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December 7, 2017

Via E-Mail: e-ORI@DOL.gov

Office ofRegulations and Interpretations,

Employee Benefits Security Administration

Room M-5655

U.S. Dept, ofLabor

200 Constitution Avenue NW

Washington D.C. 20210

Re: Re-Examination ofClaims Procedure Regulations for Plans Providing Disability

Benefits

RINNo.: 1210-AB39

Regulation: 29 C.F.R. §2560.503

Dear Deputy Assistant Secretary Elauser:

I am writing to request that the Department does not modify or further delay the final disability 

claims regulations (Final Regulation on Claims Procedure for Plans Providing Disability 

Benefits, 81 Fed. Reg. 9231 6 (Dec. 19,2016)) that are now scheduled to go into effect on

April 1,2018.

I have represented disability claimants for over 15 years. I have helped hundreds of claimants

receive disability benefits - both through the administrative claim process and, when necessary, 

litigation. My clients are individuals who have suffered the double blow ofserious illness or

injury and the loss ofwork income. Timely receipt of disability benefits is often the only thing 

that stands between my clients and losing their homes because they are unable to pay the 

mortgage or other financial catastrophes. Indeed, I have had clients who have died while their

claims were pending.

Disability claimants often have difficulty obtaining representation in the administrative claim 

process and lack the resources necessary to gather the evidence necessary to contest a claim

denial. The Department needs to make sure the Secretary's claim review regulation protects the 

interests of disabled workers.

While I appreciate the opportunity to comment on the Department's re-examination ofthe costs

ofthe final rules governing disability claims, the concerns raised by the industry are not new.

Rather, these objections appear to be simply re-argument ofthe merits ofthe final rules.
EBSA

December 7, 2017

Page 2

Where those rules are based on policy choices that have been made by Congress, by this

Department, and by the federal courts interpreting ERISA, another argument about the merits is

unnecessary.

Nevertheless, I will address the insurance industry's primary object ion.

Costs Will Not Increase

The industry claims ifthe final rules go into effect there will be an increase in costs that will 

increase long-term disability (“LTD”) premiums resulting in fewer employees being covered by

group LTD plans. This assertion is not grounded in fact.

This costs argument was made in various industry comments to the proposed rules before final

ad option. The Department concluded that costs would not outweigh the benefits. The current 

cry ofincreasing costs is an argument that has already been considered and rejected. An agency

is not required to "conduct a formal cost-benefit analysis in which each advantage and

disadvantage is assigned a monetary value." Michigan v. Environmental Protection Agency, 135

S. Ct. 1699, 2711 (2015).

Nonetheless, the Department has asked for data addressing whether costs increased in response 

to the last set ofrules applying to ERISA disability plans that became effective in 2002. In fact,

the Department can rely upon information supplied by its own Bureau ofLabor Statistics.

https:l/www.bls.gov/opub/ btn/volume-4/disability-insurance-plans.htm. The data shows that 

access and participation in employer-based disability insurance has increased, not decreased,

between 1999 and 2014. This increase occurred despite that employment in the service industry 

has increased, an industry in which employees are the least likely to have access to employerbased disability coverage. This increase also occurred despite the 2000 disability claims

regulations and a series of court decisions addressing conflicted decision-making, deemed

exhaustion, the need to discuss and explain adverse benefits decisions, and a participant’s right 

to respond to new evidence. The Department should therefore be suspicious of any data supplied

by the industry now that suggests employers would abandon disability coverage due to the costs

of codifying these principles. The Bureau ofLabor Statistics stud y also demonstrates that the

cost of disability insurance is extremely modest. Thus, even if costs did increase, the increase 

would be so small that it is unlikely to make any difference in coverage.

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

response to the adoption ofstatutory bans on discretionary language clauses in disability policies 

by some states. Notably, during the time period ofthe BLS study, many states enacted 

discretionary clause bans. This includes but is not limited to: Arkansas Admin. Code 054.00.1 0

1-4 (201 3); Cal. Ins. Code §10110.6 (2012); Colo. Rev. Stat. §16-3-1116 (2008); 50 111. Admin.

Codes 2001.3 (2005); Md. Code ann. Ins. §12-2 1 1; Mich. Admin. Codes. R. 500.2201-2202

(2007); R.I. Gen. Law §§27-18-79; Tex. Admin. Code §3.1 202-1 203; Tex. Ins. Code
EBSA

December 7, 2017

Page 3

§1701.062, §1701.002 (2011); WAC§284-96-012 (2009). Notwithstanding these statutory

developments, access and participation in disability plans increased according to the BLS data.

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

market share, UNUM and CIGNA, were examined by the state insurance regulators for poor 

claims handling practices. UNUM and CIGNA had to pay fines and consented to Regulatory 

Settlement Agreements that raised the standards for their LTD claims administration.

http://www.maine.gov/pfr/insurance/publication report/exam rpts/2004/unum mulistate/unum

multisate html:

http://www.mai ne.gov/pfr/insurance/publicationsreports/examr pts/2009/pdf/cigna mcreport 2

009.pdf.

https://www.insurance.ca.gOv/0400-news/0100-press releases/2013/release044-l 3.cfm.

Nonetheless, during this period LTD participation increased.

Given the above, there is no factual basis to support the industry's claim that modest changes to

the Secretary's claim review regulation would result in cost increases or decreased coverage.

Accordingly, I urge the Department not to change or delay the final rules.

Very truly yours,

Cari M. Schwartz,