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LAW OFFICE OF MEL CRAWFORD

9425 35th Avenue N.E.; Suite C

Seattle, WA 98115

206-714-7850

VIA EMAIL

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: Re-Examination of Claims Procedure Regulations for Plans Providing 

Disability Benefits

RIN No.: 1210-AB39

Regulation: 29 C.F.R. §2560.503

Dear Deputy Assistant Secretary Hauser:

I write to express my concern that the Department of Labor not allow further delay 

regarding Final Regulation on Claims Procedure for Plans Providing Disability Benefits, 

81 Fed. Reg. 92316 (Dec. 19, 2016)), presently scheduled to go into effect on April 1, 

2018. 

By way of background, I graduated from Harvard Law School, magna cum laude, in 

1993. I handled my first ERISA disability benefit case in 1994. My practice is presently 

100% devoted to representing employees seeking disability benefits under ERISA. 

I am aware of the reasons being asserted by the insurance industry in favor of delay, and 

find those arguments are the same the industry previously raised when opposing the final 

rules. Those re-heated arguments are addressed below. 

Purported Increased Costs:

The industry claims the final rules will result in increased premiums for disability 

insurance. That allegation is untrue. The Department determined that the costs of the 

regulations would not outweigh their benefits. It did so after considering data developed 

following the 2002 changes to ERISA’s claims management regulations, which shoed 

that access to, and and participation in, ERISA governed health insurance increased 

between 1999 and 2014. This increase occurred despite that employment in the service 

industry has increased, an industry in which employees are the least likely to have access 

to employer-based disability coverage. This BLS document also demonstrates that the 
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cost of disability insurance is extremely modest. Thus, even if costs did increase, the 

increase would be so small that it is unlikely to make any difference. 

The Department has also asked for data about whether disability premiums increased in 

response to the adoption of statutory bans on discretionary language clauses in disability 

policies by some states. Notably, during the time period of the BLS study, many states 

enacted discretionary clause bans. This includes but is not limited to Arkansas Admin. 

Code 054.00.101-4 (2013); Cal. Ins. Code §10110.6 (2012); Colo. Rev. Stat. §16-3-1116 

(2008); 50 Ill. Admin. Codes 2001.3 (2005); Md. Code ann. Ins. §12-211; Mich. Admin. 

Codes. R. 500.2201-2202 (2007); R.I. Gen. Law §§ 27-18-79; Tex. Admin. Code 

§3.1202-1203; Tex. Ins. Code §1701.062, §1701.002 (2011); WAC §284-96-012 (2009). 

Notwithstanding these statutory developments, access and participation in disability plans 

increased according to the BLS data.

Also, during the period covered by the BLS document, two major insurers with 

significant market share, UNUM and CIGNA, were examined by the states for poor 

claims handling and became subject to fines and Regulatory Settlement Agreements that 

raised the bar for their claims administration. Nonetheless, during this period access and 

participation increased. 

Given this history, the industry’s claim that the final rules will cause costs to increase, 

and thereby impact access to disability benefits in the workplace, is simply wrong. 

 

The Benefits Outweigh the Costs

The Department is not required to avoid all regulations that affect the market in some 

way. Mkt. Synergy Grp. v. United States Dep't of Labor, 2016 U.S. Dist. LEXIS 163663, 

2016 WL 6948061 (D. Kan. 11/28/2016). As well, it is not clear that, whatever the costs 

of the final rules, they would outweigh the benefits. The Department has already 

articulated its purposes – to make sure claims are fairly adjudicated and to prevent 

unnecessary financial and emotional hardship. The Department should ignore the 

industry's invitation to abandon these purposes. Moreover, these benefits cannot be 

outweighed by costs where the ERISA process is already so slanted in favor of the plan 

administrators. 

ERISA disability claimants who are denied their benefits face a process that is far below 

the standard for regular civil disputes. These procedural hurdles include: (1) there are no 

jury trials; (2) there is a closed record from the claims process that can rarely be 

supplemented in litigation; (3) courts often apply an unfavorable standard of review, and 

(4) there are no remedies to discourage unfair and self-serving behavior on the part of 

plans. This will never be a level playing field much less one that favors plan participants. 

United States v. Aegerion Pharmaceuticals, Inc., 2017 WL 5586728, at *7 (D.Mass.

11/20, 2017)("The insurance industry found it could largely immunize itself from suit due 

to the Employee Retirement Income Security Act (“ERISA”).) Even with the final rules 

in place, plan participants will not have achieved the “higher-than-marketplace 

standards” that the Supreme Court insists are required in processing ERISA claims. 
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MetLife v. Glenn, 554 U.S. 105, 115 (2008). Any consideration the Department makes 

about the benefits of the final rules relative to costs should take this “higher-thanmarketplace” expectation into account and acknowledge that ERISA exists to protect 

plan participants. 

