January 18, 2016
Page 4

be considered as part of the administrator’s failing to adhere to the ERISA and Plan’s
procedures: “an administrator must provide . . . adequate notice of the reasons for denial . . .and
must provide a “full and fair review” of the participant’s claim . .. When an administrator tacks
ona new reason for denying benefits in a final decision, thereby precluding the plan participant
from responding to that rationale for the denial at the administrative level, the administrator
violates ERISA’s procedures.” . . . “Accordingly, an administrator that adds, in its final decision,
anew reason for denial, a maneuver that has the effect of insulating the rationale from review,
contravenes the purpose of ERISA. This procedural violation must be weighed by the district
court in deciding whether [the administrator] abused its discretion”); Jebian v. Hewlett-Packard
Company, 349 F.3d 1098 (9th Cir. 2003) (a contrary rule would allow claimants, who are
entitled to sue once a claim had been “deemed denied,” to be “sandbagged” by a rationale the
plan administrator adduces only after suit has commenced); Conley v. Pitney Bowes, 176 F.3d
1044 (8th Cir. 1999) (Refusing to consider insurer's post hoc rationales in claim litigation);
Abram v. Cargill, 395 F.3d 882, 886 (8th Cir. 2005) (Evidence of independent medical
examination acquired during last stage of appeal could not be relied upon by claim administrator
as supporting its claim decision. “There can hardly be a meaningful dialogue between the
claimant and the Plan administrators if evidence is revealed only after a final decision.” The
claimant should have been permitted to review and respond to the report).

By providing claimants the right to “toll” the claim decision window or take a timeout when
the claims administrator hits them with new evidence at the eleventh hour, the Department can
alleviate not only the lack of meaningful dialogue referenced by the courts, it will also alleviate
stress on the attending physicians across the country by providing them more time to respond.

We greatly appreciate the opportunity to provide commentary on the proposed

clarifications and stand ready to respond to any questions or concerns you may have with our
recommendations.

Sincerely,

a) ube

omas O. Sinclair

TOS/cf


SINCLAIR WILLIAMSuc

ATTORNEYS & COUNSELORS

2100-A SouthBridge Parkway, Suite 336 * Birmingham, Alabama 35209
P: 205.868.0818 * F: 205.868.0894

www. Sinclair Williams.com

January 18, 2016

Office of Regulations and Interpretations
Employee Benefits Security Administration
Room M-5655

U.S. Department of Labor

200 Constitution Avenue NW

Washington D.C. 20210

Re: Claims Procedure Regulations for Plans Providing Disability Benefits
RIN No.: 1210-AB39
Regulation: 29 C.F.R. §2560.503-1

Dear Assistant Secretary Borzi:

I write to request your consideration of the following comments on the proposed amendments to
the claims procedure regulations applicable to disability benefit plans. For the past 15 years, I
have represented claimants pursuing disability benefits provided through ERISA-governed plans.
I review in any given year a minimum of three hundred to four hundred ERISA-governed claims
and in some years that number has reached above eight hundred claim reviews.

I limit my comments to two areas of primary concern as it relates to the proposed changes in
procedure and disclosure. Before addressing those two areas of concern I wish to express my
appreciation for the EBSA’s work to improve transparency and provide clarification in the
regulations. Overall, the proposed changes will offer consumers, the industry and ultimately the
courts better insight into the proper interpretation of the regulations. The proposed clarifications
also reflect thoughtful consideration of recent U.S. Supreme Court opinions that described what
that court thought the proper role a decision maker should play in the administrative scheme.
My ‘areas of concern’ therefore are not to be taken as criticism. Instead I would ask they be
considered suggestions for further clarification of the regulations.

1. § 2560.503-1(g)(1)(vii)(B) Improvements to Basic Disclosure Requirements.

Effective January 20, 2001, the Department of Labor improved disclosure requirements to
require not simply the materials “relied upon” in making a determination but to further require
production of all “relevant” documents as that term is now defined within § 2560.503-1(m)(8).
Prior to this change, administrators could avoid production of materials supportive of the claim


January 18, 2016
Page 2

for benefits by asserting those supportive documents were not “relied upon” in denying the
claim.

