Law Offices of Kevin Koelbel 

A PROFESSIONAL CORPORATION 

VIA EMAIL (e-ORI@dol.gov) 

January 15,2016 

Employee Benefits Security Administration 

Room M-5655 

U.S. Dept. ofLabor 

200 Constitution A venue NW 

Washington D.C. 20210 

Re: Claims Procedure Regulations for Plans Providing Disability Benefits 

RIN No.: 1210-AB39 

Regulation: 29 C.FR. §2560.503-1 

Dear Assistant Secretary Borzi: 

The following comments relate to the Employee Benefits Security 

Administration's proposed amendments to 29 C.F.R. §2560.503-1 applicable to disability 

benefit plans. I base my comments on my last 15 years of law practice, which have 

focused on representing disability claimants under ERISA. My practice includes 

representing claimants in the administrative appeal process, Arizona District Court, the 

United States Court of Appeals for the Ninth Circuit, and recently successfully opposing 

a petition for certiorari to the United States Supreme Court. 

Plans should be required to inform participants of all deadlines. 

Plans should be required to inform participants of contractual limitation periods 

when informing them of adverse benefit decisions. The Supreme Court's decision in 

Heimeshoffv. Hartford Life & Accid. Ins Co., 134 U.S. 604 (2013) has caused confusion 

and precipitated much litigation. Heimeshoffleft open the possibility that a contractual 

limitations period could expire before a claimant exhausts the administrative appeals 

process, even where exhaustion is mandatory. This would require filing a lawsuit to 

preserve the right to do so before the plan makes an adverse benefit decision, i.e., before 

the participant suffers any damages and a claim has accrued for purposes of federal 

jurisdiction or state statutes of limitations. 

Plans are already required to inform participants of regulatory deadlines effecting 

the administrative appeal process and of the right to file a lawsuit following an adverse 

decision on appeal. Requiring plans to inform participants of a contractual limitation 

period is no more burden than the plan already bears. Given ERISA's lack of a statutory 

limitation period most claimants (and, in my experience, many lawyers) are unaware of 

how to determine the statute of limitations under ERISA. But even if a claimant knew to 

look to the applicable state law, the claimant cannot be expected to ask for copies of plan 

7303 W. BOSTON STREET * CHANDLER, 85226 * (480) 705-7550 * (480) 705-7503 (FAX) 

kevin@koelbellaw.com 
January 15, 2016 

Page 2 of7 

documents to search for a contractual limitation period. A contractual limitation period 

shorter than the state limit is a trap for the unwary. 

ERISA provides a right to bring a lawsuit. That right would be meaningless if the 

statute of limitations expired before the plan advised the claimant of an adverse decision 

or if the contract contained an undisclosed unreasonably short period. The Congressional 

purpose of ERISA, embodied in 29 U.S.C. § 1001(b), is to promote the interests of 

employees. See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 101 (1989). 

Requiring a plan to inform a claimant of any limitation on the rights provided under 

ERISA is consistent with that purpose. That a plan's fiduciary duty would not require the 

plan to inform a claimant of terms of the plan that limit the claimant's rights is unlikely. 1 

A clear statement of the statute of limitations is imperative. Just in the District of 

Arizona, under the existing regulation, judges have applied different statutes of 

limitations depending on which state statute the judge determines is most analogous. See, 

e.g., Felton v. Unisource Corp., 739 F. Supp. 1388, 1392, 1990 WL 84396 (D. Ariz. 

1990) aff'd in part, rev 'din part, 940 F.2d 503 (9th Cir. 1991) (applying one-year statute 

oflimitations applicable to statutory claims); Lemberg v. Scottsdale Healthcare Corp. 

Health Plan, 2:11-CV-00271-REJ, 2011 WL 6049873, at *2 (D. Ariz. Dec. 6, 2011) 

(noting the Ninth Circuit has instructed to apply the statute of limitations for written 

contracts, which is six years in Arizona) (citing Wetzel v. Lou Ehlers Cadillac, 222 F.3d 

643, 648 (9th Cir. 2000); A.R.S. § 12-548); Blood Sys., Inc. v. Roesler, 972 F. Supp. 2d 

1150, 1156 (D. Ariz. 2013) (applying one-year statute oflimitations applicable to written 

employment agreements). The statute of limitations should not depend on the analogy 

drawn by the judge assigned to the case. A definite limitation period benefits plans and 

claimants by reducing litigation devoted to the determination of the statute of limitations. 

The proposed regulations should require: plans to inform claimants of statutory 

and contractual limitations periods; that any contractual limitations period does not 

commence until the administrative process is exhausted; and a minimum one-year 

limitation period. 