The Department has already acknowledged that the disability claims industry has been 

needlessly adversarial toward ERISA disability plan participants and has received many 

comments to that effect. The industry's argument that the final rules are bad for 

participants – despite all evidence to the contrary - cannot be taken seriously. The 

industry is not a credible advocate for participants. 

Furthermore, from the perspective of plan participants, an inexpensive but illusory 

disability plan is worse than no plan at all. It is important to note that when a disability 

claimant is unfairly denied benefits that he/she thought was promised through an 

employer's plan, it is too late to go out and purchase private individual insurance to cover 

the risk of becoming destitute. Disability claimants, by definition, are not well. They are 

often exhausted by chronic illness, and have trusted that their treating doctor’s 

certification that they are indeed disabled will be sufficient to allow them to receive the 

disability benefits they have applied for. I have had to decline representation of people 

plainly disabled by illness because they have already gone through the administrative 

appeal process mandated by ERISA, but, due to their lack of understanding of that 

process, failed to provide the information necessary to prevail in court. So, to the extent 

that increased protections bring disability claims administration in line with the 

reasonable expectations of the employee-participants, the costs are outweighed by the 

benefits. If there are costs associated with the final regulations, these costs could and 

should be tolerated in the name of supplying a modicum of protection for plan 

participants. 

Requiring the Plan to Discuss the Basis for Disagreement with Social Security 

Decisions or Other Contrary Opinions is Not Costly.

This rule merely requires disability plans to observe a fundamental due process principle 

that is imbedded in ERISA—namely the principle that a claimant is entitled to a wellarticulated explanation for the adverse benefits decision so that the participant may fairly 

dispute it. The 2000 regulations require no less. 

As the Department has already noted, it is doubtful that there are costs associated with the 

requirement of discussing the reasons for disagreeing with a favorable Social Security 

decision. ERISA disability benefits have always been deeply intertwined with the Social 

Security system and mostly are simply supplemental to Social Security benefits. Most

disability plans require claimants to apply for the SSA benefit, and the plans usually 

provide representation for claimants before the SSA. This is done so that the plan may 

take advantage of the plan term that the SSDI benefit will offset the LTD benefit. Indeed, 

in many cases the ERISA disability benefit is de minimis or non-existent once this offset 

is taken. In order to decide which claimants qualify for this representation, plan claims 

handlers need to know the standard that the SSA uses. Comment #114, p.8 (ACLI). 
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To the extent that the industry argues that increasing the cost of disability insurance will 

burden the government, and more specifically the SSA, the Bureau of Labor Statistics 

publication speaks to this: 

It is important to note that expanding access to employer-provided 

disability insurance would not necessarily relieve the burden on 

SSDI. The ability to access disability insurance does not affect a worker’s 

eligibility for SSDI. People can receive SSDI benefits and long-term 

disability payments, but the private disability insurance payment is usually 

reduced by the amount of the SSDI payment. 

https://www.bls.gov/opub/btn/volume-4/disability-insurance-plans.htm.

Additionally, the disability plans and insurers are required in many jurisdictions to 

discuss why they are denying a disability claim when the Social Security Administration 

awarded benefits under an obviously more strenuous standard. Montour v. Hartford Life 

& Acc.Ins Co., 588 F.3d 623, 635-637 (9th Cir. 2009); Salomaa v. Honda Long Term 

Disability Plan, 642 F.3d 666, 679 (9th Cir. 2011); Bennett v. Kemper Nat. Services Inc., 

514 F.3d 547, 553-554 (6th Cir. 2008); Brown v. Hartford Life Ins. Co., 301 F. App'x 

777, 776 (10th Cir. 2008). As a matter of Supreme Court precedent, it is arbitrary and 

capricious for the claims administrator to advocate for Social Security benefits, reap the 

benefit of the Social Security award by means of an offset, and then ignore the SSA’s 

determination. Metropolitan Life v. Glenn, 554 U.S. 105 (2008). As the industry 

comments often acknowledged, requiring an explanation of the reasons for disagreeing 

with the Social Security decision and other contrary evidence tracks the existing standard. 

Logically, it should not increase costs to simply codify this standard. 

A rule clarifying that an explanation of the basis for disagreeing with a Social Security 

decision is a requirement will increase uniformity and predictability in the process, which 

is generally associated with costs savings and not cost increases. 

