From: Paul Noah 

Sent: Friday, December 08, 2017 4:37 PM

To: EBSA, E-ORI - EBSA

Subject: Comments 1210-AB39

Office of Regulations and Interpretations, Employee Benefits Security Administration Room M5655

U.S. Dept. of Labor 

200 Constitution Avenue NW Washington D.C. 20210 

Re: 

RIN No.: Regulation: 

Re-Examination of Claims Procedure Regulations for Plans Providing Disability Benefits

1210-AB39

29 C.F.R. §2560.503 

Dear Deputy Assistant Secretary Hauser: 

I do not believe the Department should modify or further delay 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 represent individuals denied group long term disability insurance benefits. Many of these cases 

involve tragic circumstances with dire consequences for my clients and their families when 

disability insurance benefits are denied and delayed. The proposed regulations of the claims 

handling process may provide at least some degree of fairness and accountability in timely 

determining and accepting qualifying claims. 

The concerns raised by the industry 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 

unnecessary. 

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. 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). 
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. 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. It is unlikely the industry now would 

abandon disability coverage due to the costs of codifying these principles. 

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. 

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. 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. 
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. 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. 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. 

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 must build a record on which the court 

will make its decision and therefore would rather engage in the appeal process and exhaust 

internal remedies, but it must be in a timely manner due to the needs of the disabled insured. 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. 
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 wrong 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. 

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. 

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. 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. 

Thank you for consideration of these comments and for allowing disabled persons an opportunity 

to be heard in the regulatory process. Randy Noah

Law Office of P. Randall Noah

PO Box 9421 

South Lake Tahoe, CA 96158 Tel. 530.600.0891