Plans should not be permitted to offer new rationales for evidence after a claimant 

has appealed to support affirming an adverse benefit determination. 

I support the Department of Labor's ("DOL's") goal of preventing plans from 

affirming adverse benefits decisions based on reasons or evidence to which the claimant 

has had no opportunity to respond. Relying on post-hoc rationales or new evidence has 

never been consistent with the regulations. See Gabriel v. Alaska Elec. Pension Fund, 

1 Although it is the minority view, some courts have interpreted the existing regulations to require notice of the statute of 

limitations. See, e.g., Kienstra v. Carpenters' Health & Welfare Trust Fund of St. Louis, No.4: 12CV53 HEA, 2014 WL 

562557, at *4 (E.D. Mo. Feb. 13, 2014), affd sub nom. Munro-Kienstra v. Carpenters' Health & Welfare Trust Fund of St. 

Louis, 790 F.3d 799 (8th Cir. 2015)("[a] description of the plan's review procedures and the time limits applicable to such 

procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of[ERISA] following 

an adverse benefit determination on review." 29 C.F.R. § 2560.503-l(g)(iv)). 
January 15, 2016 

Page 3 of7 

773 F.3d 945, 963, 14 (9th Cir. 2014) (quoting Abatie v. Alta Health & Life Ins. Co., 458 

F.3d 955, 974 (9th Cir.2006)). Despite this, I have had to litigate the issue often. It 

appears necessary for the DOL to state what seems obvious- a review cannot be "full 

and fair" if the claimant never had an opportunity to address the ultimate reason or 

evidence supporting an adverse benefit decision. The review process is designed to 

resolve, as often as possible, claims in the administrative process. That design fails, if a 

claimant's first opportunity to address a rationale or evidence is in the district court. 

Post-hoc rationales force the district court to allow a claimant to present new evidence in 

the district court, remand the case to the plan administrator, or consider a case that has 

not been properly developed. None of these is consistent with an expeditious, efficient, 

or cost-effective claim's administration. 

Plans often obtain and offer the opinions of new medical reviewers, cite new or 

different evidence, or rely on different plan terms when affirming an adverse benefit 

determination. If these were included in the original decision, a claimant would have a 

minimum of 180 days to address them. The current regulation provides no opportunity to 

do so at the administrative level if a plan changes the basis for an adverse benefits 

decision after the claimant appeals. Although a claimant, who has been wrongfully 

denied benefits, bears what is often a devastating financial burden during the appeal 

process, no reason exists that the regulations should allow less time to address the real 

reason for the adverse benefit determination than the original reason, which the plan 

administrator often abandons on appeal. When the plan administrator abandons the 

original reason that should be a victory for the claimant. And, it would be except for the 

ability of plan administrators to change the reason for the denial of benefits after the 

claimant has appealed. 

The DOL should amend the regulations to allow a minimum of 180 days to appeal 

an adverse benefit decision from the date the plan presents its last new piece of evidence 

or rationale. The amendment should provide that if a plan denies a claimant the 

opportunity to address the new or rationale, the claim is deemed denied and subject to de 

novo review in the district court. 

Claims decisions should not be tainted by conflicts of interest. 

Minimizing the effect of bias in the claim review process is a laudable goal. But 

as the Supreme Court noted in MetLife v. Glenn, 544 U.S. 105, 113 (2013), when finding 

an inherent conflict in the insurer making the benefit determination, even the employer's 

"selection of an insurance company to administer is plan," may be tainted by the 

employer's own conflict. It follows that the plan's or the plan's insurer's selection of 

personnel, outside consultants, vocational experts, financial experts, or medical 

professionals to review claims will always be tainted by self-interest. Although the 

conflict cannot be eliminated, the regulation can be amended to minimize it. 
January 15, 2016 

Page 4 of7 

The DOL should amend the regulation to require plans to ensure that any agent, 

contractor, expert, or vendor, hired or consulted during the claim process is independent 

and impartial and not selected based on the likelihood that the person will support the 

denial ofbenefits. 

A plan should have to explain rejection of a treating physician's opinion or a Social 

Security Administration's disability determination. 