The Deemed Exhausted Rule is Not Costly

The industry’s concern about this rule seems to be that plaintiffs and their attorneys will 

race into court, increasing the volume of ERISA litigation and hence the overall costs of 

administering disability claims. This is incorrect. Plaintiff’s attorneys are ever mindful 

of building a record on which the court will make its decision and therefore would rather 

engage in the appeal process and exhaust internal remedies. This serves the dual purpose 

of possibly resolving the dispute and creating a record for the court to review in case the 

dispute cannot be resolved internally. Under the final rule, the plaintiff will mostly 

obtain a remand with instructions for the plan to do its job. Because plaintiff’s attorneys 

usually work on a contingent fee basis, it does not make sense to undertake litigation that 

is not absolutely necessary and that will not result in resolving the case on the merits. 

Further, a court will only award attorney fees for litigation where the plaintiff has 
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achieved some degree of success on the merits. Hardt v. Reliance Standard Life Ins. Co., 

560 U.S. 242, 255 (2010). In other words, the industry comments are seriously out of 

step with litigation in the real world and how the incentives are aligned to discourage

litigation. While this rule may appear to create additional trips to court, it will not do so 

except in the most extreme cases. I take it that addressing these extreme cases is the 

purpose of the final deemed denied rule. 

Additionally, as with most of the other final rules, this rule is simply a codification of 

existing judge-made law. Claimants are already able to get into court when the claims 

process has failed them in a meaningful way. See e.g. Brown v. J.B. Hunt Transp. Servs., 

586 F.3d 1079, 1085-86 (8th Cir. 2009) (failure to respond to request for documents 

excused claims from exhaustion requirement because there was no full and fair review). 

It is not likely that additional costs will result from this regulation. Hall v. National 

Gypsum Co., 105 F.3d 225, 231-32 (5th Cir. 1997); LaAsmar v. Phelps Dodge Corp. Life, 

605 F.3d 789 (10th Cir. 2010); Nichols v. Prudential Ins. Co. of Am., 406 F.3d 98 (2d Cir. 

2005); Jebian v. Hewlett-Packard Co. Employee. Benefits Org. Income Prot. Plan, 349 

F.3d 1098 (9th Cir. 2003); Dunnigan v. Metropolitan Life Ins. Co., 277 F.3d 223, 231 n.5 

(2d Cir. 2002). 

Providing the Right to Review and Respond to New Evidence or Rationale From the 

Plan During the Appeal Review is Not Costly.

This rule is fundamental to full and fair review. The Department has already 

acknowledged the importance of this rule and that it is already the standard in some 

jurisdictions. The industry complains that providing the claimant with new evidence or 

rationales before making a final decision is costly. The industry’s claim to cost impact is 

is suspect for several reasons. 

First, several disability plans or insurers already provide for the right to review and 

respond. They do so on a voluntary basis, as their comments to the proposed rules 

showed. Second, courts require plans or insurers to do this in many cases. Last, whether 

they provide this information to the claimant during the ERISA appeal process, they will 

have to provide it eventually in one form or another. New reasons or evidence will need 

to be included in the claim file and likely again in 26(a)(1) disclosures. Thus, the 

industry's portrayal of the chaos that might ensue if they were required to supply these 

documents is not credible. If the issue is the cost of mailing, such a concern should not 

be permitted to interfere with such basic a due process right. 

It is important to note what this rule does. It permits a claimant to respond to a disability 

claims administrator’s assertions in a way that will make the response a part of the record 

if the claimant has to go to court to vindicate his/her rights. This is because most ERISA 

cases are decided on a closed record. Without this rule, the claims administrator’s new 

evidence or rationale will be included in the record that the court reviews, but the 

claimant’s rebuttal will not. Perhaps what the industry is really chafing about is the loss 

of its ability to strategically withhold information that would help the claimant achieve 

reversal or win his/her case in court. 
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On several occasions I have represented clients whose insurers, after giving one reason 

for claim denial, advanced a second, new reason when presented with medical evidence 

refuting the first – and, in circumstances where the relevant plan allowed a second 

voluntary appeal, the insurer sought yet another medical opinion when its second reason 

was shown to be incorrect. The rule simply curbs this kind of adversarial behavior. 

If the industry’s concern is that the claims handlers need to do more in the same amount 

of time, this could be addressed by modifying the rule instead of eliminating the rule 

altogether. Commenters from both sides have suggested as much. 

