the claimant, as plaintiff in the litigation, has the burden of proof on most issues, this only
makes sense. That is, in most litigation contexts, the party with the burden of proof is given the
last word. Here, giving the last word to the claimant during the claims appeal process is, in
effect, giving claimant/plaintiff the right of rebuttal in litigation.

There is, however, a countervailing concern that while this extra opportunity to submit proof
to the plan exists, claimants will be going longer without disability benefit payments. This is a
problem that already exists and could be exacerbated. Plans will urge that giving claimants the
last word will make the internal appeals processes unending. This argument is out of touch with
the reality of being an ERISA disability benefits claimant. Claimants, in my experience, would
not continue the process endlessly while not receiving disability benefits. Claimants are
customarily highly motivated to get a resolution that will allow them to pay their mortgages and
feed their families. In short, the risk of an unending to and fro between plan and claimant is not
arealistic concern.

The following suggestion places reasonable limits on both claimants and plans and responds
to the concern that claimants will have to wait too long for determinations on review. While
claimants will want to act quickly in providing their responses (because they are usually without
income during this process), the type of evidence they often need to respond to new evidence or
rationales from the plan may require hiring an expert such as another physician, psychologist, or
vocational consultant. These professionals are not readily available for quick turn-arounds and,
depending on the new information needed, such experts may need weeks to evaluate the new
information.

For this reason, claimants should have at least sixth (60) days to respond to new evidence or
rationales provided by the plan on appeal. Moreover, the period for completing the decision on
review should be tolled during this 60-day period. When the claimant has responded, the plan
administrator should be allowed whatever time was left under the existing regulations or 30 days,
whichever is longer, to issue its determination on review. This rule should apply regardless of
whether the new information considered by the plan is a new “rationale” or new “evidence.”
Accordingly, I suggest the following amendment to the proposed regulation (new language
indicated by bolding and underlining):

2560.503-1(h)(4)(ii) [proposed regulations]

(ii) Provide that, before the plan can issue an adverse benefit determination on
review on a disability benefit claim, the plan administrator shall provide the
claimant, free of charge, with any new or additional evidence or rationale
considered, relied upon, or generated by the plan (or at the direction of the plan)

5 See Schaffer v. West, 546 U.S. 49, 56 (2005), in which the Court commented:

“The ordinary default rule [is] that plaintiffs bear the risk of failing to prove their claims.
McCormick § 337, at 412 ("The burdens of pleading and proof with regard to most facts have
been and should be assigned to the plaintiff who generally seeks to change the present state of
affairs and who therefore naturally should be expected to bear the risk of failure of proof or
persuasion"); C. Mueller & L. Kirkpatrick, Evidence § 3.1, p 104 (3d ed. 2003) ("Perhaps the
broadest and most accepted idea is that the person who seeks court action should justify the
request, which means that the plaintiffs bear the burdens on the elements in their claims").


By comparison, the current regulation uses the following language: “[the process must]
provide claimants the opportunity to_submit written comments, documents, records, and_other
information relating to the claim for benefits.” 29 CER. 2560.503-1(h)(ii)(2)[current
regulation].

Hence, there is an inconsistency between the preamble and the proposed regulation in that
the preamble specifies “written testimony” whereas the proposed regulation just says
“testimony.” This could lead to costly disagreements over whether the regulation contemplates
actual live testimony, i.e. a hearing.

Furthermore, under the current regulation often my clients submit testimony in the form of an
audio or video CD. This is particularly useful in cases where the client cannot read or write so
that a written statement is impossible. One case that I handled was made workable by using a
video CD interview of the claimant. He was a middle-aged gentleman who had not completed
high school (in part because he was really unable to read) and had worked all of his life as a
mechanic. When he developed a neurological condition that impaired his ability to have steady
hands, he was disabled. I could not send in a written statement for this claimant as he could not
read it. Furthermore, he would not have been able to write down his story himself both because
of his illiteracy and his neurological tremble. The video statement was, therefore, critical to
showing the plan administrator how he was disabled.

As such, I am concerned that the reference to “written testimony” in the preamble might give
plans ammunition to disallow any audio or video submissions on the grounds that these forms of
evidence do not represent “written evidence.” If this were the interpretation given to the
proposed regulation, it would actually put claimants, like my client described above, in a worse
position than they face at present.

Further, the proposed regulation’s verbiage, i.e. “evidence and testimony” could be
interpreted to impose courtroom evidentiary standards for submitting proof of a claim. That is
words like “evidence and testimony” carry an aura of litigation. I fear that plans could use such
language to argue that only evidence that meets the standards of admissibility in a court
proceeding will be considered. Such a threshold would pose a considerable hurdle for claimants
who are often unrepresented. While plans may well be able to observe the rules of evidence by
employing counsel and other legal resources, claimants are often not equipped to do so.

