From: willex211 

Sent: Monday, December 11, 2017 7:12 PM

To: EBSA, E-ORI - EBSA

Cc: willex211@aol.com

Subject: RIN: 1210-AB39

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.

For 20 years I have represented claimants in ERISA benefit matters both in the internal appeal 

process and in litigation. The vast majority of my clients were seeking to reverse denials of 

short-term or long-term disability claims.

 

The objections that have been raised are no without merit.

The Objection That The Rules Will Increase Costs Which Will Then Reduce Employee's 

Access to Disability Plans Is Without Merit

The industry’s logic - that the rules will increase administration costs, which in turn will cause 

premium increases, which in turn will reduce employees’ access to disability plans - has no 

basis. Please do not would not allow an industry that profits from denied claims to prescribe 

what is good for ERISA disability plan participants. As my experience has taught me, and as the 

Department has already acknowledged, the disability claims industry is needlessly adversarial 

toward ERISA disability plan participants. The industry's argument that the final rules are bad 

for participants – despite all evidence to the contrary - does not pass the smell test and cannot be 

taken seriously. 

Please note that available data shows that this industry argument is specious. The Bureau of 

Labor Statistics’ February 2015 publication, Beyond the Numbers, Disability Insurance Plans; 

Trends in Employee Access and Employer Costs, addresses these concerns. 
https://www.bls.gov/opub/btn/volume-4/disability-insurance-plans.htm. There was an increase in 

participation between the years of 1999 and 2014, a period of time that obviously covers the 

promulgation of the 2000 claims regulations. This increase occurred despite the fact that 

employment in the service industry has increased, an industry in which employees are less likely 

to have access to employer-based disability coverage. This increase also occurred despite a 

number of court decisions that continued to heighten the plans’ obligations. The final rules 

simply will not cause employers to abandon disability coverage. This BLS document also 

demonstrates that the cost of disability insurance is low, a possible explanation for why modest 

increases don’t seem to lead to less participation.

The Department has also asked for data about whether disability premiums increased in response 

to the adoption of state statutory bans on discretionary language clauses in disability 

policies. Notably, during the time period covered by the BLS publication, many states enacted 

discretionary clause bans. A list of these states 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). These state regulations have not 

affected access or participation. 

Also, during the period covered by the BLS publication, two major insurers with significant 

market share, UNUM and CIGNA, were examined by the states for poor claims handling 

practices. As a result they became subject to fines and Regulatory Settlement Agreements that 

raised the bar for their disability claims administration. 

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

m_multistate.html. Nonetheless, during this period access and participation increased.

An additional reason that employers are not likely to stop providing disability benefits is that 

these benefits play a role in recruitment and retention. MetLife, one of the industry’s large 

disability insurers, urges employers to consider how benefits, including disability benefits, 

increase loyalty and productivity and reduce the apparently rampant worries of financial 

insecurity. https://benefittrends.metlife.com/us-perspectives/work-redefined-a-new-age-ofbenefits/; 

https://benefittrends.metlife.com/media/1168/2016_ebts_opportunityknocks_insights.pdf.

To the extent that the industry also argues that increased costs will lead to employers requiring 

employees to pay their own disability premiums, this is not necessarily an unwelcome 

thing. Where the disability claimant pays his own premiums with after-tax dollars, his disability 

benefits are tax-free. This is an enormous benefit to many disability claimants. 

The Department should not change the final rules in response to the industry’s cost 

argument. Nor should the industry’s cost argument cause the Department to extend the effective 

date further. 
The Industry Argument that the Benefits Will Outweigh the Costs Is Without Merit --

Benefit Claimants Very Much Need A More Equitable System Where the Cards Are Not 

Stacked In Favor of the Industry

Regulations are not improper just because they affect the market. Mkt. Synergy Grp. v. United 

States Dep't of Labor, 2016 U.S. Dist. LEXIS 163663, 2016 WL 6948061 (D. Kan. 11/28/2016).

But assuming that the final regulations have some impact on cost, the costs will not 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 ERISA claimants are at such a procedural disadvantage. 

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 these “higherthan-marketplace” standards into account. It cannot be the case that any minor increase in costs 

justifies denying ERISA claimants the limited protections that the final rules provide.

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 she thought were promised through an employer's plan, it is too late for her 

to purchase private individual insurance to cover the risk of becoming destitute. It is only at the 

point of becoming disabled that claimants discover the procedural hurdles that are unique to 

ERISA claims. Attorneys often have to turn down representation of ERISA disability cases that 

are otherwise meritorious because the record is closed or the claimant had not realized that a 

contractual limitations period had passed. To the extent that increased protections bring 

disability claims administration in line with the reasonable expectations of the employeeparticipants, the costs are outweighed by the benefits. This is what is meant by higher-thanmarketplace standards. 

In sum, 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. For some employees a Social 

Security award will wipe out their entire ERISA benefit or reduce it to a mere $100 per 

month. Most disability plans require claimants to apply for the SSA benefit, and the plans 

usually provide representation for claimants. This is done so that the plan may take advantage of 

the plan term that the SSDI benefit will offset the LTD benefit. In order to decide which 

claimants qualify for this representation, claims handlers need to know the standard that the SSA 

uses. Comment #114, p.8 (ACLI). As such, their claims manuals tend to include pages of 

instructions related to Social Security disability and its standards. Both the Unum and Cigna 

Regulatory Settlement Agreements required the insurers to give greater weight to the Social 

Security awards. The insurers are no strangers to the SSA process or its standards. 

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, courts in many jurisdictions require an explanation of a favorable Social Security 

award. 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.

Additionally, as with most of the other final rules, this rule is mostly 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 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 

admit. 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 locate and 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 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 case in court. 

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 this approach.

I strongly disagree with industry 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 absurd, 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. The disability claims regulations acknowledge as much my limiting the 

number of appeals a plan can require to two. 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 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. 

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).

Yours Truly,

Michael P. Williamson, Attorney at Law

Michael P. Williamson

Attorney at Law
201 4th Ave. N

Suite 1490

Nashville, TN 37219

phone: 615-726-0808

fax (toll free): 855-696-8770

email: willex211@aol.com