The norm is for plans to require claimants to apply for Social Security disability 

benefits. If claimants fail to do so, a plan will offset its benefit payment by the amount it 

estimates the Social Security benefit would have been if the claimant applied and the 

Social Security Administration approved the claim. Many plans will even hire 

companies to assist the claimant in obtaining Social Security disability benefits only to 

terminate the plan's benefits pending the Social Security determination or, in some case, 

after the award of Social Security disability benefits. Except in the context of mental 

versus physical disability, I have never been able to understand how a plan can represent 

to the Social Security Administration that a claimant meets the Social Security 

Administration's definition of disability and simultaneously find the claimant does not 

meet the plan's definition. I have never seen a plan's definition of disability that is more 

stringent than the Social Security Administration's definition. Thus, either the plan is 

misrepresenting the claimant's disability to the Social Security Administration or 

wrongfully terminating the plan's benefit payments. Plans profit from a favorable Social 

Security Administration determination, then ignore that determination and terminates its 

payment of benefits without explanation. Requiring a plan to explain its rejection of a 

Social Security determination (especially where the plan has advocated for the claimant 

in order to obtain the Social Security benefit) is consistent with the existing requirement 

of a full and fair review. 

An argument plans offer is that the Social Security Administration is bound by the 

"treating-physician rule," but plans are not. While this explanation rationalizes a plan's 

acceptance of the benefit of a Social Security disability award while rejecting the analysis 

supporting it, it side steps the issue of why the plan is rejecting the treating physician's 

opinion. The treating physician rule is premised on treating physicians likely being the 

medical professionals most able to provide a detailed, longitudinal picture of the 

claimant's disability and bring a unique perspective to the medical evidence that cannot 

be obtained from the objective medical findings alone or from reports of individual 

examinations, such as consultative examinations. The treating-physician rule only allows 

an administrative law judge to reject the treating physician's opinion in the face of 

substantial contrary evidence. 

While adopting the treating-physician rule would be best for ERISA disability 

claimants, plans should at least have to explain in detail its reason for rejecting a treating 

physician's opinion. In my experience, when a rationale has been offered, it is usually 
January 15, 2016 

Page 5 of7 

that the plan found someone to review the medical records, who does not agree with the 

treating physician. To find this "someone" is always possible. 

This ties into the issue ofthe plan's conflict of interest and incentive to hire 

experts and reviewers who support the denial of benefits. My view may be cynical, but 

anyone familiar with expert witnesses in litigation knows every party can find an expert 

with an opinion to support that party. While trial experts are subject to qualification 

under state and federal rules and case law, plan administrators have unfettered discretion 

in seeking opinions. Coupling the requirement that plans not select reviewers who will 

support denials of benefits with the requirement that plans provide cogent explanations 

for rejecting a treating physician's opinion moves the process closer to a full and fair 

review. As the administrative process approaches a full and fair review, the burden on 

courts lessens by reducing the number of cases that can be litigated and reducing the 

issues to litigate in the cases that make it to court. 

A court should be permitted to review any relevant evidence a claimant makes 

available to a plan before litigation commences. 

Limiting review in district court to the evidence available to the claims 

administrator at the time of an adverse decision provides an incentive to claims 

administrators to process claims before a claimant obtains evidence to support a claim. 

For example, the claim process for Social Security disability benefits is notoriously slow. 

Often a favorable Social Security decision issues after a claim administrator terminates 

plan benefits. This is true even in cases where the plan continues to assist the claimant to 

obtain the Social Security disability benefits. This was the case in Bilyeu v. Morgan 

Stanley Long Term Dis. Plan, 683 F.3d 1083 (9th Cir. 2012) cert. denied 133 S.Ct. 1242 

(2013). In Bilyeu, even after the plan's insurer, Unum, terminated Bilyeu's benefits, 

Unum continued to use its wholly owned subsidiary, Genex, to assist Bilyeu in obtaining 

Social Security disability benefits. Genex was successful. But when Bilyeu challenged 

the termination of plan benefits, Unum countersued for reimbursement for the 

overpayment created by the retroactive award of Social Security benefits that overlapped 

with the period Unum paid benefits. Unum did not have to explain its rejection of the 

administrative law judge's decision because it was not part of the administrative record at 

the time Unum denied benefits. Thus, the district court could consider the Social 

Security disability award with respect to Unum's counterclaim, but not necessarily with 

respect to Bilyeu's claim for benefits. That seems absurd. Permitting the court to 

consider any evidence available to the plan before litigation remedies the situation. This 

is the view taken by the Fifth Circuit in Vega v. National Life Ins. Serv., Inc., 188 F .3d 

287, 300 (5th Cir. 1999). 

Another example is a claimant not having enough time to obtain additional 

treatment during the appeal process. In some cases, a disability requires treatment by a 

specialist, who is out-of-state, in high demand, or to whom a claimant has limited access 

because of limited medical insurance. Waiting six months for an appointment is not 
January 15, 2016 

Page 6 of7 

unusual. But when the appeal process is 180 days, six months is not soon enough. 

