Social Security disability benefits,
suggest a specific representative to hire, recover the “overpayment” from its insured once the
Social Security Administration finds in the claimant’s favor, and then deny the LTD claim
though it is based on nearly identical arguments that the suggested representative made in front
of the Administration.

Alternative A

Accordingly, the regulation as presented, requiring a claims administrator to meaningfully
distinguish the views of treating physicians or other entities that are paying benefits, will be
helpful. Often, administrators ignore evidence that is favorable to the claimant. Generally, if the
administrator pays any attention to contrary opinions, my clients receive pre-packaged or
boilerplate paragraphs in the denial letters that have nothing to do with their claims. Because of
this they cannot mount a response. This stands in the way of full and fair review. Sometimes
courts do not understand the difference between the type of explanation required by ERISA and
these empty paragraphs. Assuming that this regulation is intended to change plans’ reliance on
this sort of explanation or a wholesale failure to address the contrary evidence, I am in favor of
the regulation.

Alternative B

The regulation requiring a discussion about the difference between the plan’s decision and
awards made by other systems, such as Social Security, should be expanded to set forth a
deferential review requirement. The regulation could utilize the same language as the regulatory
settlement agreements that have been used by many state insurance commissioners in response to
concerns about disability claims processes used by insurers such as UNUM, For example, in the
regulatory settlement agreement UNUM was required to follow, this language was used:


The Companies must give significant weight to evidence of an award of Social
Security disability benefits as supporting a finding of disability, unless the
Companies have compelling evidence that the decision of the Social Security
Administration was (i) founded on an error of law or an abuse of discretion, (ii)
inconsistent with the applicable medical evidence, or (iii) inconsistent with the
definition of disability contained in the applicable insurance policy.

Including similar language in the proposed regulation would be helpful to assure that plans give
the appropriate weight to an award made by another entity.

IL. Comments on Technical Matters in the Proposed Regulations

Notice of Right to Request Relevant Documents

ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4) states, “The administrator shall, upon written request
of any participant or beneficiary, furnish a copy of the latest updated summary, plan description,
and the latest annual report, any terminal report, the bargaining agreement, trust agreement,
contract, or other instruments under which the plan is established or operated.” In addition to
the specific documents described in the ERISA statute itself, at ERISA § 104(b)(4), 29 U.S.C. §
1024(b)(4), such as the summary plan descriptions and other documents under which the plan is
operated, the ERISA statute, at § 109(c), 29 U.S.C. § 1029(c) provides that the Secretary of
Labor may also prescribe what other documents should be furnished. Thus, reading sections
§109(c) and 502(c) together, along with ERISA § 505, 29 U.S.C, § 1135 (allowing the Secretary
to “prescribe such regulations as he finds necessary or appropriate to carry out the provisions of
this title”), the Secretary is given authority to establish the format and content of what documents
are required to be produced by an administrator in an ERISA matter. The Secretary of Labor’s
ERISA claim procedures regulations, set out in 29 C.F.R. § 2560.503-1 (h)(2)(iii), describe what
documents an administrator must provide. The regulations state that, in order to provide a full
and fair review, the Plan must provide that a claimant shall be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other information
relevant to the claimant's claim for benefits.

Although attorneys understand this language, lay persons, who are the actual participants and
often not represented, may not realize what rights are given here. The regulation concerning
notice of the right to request relevant documents contained in 29 C.F.R. §2560.503-
1(g)(1)(vii)(C) [proposed regulation] is an improvement since it was formerly missing from the
regulation. However, it would be more helpful to claimants to use the words “claim file,” which
is plain language and is consistent with the amendment at 29 C.F.R. §2560.503-1(h)(4)(i)
[proposed regulation].

Accordingly, I suggest the following amendment to the proposed regulation (added language is
underlined and bolded):

29 C.F.R. §2560.503-1(g)(1)(vii)(C)[proposed regulation]