Additionally, adding a requirement of a courtroom-level of evidentiary admissibility to the
administrative claims process by regulation will seriously erode the idea of a “meaningful
dialogue” * between plan and claimant. This is the very essence of the administrative review
process. Hence, I would ask the DOL to make explicit that the proposed amendment is not
intended to curtail or narrow the types of information that claimants may submit to the plan in
support of their claims. More particularly, I would ask for clarification that the phrase “written
evidence” does not mean that only narrative evidence written down will be accepted and also
that the standards of evidence used in a courtroom do not apply to what may be submitted by a
claimant in support of his/her claim or appeal.

4 See Booten v. Lockheed Medical Benefit Plan, 110 F.3d 1461, 1463 (9th Cir. 1997)


(7) In the case of an adverse benefit determination on review with respect to
a claim for disability benefits, a statement of the date by which a claimant
must bring suit under 502(a) of the Act. However, where the plan includes its

own contractual limitations period, the contractual limitations period will not
be reasonable unless:

be reasonable unicses

a. it begins to run no earlier than the date of the claimant’s receipt of the
final benefit determination on review including any voluntary appeals that

are taken;

b. it expires no earlier than 1 year after the date of the claimant’s receipt
of the final benefit determination on review including any voluntary appeals

that are taken;

c the administrator provides notice to the claimant of the date that the
contractual limitations period will run;_and

d. the contractual limitations period will not abridge any existing state
limitations period that provides for a period longer than one year.

(8) In the case of an adverse benefit determination on review with respect to a
claim for disability benefits, the notification shall be provided in a culturally and
linguistically appropriate manner (as described in paragraph (p) of this section).

IL. Comments on Timing of Right to Respond to New Evidence or Rationales

The DOL’s proposals clearly attempt to improve the situation for claimants who are trapped
by new rationales or evidence developed by the plan during its review of an appeal submitted by
aclaimant. I commend this effort. “Sandbagging”” has been a persistent problem in the ERISA
appeals process and some courts have not appreciated how prejudicial this is to claimants. In
Abram vy. Cargill, 395 F.3d 882, 886 (8th Cir. 2005), a case which I handled on behalf of Ms.
Abram, the court articulated the problem as follows:

[w]ithout knowing what “inconsistencies ” the Plan was attempting to resolve or
having access to the report the Plan relied on [in its appeal determination],
Abram could not meaningfully participate in the appeals process. . . This type of
“gamesmanship” is inconsistent with full and fair review.

Id. Given that: (1) once the claimant has submitted his/her appeal there is no chance to respond
to anything new raised by the plan in its review determination; and (2) it is often very hard to
supplement the record in litigation, the DOL’s proposed change offers some assurance that a
claimant can contribute his/her relevant evidence to the record that the court will review. Where

2 Marolt y. Alliant Techsystems, 146 F.3d 617, 620 (8th Cir. 1998)(observing that ERISA does not permit
claimants to be “sandbagged” by rationales not presented by the plan during the administrative review
process).


in connection with the claim; such evidence must be provided as soon as possible
and sufficiently in advance of the date on which the notice of adverse benefit
determination on review is required to be provided under paragraph (i) of this
section to give the claimant a reasonable opportunity to respond prior to that date.
Such new evidence or rationale must be provided to the claimant before the
decision on appeal is issued and the claimant must be afforded up to 60 days
to respond. The time to render a determination on review will be suspended
while the claimant responds to the new evidence or rationale. After receiving
the claimant’s response to the new evidence or rationale or notification that
the claimant will not be providing any response, the plan will have whatever
time was left_on the original appeal resolution time period or 30 days,
whichever is greater, in which to issue its final decision.

IIL. Independence and Impartiality - Avoiding Conflicts of Interest
The proposed regulation regarding the impartiality of claims personnel is essential and I

applaud the DOL’s effort to minimize the effect that biased individuals have on the claims and
appeals process. However, the proposed regulation needs clarification in three areas.

First, the proposed regulation should make clear that impartiality is ensured, even where the
plan, itself, is not directly responsible for hiring or compensating the individuals involved in
deciding a claim. This clarification is necessary because, as a practical matter, plans frequently
delegate the selection of experts to third-party vendors and the vendors, in turn, employ the
experts.

Second, clarification is needed concerning what is meant by the reference in the proposed
regulation to individuals “involved” in the process. Claims administrators often protest that
physicians, or other consulting experts, are not “involved in making the decision” but merely
supply information (such as an opinion on physical restrictions and limitations) that is considered
by the claims adjudicator. Under this logic, plans may argue that consulting experts are not
affected by the impartiality regulation.

Finally, the proposed regulation should make clear that it applies to not only claims
adjudicators and consulting physicians but also to other experts such as vocational consultants or
accountants. Such experts are frequently used in the claims process and should be included in
the scope of the impartiality requirement. In light of these concerns, I suggest that the proposed
regulation be amended as follows (added language is bolded and underlined):

29 C.F.R. §2560.503-1(b)(7) [proposed regulation]

In the case of a plan providing disability benefits, the plan and_ its agents,
contractors, or vendors (such as any entities who supply consulting experts to
plans) must ensure that all claims and appeals for disability benefits are
adjudicated in a manner designed to ensure the independence and impartiality of
the persons involved in making the decision or who are consulted in the process
of making the decision. Accordingly, decisions regarding hiring, compensation,
termination, promotion, or other similar matters with respect to any individual,


IV. Notice of Right to Retain Counsel for Appeal
Often ERISA claimants who have been wrongly denied disability benefits do not realize that

they have the right to be represented by counsel in the administrative appeal process. Not only
that, but I have had prospective clients advise me that they inquired of plan representatives as to
whether they should hire a lawyer for the appeal and were actually encouraged not to do so.

