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 Creative Health Benefits Solutions for Today, Strong Policy for Tomorrow

 

January 19, 2016

Submitted electronically via: www.regulations.gov

Office of Regulations and Interpretations

Employee Benefits Security Administration

Room N-5655

U.S. Department of Labor

200 Constitution Avenue NW

Washington DC 20210

Re: RIN 1210-AB39 – Claims Procedure Regulation Amendment for Plans 

Providing Disability Benefits

Dear Sir or Madam:

The National Business Group on Health is pleased to respond to the Department of 

Labor’s proposed amendments to claims procedure regulations for plans providing 

disability benefits under ERISA.

The National Business Group on Health represents 427 primarily large employers, 

including 70 of the Fortune 100, who voluntarily provide group health plan coverage to 

over 55 million American employees, retirees, and their families. Our members employ 

and provide disability and health coverage for employees under a wide variety of work 

arrangements, including full-time, part-time, seasonal, and temporary. They also often 

operate multiple lines of business in multiple states and tailor employee work and benefit 

arrangements to the specific needs of each line of business.

National Business Group on Health members support the Department’s efforts to protect 

plan participants’ rights to adequate notice and full and fair reviews of disability claims. 

However, our members are deeply concerned that many of the Department’s proposals 

will only increase participant confusion, plan costs, and litigation with little benefit to 

participants. We urge the Department, as it develops final regulations, to consider the 

following:

• Our members are at the forefront of developing comprehensive health and 

productivity strategies designed to improve workforce health and safety, improve 

and maintain productivity, and remain employers of choice. Our members do not 

focus narrowly on containing costs by aggressively disputing individual disability 

claims, as suggested by the Preamble to the notice of proposed rulemaking. They 

also must consider the costs of employees’ time away from work and employee 

replacement costs, such as recruitment and training costs, when an employee is 
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not working due to a disability. Therefore, our members have a substantial 

incentive to design and administer benefit programs with the aims of improving 

employees’ health, safety, and ability to return to work.

• To further these aims, final regulations should maintain plan sponsors’ flexibility 

to establish plan terms and administer benefits accordingly. Maintaining or 

reducing plans’ administrative and cost burdens also will permit plan sponsors to 

devote more resources toward maintaining and improving benefits for their 

employees.

• The current Section 503 Regulation already provides robust participant 

protections by, among other things, requiring plans to detail reasons for adverse 

benefit determinations, providing access to relevant records and information, and 

including a deemed exhaustion provision. Our members devote substantial 

administrative and financial resources to complying with these requirements and 

have found that current claims and appeals procedures provide ample opportunity 

for claimants to review relevant information and pursue appeals. The additional 

requirements in the notice of proposed rulemaking will only increase 

administrative and cost burdens without providing useful information or 

meaningful protections for participants.

We provide further discussion and recommendations below.

I. Disclosure Requirements

Final regulations should not include a requirement that adverse benefit 

determinations include the basis for disagreeing with any disability 

determination by the Social Security Administration (SSA), by a treating 

physician, or other third party disability payor, to the extent that the plan did 

not follow those determinations presented by the claimant.

As plan fiduciaries, our members have an obligation under ERISA to administer 

disability benefits in accordance with plan documents, including plans’ definitions of 

“disability.” Because plan terms are tailored to the specific needs, aims, and benefit 

offerings of our members’ specific workforces, disability determinations for employersponsored plans can differ from those of the SSA, physicians, or other third parties who 

apply different definitions of disability and will not be familiar with plan documents and 

terms.

To comply with the Department’s proposal, employer-sponsored plans will have to apply 

and interpret third parties’ definitions of disability and medical assessments—a task that 

plans generally will not have sufficient information or expertise to complete. 

Furthermore, explaining the basis for disagreeing with a third party’s disability 

determinations will substantially lengthen and complicate notices of adverse benefit 

determination. To ensure compliance, plans will likely feel compelled to provide highly 

detailed, technical explanations of how the facts of individual claims apply to both plan 

and third party disability definitions. Such detail is likely to cause confusion for 
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participants and increase plan costs without providing additional information that would 

assist a participant in evaluating his or her claim under the plan at issue.

The current Section 503 Regulation requires plans to notify participants of the specific 

reasons and plan provisions that form the basis for an adverse benefit determination—

information sufficient for a claimant to determine the basis for the plan’s decision and 

whether the claimant may wish to pursue an appeal. We therefore recommend that the 

Department maintain this rule and, in final regulations, eliminate the requirement that 

adverse benefit determinations include the basis for disagreeing with any disability 

determination by the SSA, treating physician, or other third party payor.

II. Right to Review and Respond to New Information

Final regulations should not include a requirement that, prior to a plans’ 

decision on appeal, a disability benefit claimant be provided, free of charge, 

with any new or additional evidence considered, relied upon, or generated by 

(or at the direction of) the plan in connection with the claim, as well as any new 

or additional rationale for a denial, and a reasonable opportunity for the 

claimant to respond to such new or additional evidence or rationale.

