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December 6, 2017

Via Email Only: e-ORI@dol.gov

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 am writing to discourage the Department from modifying or further delaying the final disability 

claims regulations (Final Regulation on Claims Procedure for Plans Providing Disability 

Benefits, 81 Fed. Reg. 92316 (Dec. 19, 2016)) that are now scheduled to go into effect on April 

1, 2018. 

I have been representing individuals with ERISA related short and long term disability claims 

since the late 1990’s. As a result, I know the difficulties encountered by disabled individuals 

seeking to receive disability benefits to which they believed they were entitled. Many have had 

to resolve their claims for less than a reasonable value because they lacked the wherewithal, even 

without having to pay my attorney’s fees, to withstand a long administrative or legal battle. 

While I am grateful for the opportunity to comment on the Department’s re-examination of the 

costs of the final rules governing disability claims, the concerns raised by the industry are not 

new. Rather, these objections appear to be simply re-argument of the merits of the final rules. 

Where those rules are based on policy choices that have been made by Congress, by this 

Department, and by the federal courts interpreting ERISA, another argument about the merits is 
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unnecessary. Nevertheless, I will address the objections that have been raised that I feel are 

most in need of a response

Costs Will Not Increase

The industry claims if the final rules go into effect there will be an increase in costs that will 

increase premiums resulting in less access to disability benefits. These assertions do not ring 

true. 

This costs argument was made in various industry comments to the proposed rules before final 

adoption. The Department concluded that costs would not outweigh the benefits. The current 

cry of increasing costs is an argument that has already been considered and rejected. An agency 

is not required to "conduct a formal cost-benefit analysis in which each advantage and 

disadvantage is assigned a monetary value." Michigan v. Environmental Protection Agency, 135 

S. Ct. 1699, 2711 (2015). 

Nonetheless, the Department has asked for data addressing whether costs increased in response 

to the last set of rules applying to ERISA disability plans that became effective in 2002. In fact, 

the Department can rely upon information supplied by its own Bureau of Labor Statistics.

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

The data shows that access and participation in employer-based disability insurance has 

increased, not decreased, 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 increase also occurred despite 

the 2000 disability claims regulations and a series of court decisions addressing conflicted 

decision-making, deemed exhaustion, the need to discuss and explain adverse benefits decisions, 

and the participants right to respond to new evidence. I would therefore be suspicious of any 

data supplied by the industry now that suggests employers would abandon disability coverage 

due to the costs of codifying these principles. This BLS document also demonstrates that the 

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. 

http://www.maine.gov/pfr/insurance/publications_reports/exam_rpts/2004/unum_multistate/unu

m_multistate.html;
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http://www.maine.gov/pfr/insurance/publications_reports/exam_rpts/2009/pdf/cigna_mcreport_2

009.pdf. 

https://www.insurance.ca.gov/0400-news/0100-press releases/2013/release044-13.cfm. 

Nonetheless, during this period access and participation increased. 

Given this history, I dispute any claim that costs will increase in response to the modest changes 

in the final rules. Accordingly, I urge the Department not to change the final rules in response to 

the industry’s strained logic that the costliness of the final rules will impact access to disability 

benefits in the workplace. 

 

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. 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 “higherthan-marketplace” 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. Disabled 

claimants are often shocked when they are told about ERISA's procedural hurdles. So, to the 
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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 well-articulated 

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). Disability claims administrators’ operational manuals devote many pages to 

deciding whether the claimant is disabled enough to be referred to counsel for representation 

before the Social Security Administration, and how to offset or recover the benefits once they are 

successful, and how to express all of this to the claimant. 

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 
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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 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. 
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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. 

There is no question in my mind, after years of experience representing ERISA claimants, that 

the ability to sandbag the claimant with a new medical opinion that he/she cannot refute, or a 

new plan provision to rely upon that he/she cannot counter, is a prized device in the disability 

claims industry. The final rule needs to be kept in place to prevent this behavior from stamping 

out otherwise meritorious disability claims. 

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, as a second appeal permits the claims administrators the 

same sandbagging opportunity as the first appeal. Second appeals are not necessarily a boon to 

plan participants. Additionally, second appeals are not universal and are not required. The 

second appeals that the industry touts are a matter of plan design and can be changed at any time 

by plan sponsors. 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). These

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 
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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 the plan. This final rule addresses a serious problem in the ERISA 

disability claims process and should remain. 

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). 
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Thank you for giving me the opportunity to provide my comments. I hope they were instructive. 

Very Truly Yours,

Howard L. Bolter