Which leads me to another issue. The current regulations [29 C.F.R. §2560.503-

1(h)(3)(i) and (4)] allow a minimum of 180 days for a claimant to submit an appeal. In 

the last year have I seem two claim files in which the same insurer has told the claimant 

that the regulations permit a maximum of 180 days to appeal. 

The DOL should amend the regulation to permit claimants to add the 

administrative record at any time prior to commencing litigation. And, the regulation 

should require plans to extend the time to appeal beyond the minimum absent a showing 

a prejudice to the plan. 

Notice of the right to obtain relevant documents should include the definition of 

relevant documents. 

Requiring plans to provide claimants notice of the right to request "relevant 

documents" is important to insure a claimant receives a full and fair review. But a 

claimant is unlikely to know what "relevant documents" means. A claimant is much 

more likely to be familiar with the term "claim file." The amendment to the regulation 

should require that plans provide notice to claimants that they may request their "claim 

file." In the alternative, plans should not only be required to inform claimant of their 

right to request "relevant documents," but also provide the definition of "relevant 

documents" contained in 29 C.F.R. § 2560.503-1(m)(8). 

The amendment needs to be clarified that "deemed exhausted" also applies to the 

appeal process. 

The proposed amendment is clear that a plan must adhere to the regulations or the 

claim process is deemed exhausted. But many view the claim process and the appeal 

process as distinct. The proposed amendment should clarify that the appeal process is 

part of the claim process and that a claimant is deemed to have exhausted the claim 

process if a plan fails to adhere to the regulations in either the initial claim process or the 

appeal process. 

The proposed amendment should also clarify that the standard of review in the 

district court when a claim is deemed exhausted is de novo, which is consistent with the 

case law interpreting the current regulation. See, e.g., Abatie v. Alta Health & Life Ins. 

Co. 458 F.3d 955, 963 (9th Cir. 2006); Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 

631 (lOth Cir. 2003) (citing Firestone, 489 U.S. at 111). The preamble to the proposed 

regulation is clear that review is de novo when special deference is not given to the plan's 

decision. But, the regulation states "if a claimant chooses to pursue remedies under 

section 502(a) of ERISA under such circumstances, the claim or appeal is deemed denied 

on review without the exercise of discretion by an appropriate fiduciary." That is not as 

clear a statement as the preamble. To avoid a potential ambiguity the DOL should amend 

the regulation to state that review is de novo when a claim or appeal is deemed denied. 
January 15, 2016 

Page 7 of7 

Plans should be required to disclose internal rules, protocols, guidelines, etc. 

I support the proposed amendment requiring plans to state in adverse benefit 

determinations the specific internal rules, guidelines, protocols, standards or other similar criteria 

of the plan relied upon or state that they do not exist. To the extent they exist they would all 

within the definition of "relevant documents" that a claimant could request. But requiring 

disclosure will protect the unwary and unsophisticated claimant against plans creating and 

applying hidden terms or conditions. Perhaps most important is the requirement to disclose the 

non-existence of this category of documents. Rudderless claims handling cannot be consistent 

with a plan administrator's fiduciary duties. Benefits must be administered "in accordance with 

the documents and instruments governing the plan." 29 U.S.C. §1104. The regulations already 

require adverse benefit determinations to include the reasons for the denial and the applicable 

plan terms. The proposed amendment would not be onerous and would promote "a meaningful 

dialogue between ERISA plan administrators and their beneficiaries" as ERISA contemplates. 

Booten v. Lockheed Med. Ben Plan, 110 F.3d 1461, 1463 (9th Cir. 1997). Not requiring plans to 

identify the basis of an adverse benefit decision is antithetical to a full and fair review. 

Plans should notify claimants of their right to retain counsel for appeal. 

Plans promote the notion that the administrative appeal process is an informal process 

and do not convey the importance of the process. Because the current regulations limit what a 

claimant may present in the district court to evidence presented during the appeal process, the 

appeal process is crucial. In my experience, frequently claimants do not seek counsel until after 

the plan denies the administrative appeal, and then it is too late to present evidence and limits 

review in the district court. Although some of the proposals above address the current 

limitations on the content of the administrative record, in the absence of such changes, many of 

the issues now litigated would be avoided if a claimant had the advice of counsel during the 

appeal process. The DOL should amend the regulations to require plans to inform claimants of 

their right to an attorney during the appeal process. This is consistent with a plan administrator's 

fiduciary duties to claimants and the goal of a full and fair review. 

I hope that these comments are clear and helpful 

Kevin 

~)(~ Koel bel