The proposed language within the additional paragraph (g)(1)(vii)(B) uses the same “relied
upon” language which was problematic in the pre-2001 regulations. It has been my experience
over the course of several thousand claims the most common response we receive from claims
administrators is to argue they did not “rely upon” their internal regulations, protocols, rules or
standards in denying the claim and thus there is no need to produce them. This, of course, begs
the question whether or not the administrators violated their own rules, guidelines, protocols and
standards by ignoring them.

As it currently stands, the amendment would seem to offer two alternatives: (A) provide the
“internal rules, guidelines, protocols, standards or other similar criteria of the plan relied upon”
or (B) state there are no such documents. Thus it may appear claimants will get either (A) or
(B). However, consider the scenario where the administrator violated their own internal rules in
denying the claim. Rather than disclosing that violation by producing the rule or stating no such
tule exists, the administrator may simply choose (C): state that in denying the claim the
administrator did not “rely” upon their internal rules. We would propose the following
clarification:

RECOMMENDATION:
Current:

(B) Either the specific internal rules, guidelines, protocols, standards or other
similar criteria of the plan relied upon in making the adverse determination or,
alternatively, a statement that such rules, guidelines, protocols, standards or other
similar criteria of the plan do not exist.

Proposed:

(B) The “relevant” (as defined by § (m)(8)(iii) and (iv) of this section)
internal rules, guidelines, protocols, standards or other similar criteria of the
plan, plan administrator, claims administrator or other entity making the
adverse determination.

There should not be much objection to this clarification from the industry involved in the
administration of these claims given that many are beginning to recognize the importance of full
disclosure of internal rules contained in documents such as claims manuals. Indeed, one of the
largest disability insurers has begun providing its claims manual upon written request to
disability claimants. The relevant provision of Unum Group’s Claims Manual is attached.


January 18, 2016
Page 3

2. § 2560.603-1(h)(4)(ii) and (iii) Right to review and respond to new information before
final decision.

Out of the thousands of claims that I have reviewed over the course of my practice, less than
five percent (5%) of the claimants sought advice prior to filing a claim. Ninety-five percent
(95%) of claimants who sought assistance with ERISA claims did so only affer the initial denial.
This provides a very limited time period for the claimant’s attorney to become familiar with the
case and to submit additional evidence.

This narrow window of time is exacerbated with what the ERISA plaintiffs’ bar refers to as
“sandbagging” where a claims administrator discloses for the first time new medical opinions in
the final (appellate) denial. The new regulation would assist claimants in being fully informed
on the basis for the final denial and in providing them with the opportunity to respond ifthe
claimants are given the right to “toll” the time for a determination when presented with new
evidence.

RECOMMENDATION:

If the plan or claims administrator generates new evidence during the appeal of an
adverse benefit determination, then that administrator is required to “give the
claimant a reasonable opportunity to respond .. .” by providing the claimant (at the
claimant’s discretion) the right to temporarily “toll” his claim review.

Oftentimes the “new evidence” generated during the appeal phase of a disability claim is
medical evidence generated by insurance company physicians who are employees of the
company or by insurance company “paper” doctors who provide medical records reviews
through third party service companies dedicated to the insurance industry. While it may be that
the insurance companies may demand quick turnaround from their captive physicians, such is not
possible for a claimant.

The claimants are not able to insist on their attending physicians’ responses within a few
days’ notice or even a few weeks’ notice. If the administrators of the claim generate new
medical evidence on appeal, claimants should be given a right at their discretion to trigger the
tolling provisions under the regulation and inform the administrator that the clock for making the
determination will not begin to run again until such time as the claimant is able to procure a
rebuttal for the new evidence.

Once the claimant submits that rebuttal to the administrators’ new evidence, the “clock”
would continue on the time period for making a determination, thus giving the administrator the
same amount of time they had left prior to the “tolling” of the claim decision window. Such a
proposal is in line with the majority of jurisdictions which have dealt with the timing issue and
the administrators’ attempts to generate additional evidence during the appellate phase. See
Abatie v. Alta Health & Life Ins. Co., et al., 458 F.3d 955, 973-974 (9th Cir. Cal. 2006) (en banc)
(an administrator’s stating of a last minute reliance on a new ground for denial of benefits must