PUBLIC SUBMISSION

Received: December 11, 2017

Status: Pending_Post

Tracking No. 1k1-90aq-awoc

Comments Due: December 11, 2017

Submission Type: Web

Docket: EBSA-2015-0017

Claims Procedure for Plans Providing Disability Benefits; Extension of Applicability

Date

Comment On: EBSA-2015-0017-0291

Claims Procedure: Plans Providing Disability Benefits

Document: EBSA-2015-0017-DRAFT-0442

Comment on FR Doc # 2017-22082

Submitter Information

Name: Terrence Coleman

Address: 600 Montgomery St., 31st Floor

San Francisco, CA, 94111

Email: tcoleman@pillsburycoleman.com

Phone: 4154338000

General Comment

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 write 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 over twenty years, my law practice has focused exclusively on the representation 
of insurance policyholders, including disability benefit claimants in pre-litigation 

administrative appeals and ERISA litigation.

I understand that a number of insurers and plans oppose the new regulations, claiming 

they will increase costs. In particular, they have argued that providing an insured the 

right to review and respond to new evidence or rationales during the appeal process 

will be prohibitively expensive. This argument is contradicted by what typically 

occurs in practice.

In reality, by the time a denied disability claim ends up in federal court, the reviewing 

court will usually reject an insurer's claim denial where the insurer relied on new 

evidence without giving the participant a chance to respond. In that instance, a court 

will be forced to review the new evidence itself, and generally, reject the insurer's 

decision based on the new evidence or remand the matter to the plan for further 

findings. Each of these alternatives is incredibly more expensive to the plan than 

would be allowing the participant to respond to the evidence in the first instance, 

during the appeal stage of the claim.

Not only is it more judicially efficient to allow insureds to respond to "new evidence" 

at the appeal stage, but also it is fundamental to a full and fair review.

It is important to note what this rule actually does. It allows a claimant to respond to a 

disability claims administrator's (often an insurance company) 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. This 

explains why many judges will "remand" a case with "new evidence" back to the 

insurer: to allow the claimant to build up his/her side of the administrative record 

before appearing before the judge again. Obviously, not allowing an insured to 

respond to new evidence during an appeal is incredibly inefficient for all parties 

including the court.

After years of experience representing ERISA claimants, there is no question in my 

mind that the insurer's ability to sandbag disabled claimants 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 common denial technique in the disability claims industry. In 

order to prevent administrators from attempting to suppress meritorious disability 

claims, the final rule needs to be kept as is in the regulations.

If the industry's true concern is that their claims handlers will need to do more work 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 as a 

compromise.

I 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. In my experience, this is absolutely false because a 

second appeal permits the claims administrators the same sandbagging opportunity as 

the first appeal. Second appeals are not necessarily a useful device to plan 

participants. Moreover, second appeals are not universal and are not required by most 

disability plans. The second appeals that the industry touts are a matter of plan design, 

and can be changed at any time by plan sponsors. In fact, it is possible that "second 

appeals" will become obsolete where the claimant has a true right to respond to new 

evidence, resulting in cost savings for the industry.

The procedural protections provided by the disability claims regulations are important 

in light of the few substantive rights and protections afforded plan participants and 

beneficiaries. However, the benefit of allowing insureds an opportunity to respond to 

new evidence is not limited to participants. Allowing an opportunity to respond allows 

a claimant to address the accuracy and reliability of that evidence to ensure "a 

meaningful dialogue" between the parties. Booton v. Lockheed Medical Benefit Plan, 

110 F.3d 1461, 1463 (9th Cir. 1997).

Thank you for the opportunity to comment upon these important proposed 

regulations.

Very truly yours,

Terrence J. Coleman