I also dispute the industry’s comments to the effect that a second appeal, which is offered 

with some plans, serves the same purpose as the right to respond to new evidence or 

rationales before a final decision. This is clearly not true, for the reasons described above 

– the second appeal permits yet more of the same behavior. Further, second appeals 

often serve only to delay final resolution, dragging out the process longer while the 

claimant goes for months without the benefits he or she needs. It may be that second 

appeals will become obsolete where the claimant has a true right to respond. 

Other Provisions

The Impartiality Rule

Few industry commenters complained about the proposed rule requiring that consulting 

experts be impartial. Comment #76 (UNUM), Comment #92 (NFL), Comment #129 

(AHIP). This muted objections are understandable, since it is hard to argue that disability 

claims administrators should be free to hire biased experts. The majority of those who 

object to this rule admitted that the proposed rule reflects the existing law. Comment 

#76, (UNUM), Comment #92 (NFL). The industry complaints seem to be based on the 

fear of increased litigation, particularly in the form of discovery. First, federal judges are 

well versed at limiting discovery in ERISA cases in proportion to the needs of the case.

See e.g. Paquin v. Prudential Ins. Co. of Am. 2017 WL 3189550 (D. Colo. 7/10/2017); 

Heartsill v. Ascension Alliance, 2017 WL 2955008 (E.D. Mo. 7/11/2017; Ashmore v. 

NFL Player Disability and Neurocognitive Benefit Plan, 2017 WL 4342197 (S.D. Fla. 

9/27/2017); Baty v. Metropolitan Life Ins. Co., 2017 WL 4516825 (D. Kan. 10/10/2017); 

Harding v. Hartford Life and Accident Ins. Co., 2017 WL 1316264 (N.D. Ill. 4/10/2017); 

Hancock v. Aetna Life Ins. Co., 321 F.R.D. 383 (W.D. Wash. 2017); Kroll v. Kaiser 

Foundation Health Plan Long Term Disability Plan, 2009 WL 3415678 (N.D. Cal. 

10/22/2009). Next, if the impartiality rule is already the law, it is not clear how more 

discovery would result from codifying it. Additionally, the credibility of experts who are 

opining on whether a claimant qualifies for benefits should be subject to some sort of 

scrutiny. If a claimant needs to conduct discovery into whether a physician hired by the 

administrator is well-known to support denials, the cost of conducting this discovery 

cannot possibly outweigh the benefits. ERISA claimants are entitled to a process that 

does not have a predetermined outcome based on which reviewing physician is hired by 
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the plan. This final rule addresses a serious problem in the ERISA disability claims 

process and should remain – particularly when ERISA’s processes do not allow claimants 

the rudimentary due process opportunity to cross examine the experts who have 

contradicted their own physicians.

The Rule Requiring Disclosure of any Internal Limitations Period

Few industry commenters focused on the final rule requiring claims administrators to 

provide the claimant with the date when any internal time limit for filing suit will expire. 

I am assuming, therefore, that these objectors are not claiming that this rule has a cost 

impact. The claims administrators are in a position to satisfy this rule, since the 

expiration date of an internal limitations period is essentially a plan term that should be 

accessible to the plan administrator and not be hidden from unsuspecting plan 

participants. As with most of the final rules, information respecting the period of 

limitations is required to be disclosed in several jurisdictions, so it is unlikely to incur 

additional costs to create uniformity. Santana-Diaz v. Metro. Life Ins. Co., 816 F.3d 172, 

179 (1st Cir. 2016); Moyer v. Metro. Life Ins. Co., 762 F. 3 503, 505 (6th Cir. 2014); 

Mirza v. Ins. Adm'r of America, Inc., 800 F. 3d 129, 134 (3d Cir. 2015). 

The Rule Requiring Disclosure of Internal Guidelines

Few commenters objected to the proposed rule requiring claims administrator to disclose 

internal guidelines or certify that none exist. Comment #50 (DRI), Comments #76 

(UNUM). These commenters complained that internal guidelines tend to be procedural 

rather than substantive, implying that the guidelines are irrelevant. As this lengthy 

rulemaking process has shown, procedure affects substantive outcomes. So even if 

internal guidelines are procedural, that is no reason to withhold those guidelines from 

claimants. The disclosure of claims manuals and internal guidelines, which often contain 

additional plan terms that are hidden from the ERISA participants, will ultimately cut 

down on litigation, since discovery of these documents is often disputed. See Glista v. 

Unum Life Ins. Co. Of Am., 378 F.3d 113, 123-125 (1st Cir. 2004); Mullins v. AT&T 

Corp., 290 Fed. Appx. 642, 646 (4th Cir. 2008). 

Thank you for your consideration of these concerns.

Sincerely,

Mel Crawford