December 10, 2017

By Mail: 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

Deputy Assistant Secretary Hauser:

I am writing to strongly urge the Department to not alter or further postpone the 

implementation of the Final Regulation on Claims Procedure for Plans Providing Disability 

Benefits, 81 Fed. Reg. 92316 (Dec. 19, 2016) (“the final disability claims regulations” or “the 

final rules”) that are now scheduled to go into effect on April 1, 2018. 

For over fourteen years, I have represented claimants at all stages of the ERISA benefit 

claims process (application, the internal appeal process, and in litigation). The vast majority of 

my clients are seeking to overturn disability claim denials. 

The professed concerns proffered by the industry are the same objections previously 

raised against the implementation of the final rules, which the Department has already 

considered and soundly rejected. 

As addressed in my previous comments, I am extremely alarmed with the lack of 

transparency in this process and the fact private meetings between the industry and the 

Department appear to be the catalyst for this reexamination, without any input from 

representatives of participants. While it is unclear why this matter is being re-litigated, 

nevertheless, I will address the industry’s objections that I feel are most in need of a response.

Costs Will Not Increase

The industry’s assertion that implementation of the final rules will increase 

administrative costs, resulting in higher premiums and a reduction in employees’ access to 

disability plans is entirely void of merit. It is important to consider the source of this argument. 

The industry is certainly not a disinterested, reliable advocate for participants. As the 

Department has already acknowledged, the disability claims industry has been needlessly 

adversarial toward ERISA plan participants. Even a cursory review of is the comments provided 
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to the Department previously establish the truthfulness of this and the inequities faced by plan 

participants in the ERISA disability claims process. 

The Department has requested data addressing whether costs increased as a result of the 

implementation of the 2000 claim regulations. This information is already available through the 

Bureau of Labor Statistics (“BLS”) and establishes that not only did costs not increase, but 

employee access to disability plans actually rose. See, Bureau of Labor and 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/volume4/disability-insurance-plans.htm. There was an increase in participation between the years of 

1999 and 2014. This increase occurred despite the implementation of the 2000 regulations and 

despite the fact that employment in the service industry has increased (an industry in which 

employees are least likely to have access to employer-based disability coverage). Moreover, this 

increase occurred despite a plethora of court decisions that continued to heighten the plans’ 

obligations, including decisions discussing a plan participant’s right to review and respond to 

new evidence, the necessity of an administrator to appropriately explain adverse benefit 

determinations, and cases addressing financially conflicted decision-making and when a claim is 

deemed exhausted. 

The Department has also requested data addressing whether disability plan premiums 

increased as a result of the implementation of state statutory bans on discretionary clauses in 

disability policies. Again, the Department can rely on information from its own Bureau of Labor 

and Statistics. During the time period covered by the BLS publication, numerous states enacted 

discretionary clause bans, which 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 

only not affected access or participation, but the BLS publication establishes that participation in 

employer-based disability plans actually increased. 

There is no credible evidence to suggest that costs will increase as a result of the 

implementation of the final rules. In light of the credible evidence establishing the contrary, I 

would be very skeptical of any data supplied by the industry now that suggests that employers 

would forego disability coverage for their employees. The Department should not modify or 

further delay the implementation of the final rules in response to the industry’s recycled cost 

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

date further. 

The Benefits of the Final Rules Far Outweigh the Purported Costs

The ERISA litigation claims process 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 
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itself from suit due to the Employee Retirement Income Security Act (“ERISA”).). ERISA 

disability participants who are denied their benefits face an arduous process that is far below the 

standard for regular civil disputes. There are no jury trials in ERISA claims; there is a closed 

record from the claims process that can rarely be supplemented in litigation; courts often apply 

the most stringent standard of review - arbitrary and capricious; and there are no remedies to 

hold administrators accountable and discourage unfair and self-serving behavior on the part of 

plan administrators (which are very often financially conflicted). Plan participants must still 

achieve the “higher-than-marketplace standards” in processing ERISA claims, even with the 

implementation of the final rules. MetLife v. Glenn, 554 U.S. 105, 115 (2008). Thus, the 

Department should take these “higher-than-marketplace” standards into account when 

considering the benefits of the final rules relative to the purported costs of implementation. But 

assuming that the final rules have some minor impact on cost, the costs simply will not outweigh 

the benefits. The Department has indicated that its purpose in this process is to make sure claims 

are fairly adjudicated and prevent participants from facing unnecessary financial and emotional 

hardship. The industry’s request that the Department abandon these important goals should be 

denied. 

If the enhanced protections of the final rule actually resulted in the premium increases

suggested (which is unsupported and disputed by credible evidence), it would certainly be an 

acceptable price to pay for true coverage. Again, the comments previously submitted to the 

Department illustrate the inequities that ERISA participants face in the claims process. Paying 

lower premiums for illusory coverage does not protect participants. Plan participates typically 

only discover the inequities of the ERISA claims process when their disability claims have been 

unfairly denied, at which point it is too late to purchase private individual insurance. I can attest 

to the fact that disability insurance attorneys very often must turn down representation of 

meritorious ERISA disability cases because the record is closed or the claimant was unaware of a 

contractual limitations period that has passed. To the extent that the increased protections of the 

final rules bring an administrator’s claims handling process in line with the reasonable 

expectations of participants, the minimal costs (if any) are outweighed by the benefits. 

Requiring the Plan to Explain the Basis for Disagreement with Social Security Decisions or 

Other Contrary Opinions will Not Increase Costs.

This rule simply requires disability plans to clearly articulate an explanation for an 

adverse benefit determination so that claimants have a fair opportunity to address it. This 

fundamental due process principal is entrenched in ERISA and already required by the 2000 

regulations. 

The Department has already acknowledged that addressing the reasons for disagreeing 

with a favorable Social Security decision will not likely increase administrative costs. Typically, 

plan benefits are merely a supplement to Social Security Disability benefits (“SSDI”). Most 

disability plans require claimants to apply for benefits through the Social Security 

Administration (“SSA”) and often plans will provide representation for claimants towards this 
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goal. This is because plan terms usually provided that plan benefits are offset by SSA benefits. 

Insurers are well aware of the SSA process. For example, in order to determine whether 

claimants qualify for SSDI representation, claims staff must know the applicable criteria. 

Importantly, many insurers’ claims manuals address the SSDI standards. Likewise, both the 

Unum and Cigna Regulatory Settlement Agreements required the insurers to give great weight to 

SSA awards. 

Also, such a rule would not increase costs or place a higher burden on the government. 

The BLS publication provides: 

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.

It is important to note that courts in many jurisdictions already specifically 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). Moreover, the 

Supreme Court of the United States has found that it is arbitrary and capricious for claims 

administrators to encourage or require claimants to seek Social Security benefits, benefit from 

SSA awards by offsetting SSA benefits, and then ignore the SSA’s determinations. Metropolitan 

Life v. Glenn, 554 U.S. 105 (2008). 

Many of the industry’s own comments to the Department acknowledged that requiring an 

explanation of the reasons for disagreeing with the Social Security decision and other contrary 

evidence is in line with the existing standard. Thus, this rule would not increase costs. Instead, 

codification of this already existing requirement will increase uniformity in the process and thus, 

likely decrease costs. 

The Deemed Exhausted Rule is Not Costly

The Industry appears to argue that the cost of administering disability claims will 

increase because the final deemed exhausted rule would purportedly result in plaintiffs and their 

attorneys racing into court and increasing the volume of ERISA litigation. This argument is 

entirely void of merit. Similar to the majority of the other final rules, this rule is primarily a 

codification of existing judge-made law. Claimants are already able to file a lawsuit 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). Accordingly, it is 
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unlikely that additional costs will result from the implementation of this rule. 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). 

Further, there is no incentive for plaintiffs and their attorneys to prematurely file ERISA 

lawsuits. Courts will only award attorney fees for ERISA 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). Accordingly, there is no motivation to utilize the final deemed denied rule 

and file a lawsuit except in the most extreme cases. In most circumstances, such a case will be 

remanded to the administrator with instructions to timely and appropriately evaluate the merits of 

the claim. It simply does not make sense for plaintiffs or their attorneys to initiate litigation that 

is not necessary and that will not result in resolving the case on the merits. 

Providing the Right to Review and Respond to New Evidence or Rationale From the Plan 

During the Appeal Will Not Increase Costs.

This rule has its foundation in basic fairness. It prevents administrators from 

sandbagging participants with new evidence or rationales, at a time that participants have no 

ability to respond. Such a rule is essential to a full and fair review. In litigation, ERISA cases 

are typically limited to the record assembled during the internal claims process. As such basic 

fairness dictates that participants be permitted to address all evidence and adverse benefit 

rationales before the record closes. Without such a rule, plan administrators (which are very 

often financially conflicted) are incentivized to stonewall participants during the internal process 

and ambush them by inserting new evidence or new rationales for an adverse benefit 

determination just before the record closes. Essentially, plans are able to stack the deck or create 

a largely one-sided record. Not allowing participants the ability to address all evidence and 

denial rationales proffered by plan administrators is particularly prejudicial given the fact that in 

many ERISA litigation cases, participants have the burden of proof under the extremely stringent 

arbitrary and capricious standard of review. 

The Department has already acknowledged the importance of this rule. The industry’s 

assertion that providing the claimant with new evidence or rationales before making a final 

decision is costly is unsupported and dubious for several reasons. 

First, as the Department has already acknowledged, this rule simply codifies the standard 

in some jurisdictions. Likewise, several disability plans or insurers already provide for the right 

to review and respond to new evidence and rationales. Further, courts already require plans to do 

this in many cases. Accordingly, in many circumstances administrators are already following

this rule. Second, participants and their attorneys have no incentive to needlessly drag out the 

process. They are motivated to respond to new evidence or rationales only when absolutely 

necessary to their claims. If participants are able to respond to all evidence and rationales 
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during the administrative process, ERISA litigation will likely decrease and in turn so will the 

cost of administering disability claims. Finally, whether plans provide this information to the 

claimant during the ERISA appeal process, they will have to provide it eventually. New reasons 

or evidence will need to be included in the claim file and likely again in 26(a)(1) disclosures. 

Again, without this rule, the claims administrator’s new evidence or rationale will be 

included in the record that the court reviews, but the participant’s rebuttal will not. This allows 

and indeed incentivizes plan administrators to strategically withhold information during the 

administrative process and sandbag participants with that information at a time that they are 

prohibited from ever challenging it, rendering a reversal of the adverse benefit determination 

even more elusive during the administrative process or in court. The industry’s objection to not 

being able to stack the record is neither surprising nor new. 

The industry’s claim that a second appeal (which some plans provide) serves the same 

purpose as the right to respond to new evidence or rationales before a final decision, is patently 

incorrect. A second appeal allows claims administrators the same sandbagging opportunity as 

the first appeal and not all plans permit second appeals.

The Impartiality Rule

While there were only a few industry comments objecting to the rule requiring that 

consulting experts be impartial, it is important to address this rule and the objections. The 

industry complaints appear to suggest that litigation costs would rise, alleging that discovery in 

ERISA litigation would increase. However, the majority of those who object to this rule also 

admitted that the proposed rule reflects the existing law. Thus, it is unclear why litigation costs 

would increase simply by codifying what is already required. Moreover, federal judges limit 

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). 

Additionally, the importance of ensuring that the experts relied on by administrators to 

render claim determinations be impartial cannot be outweighed by an unsupported claim that the 

costs of administering disability claims will increase. ERISA claimants are entitled to a truly full 

and fair review and thus, the credibility of experts who are opining on whether a claimant 

qualifies for benefits should be subject to some degree of scrutiny. 

The Rule Requiring Disclosure of any Internal Limitations Period

Since the expiration date of an internal limitations period is a plan term, this information 
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is easily accessible to plan administrators and thus, this rule can be implemented with no 

additional cost to or burden on administrators. Again, many jurisdictions already require plans to 

disclose the limitations period, so it is unlikely to increase administrative costs. 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

There were a few industry comments objecting to the proposed rule requiring claims 

administrator to disclose internal guidelines or certify that none exist. Many of these comments 

suggested that these documents are immaterial, alleging that internal guidelines tend to be 

procedural rather than substantive. However, a plan’s claim procedures certainly affect the 

substantive outcome of claims. This rule will actually reduce litigation costs, as currently the 

disclosure of claims manuals and internal guidelines in discovery is often disputed in ERISA 

litigation cases. 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). 

Thank you considering my comments,

/s/ Alicia Paulino-Grisham

Alicia Paulino-Grisham, Esquire