As noted above, the current Section 503 Regulation requires plans to notify participants 

of the specific reasons and plan provisions that form the basis for an adverse benefit 

determination. Claimants also are entitled to receive internal rules, guidelines, protocols, 

or other similar criteria that plans rely upon in making adverse benefit determinations, 

free of charge upon request. We believe these procedures are sufficient for a claimant to 

determine the basis for a plan’s decision and whether the claimant may wish to pursue an 

appeal.

This Department’s proposal to provide new or additional evidence automatically during 

the pendency of an appeal could involve providing large amounts of additional 

information, with substantial administrative and cost burdens. This additional information 

would likely result in claimants receiving information that is confusing and not helpful in

evaluating claims. For example, claim files may include sensitive medical information 

that is best reviewed with a primary care physician. Requiring plans to provide this 

information automatically could cause claimants confusion and may even interfere with 

ongoing treatment. 

This proposal also raises significant privacy and security concerns. If plans are to provide 

this information—which may include sensitive medical information—automatically, they 

must rely on claimants’ last available contact information. If plans rely on the last 

available contact information, they will not be able to ensure that the information is 

viewed only by claimants. Therefore, if final regulations include this rule, we recommend 

that the Department, in coordination with the Department of Health and Human Services, 

provide guidance on how plans can ensure that such disclosures do not result in a breach, 

as defined by HIPAA.

For the reasons above, we recommend that the Department eliminate the requirement 

plans automatically provide new or additional evidence considered, relied upon, or 
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generated by the plan in connection with a claim. If final regulations do include this rule, 

the regulations should, at minimum, define the types of information that plans must 

provide automatically and take into account the fact that plans and participants will need 

adequate time to engage in these procedures. We support adoption of a tolling rule that 

would toll the period for providing claims decisions until claimants respond and plans 

have an opportunity to review those responses. Our members are also concerned that the 

back-and-forth process involved with automatically providing information, claimant 

responses, and plan responses could extend far beyond the time frames under the current 

Section 503 Regulation. Therefore, we also recommend that final regulations include a 

rule stating that plans can establish a reasonable amount of time for claimants to respond 

to any new information, after which plans can proceed with their claims decisions.

III. Deemed Exhaustion of Claims and Appeals Processes

Final regulations should not amend the deemed exhaustion provision in the 

current Section 503 Regulation.

We support the Department’s efforts to protect plan participants’ rights to adequate notice 

and full and fair reviews of disability claims. However, the Department’s proposed 

amendments to the deemed exhaustion provision will not enhance claimants’ ability to 

obtain to a full and fair review.

Our members are very concerned that the proposed “strict adherence” is a vague standard 

that will create administrative and cost burdens disproportionate to any benefit to 

claimants. As noted above, our members devote substantial resources to complying with 

the current Section 503 Regulation, which provides detailed, robust claims and appeals

procedures. The additional procedures the Department proposes will only add 

administrative and cost burdens without providing for more full or fair review. 

Although we support a minor errors exception, in most cases, claimants will not know 

about the exception or will not have a complete understanding of how the exception 

applies to their claims. Therefore, it is likely that claimants will routinely request review 

by the courts—even when no error occurs—because it will be difficult for claimants to 

determine, during the pendency of a claim, if an error occurred or whether an error was 

minor. The DOL’s proposed strict adherence standard therefore will significantly 

increase litigation, which will lead to increased costs for plans and, ultimately, 

participants. 

Likewise, the proposed de novo review and additional procedures when a court rejects a 

claimant’s request for immediate review only add administrative and cost burdens 

without any clear benefit to participants. Like the strict adherence standard, these rules 

will substantially increase litigation and administrative complexity but will not provide 

additional clarity at the outset as to how participants should proceed with their claims.

Therefore, we recommend that final regulations eliminate the proposed amendments to 

the current deemed exhaustion provision. If final regulations do include the Departments’ 

proposals, we recommend that the regulations require claimants to first raise any 
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potential errors with plans and allow plans an opportunity to cure before proceeding to 

court under section 502(a) of ERISA.

IV. Culturally and Linguistically Appropriate Notices

Final regulations should not include the proposed requirements related to 

culturally and linguistically appropriate notices.

Finally, our members are concerned that the proposed requirements related to culturally 

and linguistically appropriate notices will present substantial administrative and cost 

burdens for plans. Many of our members have already committed substantial resources to 

providing language assistance for their non-English speaking participants. However, the 

Department’s proposal would require plans to automatically make specific services 

available, regardless of plans’ specific populations and needs. We recommend that plans 

continue to have flexibility to design their non-English language resources to fit their 

employee populations.

Again, thank you for considering our comments. Please contact me or Steven Wojcik, the 

National Business Group on Health’s Vice President of Public Policy, at (202) 558-3012 

if you would like to discuss our comments in more detail.

Sincerely,

Brian Marcotte

President