CAMPINS BENHAM-BAKER, PC 

935 MORAGA ROAD, SUITE 200 

LAFAYETTE, CALIFORNIA 94549 

PHONE: (415) 373-5333 ● FAX: (415) 373-5334 

julia@campinsbenhambaker.com

December 8, 2017 

Via Regulations.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 practicing ERISA disability benefits law for over a decade and have 

represented many extremely disabled claimants attempt to get what they were promised by their 

plans. 

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 

unnecessary. 

Nevertheless, I will address the objections that have been raised that I feel are most in 

need of a response 
December 8, 2017 

Page 2 

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. This is not true. 

The Department has already concluded, in response to various industry comments, that 

costs would not outweigh the benefits. An agency is not required to "conduct a formal costbenefit 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 show 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. 
December 8, 2017 

Page 3 

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

m_multistate.html; 

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 has recognized the important purpose of these regulations: to make sure 

claims are fairly adjudicated and to prevent unnecessary financial and emotional hardship. These 

benefits far outweigh any additional costs. 

As it is, 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 “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. The industry’s claims that the 

new regulations will be bad for participants is no more credible than the fox’s claim the best 

interests of the hens would be served by tearing down the hens’ house. 

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 
December 8, 2017 

Page 4 

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. 

Almost all of my clients who end up with their benefits have lost so much during the process, but 

there have been ones I haven’t been able to help at all. Just today I had to reject a client whose 

cognitive injuries were significant and because she did not understand the process before finding 

a lawyer, has run out of time to put together all of the necessary documentation to convince the 

plan of her disability. Her very disability is what is preventing her from proving her disability.

Any modest costs of the proposed regulations are far outweighed by the enormous 

benefits to 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). 

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. 
December 8, 2017 

Page 5 

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 

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. 
December 8, 2017 

Page 6 

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. 

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 
December 8, 2017 

Page 7 

disability claims industry. Recently, we had a client with a limited period of depression—for 

which she was seeking a limited period of benefits. She submitted her documents and the insurer 

surveilled her eating lunch. They sandbagged her with a psychiatrist’s review of that video. The 

same psychiatrist called my client’s doctors and then lied about his attempts to contact them. We 

had to litigate to get my client her benefits, which resulted in her ultimately getting less than she 

was due. 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). 

This muted objection is 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 
December 8, 2017 

Page 8 

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. 

Regards, 

 CAMPINS BENHAM-BAKER, PC 

 

 By 

 Julia Campins