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December 7, 2017 

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: 

“To delay justice is injustice.” 

- William Penn 

I write once again to discourage the Department from further delaying the final 

disability claims regulations that are now scheduled to go into effect on April 1, 2018. 

As I have previously written, I am a lawyer who has focused on litigation involving 

claims governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. 

§1001 et seq. (“ERISA”) since 2005. ERISA claims currently make up about 70% of my 

practice. They include claims on accidental death and dismemberment insurance 

policies, health insurance policies, and disability insurance policies. Each of these 

policies was issued by one of the major insurance carriers selling ERISA governed 

policies. In order to stay current with the evolving nature of ERISA common law, I 

subscribe to a subscription service and review new opinions on a weekly basis. 

The concerns raised by the insurance industry are not new, nor are they genuine. 

Instead, they are an effort to delay implementation of regulations that simply reiterate 

what courts around the country have ruled in the ERISA context. Another argument 

about the merits of those rules is unnecessary. The insurance industry has already lost 

on these issues, and it is not entitled to another bite at the apple. 

As before, the insurance industry raises tired but familiar objections. I will respond to 

each in turn. 
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 

are false. 

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

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

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 can rely upon information supplied by its own Bureau of 

Labor Statistics. https://www.bls.gov/opub/btn/volume-4/disability-insuranceplans.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 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. Any evidence 

provided by the insurance industry that suggests employers would abandon disability 

coverage due to the costs of codifying these principles is suspect, at best. 

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. During the time period of the study, many states 

enacted discretionary clause bans, including, but 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). Despite these 

new statutes, access and participation in disability plans actually increased. 

Also, during the period covered by the study, two major insurers, UNUM and CIGNA, 

were examined by the states for poor claims handling and were fined and forced to enter 

Regulatory Settlement Agreements to improve shoddy claims administration. 

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

multistate/unum_multistate.html; 

http://www.maine.gov/pfr/insurance/publications_reports/exam_rpts/2009/pdf/cign

a_mcreport_2009.pdf. 

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

13.cfm. Still, access and participation increased. 

The evidence shows that costs will not increase in response to the modest changes in the 

final rules. The Department should not change the final rules in response to the 

insurance industry’s strained logic that the costliness of the final rules will impact access 
to disability benefits in the workplace. 

 

Benefits Outweigh Any Potential 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). Going further, there is no clear evidence that 

any theoretical costs of the final rules would outweigh the benefits. The Department has 

already noted the purpose of the rules is 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. 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 ridiculously 

below the standard for regular civil disputes. Such 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 may never be a level playing field. 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 “higher-than-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 cannot be taken seriously and is downright laughable. The insurance 

industry only cares about its own profits, not its fiduciary duties to plan participants. 

Furthermore, an inexpensive but illusory disability plan is worse than no plan at all. 

When a disability claimant is unfairly denied benefits, 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 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. 

 

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 careful to build 

a record on which the court will make its decision and would usually 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 if 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). This standard leaves plenty of discretion to the judge, 

who often chooses not to award fees to the successful plaintiff. The insurance industry 

comments are 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. 

Additionally, this rule is just a codification of existing law. Claimants can already get 

into court when the claims process has failed them in a meaningful way. 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); Jebian v. HewlettPackard Co. Employee. Benefits Org. Income Prot. Plan, 349 F.3d 1098 (9th Cir. 2003). 

 

If you have any questions or wish to discuss these issues in more detail, do not hesitate 

to contact me. 

 Very truly yours, 

 

 BERG PLUMMER JOHNSON & RAVAL 

 By: _________________________ 

 Amar Raval 

AR: