945 Concord Street Framingham, MA 01701 T: (508)620‐5387 F: (508) 834‐1172  

E: kate@sullivandisabilitylaw.com 

December 11, 2017 

 

BY ELECTRONIC MAIL 

Office of Regulations and Interpretations, 

Employee Benefits Security Administration 

Department of Labor 

Re: Re-Examination of Claims Procedure Regulations for Plans Providing Disability 

Benefits 

RIN No.: 1210-AB39 

Regulation: 29 C.F.R. §2560.503-1 

Dear Deputy Assistant Secretary Hauser: 

 I am writing to request that the Department not modify or further delay 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 in private practice representing individuals seeking their disability benefits for 

over fifteen years. The majority of my practice involves representing clients who have disability 

insurance policies through their employment that are governed by ERISA. I have represented 

hundreds of clients who have had their ability to understand an adverse decision by an insurance 

company directly impacted by the Department’s regulations setting forth their rights to obtain 

information relevant to the rationale for the decision made on their claim. 

There are two issues I wish to address in my comments. First, the industry’s allegation that 

there will be an increase in cost associated with the claims regulations and second, that providing 

the right to review and respond to new evidence or rationale from the claims administrator during 

the appeal is costly. 

No Increase in Cost 

The insurance industry claims that the rules will increase costs and therefore premiums will 

increase and negatively affect individuals access to disability benefits. A review of existing data 

proves this to be inaccurate. 

All data points to the conclusion that access and participation in employer-based disability 

insurance has increased, not decreased, between 1999 and 2014. This is demonstrated in the 
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December 11, 2017 

Page 2 of 2 

  

Department’s own Bureau of Labor Statistics, https://www.bls.gov/opub/btn/volume-4/disabilityinsurance-plans.htm It is crucial to note that this participation level increased at a time in which 

despite the 2000 disability claims regulations and subsequent court decisions that addressed issues 

addressed in the current regulations, for example deemed exhaustion, the need to discuss and 

explain adverse benefits decisions, and the participants right to respond to new evidence. It seems 

that any new data from the insurance industry that is contrary to the existing data is suspect. 

All the rules are critical to providing claimants with a full and fair review of their claim for 

benefits. It is also important to keep in mind that the BLS data shows that the cost of disability 

insurance is extremely modest, so any alleged cost increase is unlikely to have any effect 

whatsoever, and the benefits of the rules far outweigh any alleged increase in cost. 

Providing a right to review and respond will not increase cost 

The benefit of proving the right to review and respond by a claimant to new evidence or 

rationale from a claims administrator during an internal appeal far outweighs any alleged cost. It 

is not possible for a claimant to have a fair claim review by an insurance company if that claimant 

is unaware of and not given the rationale for the denial of benefits and an opportunity to respond 

to it in a substantive way. The industry claims this rule is costly. I argue that there is no cost 

associated with the rule, and in fact the opposite is more likely true- it is more costly to not have 

the rule at all. 

This rule gives claimants the right to respond to an administrator’s rationale for denying 

his or her claim and allows the response to be part of the record if there is any litigation that ensues. 

This is vitally important and critical to any future resolution of the matter as most ERISA cases 

are decided on a closed record. By way of example, I am litigating a case now in the United States 

District Court, District of Massachusetts, where this very issue is presented. My client was not 

given the right to respond to the insurance company’s last rationale for denying her appeal. We 

attempted to communicate with the insurance company and asked it to review her response and it 

refused. Litigation ensued and now a motion will be presented to the court asking it to resolve the 

matter of what belongs in the record. In addition, the court, if it believes the insurance company 

should have allowed my client the opportunity to respond, may choose as a remedy to remand the 

matter back to the insurance company to undertake the review that this very rule contemplates. 

This is an example of how it is less costly for the insurance company to have allowed my client a 

response while the appeal was still pending rather than spend judicial resources to decide the matter 

after the fact. 

The insurance industry’s comments that a second appeal serves the same purpose is not 

accurate as a second appeal gives the claims administrator the same sandbagging opportunity as 

the first appeal and therefore does not solve the problem of not allowing a claimant to respond 

substantively to the rationale being offered to deny his or her claim. In fact, if the claimant has a 

substantive right to respond, it would obviate the need for any second appeal, and costly litigation 

as explained above. 

 In the end, there is no higher cost associated with this rule. It only removes the industry’s 

ability to withhold information that would help claimants respond substantively to the rationale 
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December 11, 2017 

Page 2 of 2 

  

they are being presented with as the basis to deny his or her appeal. The only loss to the insurance 

industry is the loss of the ability to give a new reason for denying a claim and not allowing any 

response to that new rationale. 

Thank you for taking the time to consider my comments. If you have any questions or 

would like to discuss these issues further, please feel free to contact me.

 Sincerely, 

 

 M. Katherine Sullivan