When this happens and the claimant does not get assistance with the appeal, he/she often
squanders his/her best chance for reversing the benefit denial. I have had several potential
clients come to me seeking representation for litigation had not retained counsel for the
administrative appeal process. Many of those potential clients had claims that were effectively
lost before they even came in the door of my office because the administrative record was so
inadequate that the claimant would not be able to win in federal court —even if the claim was
actually quite meritorious. That is by not having legal advice that the administrative review
process is the gatekeeping step by which evidence is considered later in court, these claimants
were effectively unable to get judicial review.

Obviously having a lawyer does not guaranty that claimants will be fully able to optimize
their claims during the administrative review process, but legal assistance would surely decrease
the instances in which a claimant does not offer adequate evidence to the plan during the
administrative process. Hence, a regulation requiring plans to advise claimants of their right to
retain counsel for the appeal may well prevent claimants from foregoing their last and best
opportunity for reversing a benefit denial.

Accordingly, I propose that the DOL adopt a regulation that benefit denial letters must advise
claimants of their right to hire an attorney to represent them in the appeal phase of the claims
process. The Social Security ‘Administration does this. There is no reason to hide this right from
claimants.

CONCLUSION

On behalf of the claimants I represent now and those that I may represent in the future, I
sincerely thank the DOL for undertaking this effort to amend the disability claims regulations. I
am heartened that the agency has taken these steps to level a playing field that is decidedly
uneven. The measures that have been proposed as well as other parts of the proposed regulations
will very likely make it possible to resolve claims without litigation. They will be a boon for
claimants, plans and the court system. Thank you for these efforts.

Sincerely,
\ 2H

Ctheuse p/V Tape.

atherine L. MacKinnon, Esq.

KLM/klm


Law Office of
Katherine L. MacKinnon P.L.L.C.

Katherine L. MacKinnon Sarah J. Demets
katemackinnon-atty@msn.com sarah@katemackinnon.com

January 18, 2016

Via email only
e-ORI@dol.gov.
Office of Regulations and Interpretations,
Employee Benefits Security Administration
Room M-5655
USS. Dept. of Labor
200 Constitution Avenue NW
Washington D.C. 20210
e-ORI@dol.gov.
Re: Claims Procedure Regulations for Plans Providing Disability Benefits

RIN No.: 1210-AB39
Regulation: 29 C.F.R. §2560.503-1

Dear Assistant Secretary Borzi:

I am an attorney in a two-person law firm in St. Paul, Minnesota. The majority of our
practice is focused on representing claimants/participants or beneficiaries (hereafter “claimants”)
in ERISA-governed benefit disputes. Last year this firm worked on 52 matters involving
employee benefit disputes under ERISA. Over the preceding years, we have handled many more
such cases -- including several that were resolved by judicial action.! The vast majority of the
ERISA disputes we have been involved with have concerned disability benefit issues. As such,
the DOL’s proposed regulations in this area are of great interest to the clients we represent.
Accordingly, I write to offer comments on some of the proposed regulations.

I have organized my comments as follows. First, I will address the most important
substantive issues for the DOL to address as it finalizes the proposed regulations. Second, I have
set out what I see as the most important technical issues in the proposed regulations, i.e., requests
for changes in the proposed language for purposes of greater clarity or conformity with other
regulations.

' Alliant TechSystems, Inc. v. Marks, 465 F.3d 864 (8th Cir. 2006),

Abram vy. Cargill, 395 F.3d 882 (8th Cir. 2005);

Wenzel v. Blue Cross and Blue Shield of Minnesota, 2015 US. Dist. LEXIS 146815 (D. Minn. 10/28/15);
Lanpher v. Metropolitan Life Ins. Co., 50 F. Supp. 3d 1122 (D. Minn. 2014);

UNUM Life Ins. Co. v. Zaun, 2014 U. S. Dist. LEXIS 100425 (D. Minn. 5/29/14);

Brandt y. ALLINA Health Systems LTD Benefits Plan, 2010 U. S. Dist. LEXIS 58967 (D. Minn. 6/15/10);
Gordon v. Northwest Airlines, Inc. LTD Income Plan, 606 F. Supp. 2d 1017 (D. Minn. 2009);

Groska v. Northern States Power Co. Pension Plan, 2007 U.S. Dist. LEXIS 71081 (D. Minn. 2007); and
Wolfe v. 3M Short-Term Disability Plan, 176 F. Supp. 2d 911 (D. Minn. 2001).

2356 UNIVERSITY AVE WEST #230 @ ST. PAUL, MN @ 55114-1800
PHONE (952) 915-9215 @ FAX: (952) 915-9217


(such as a claims adjudicator, vocational expert, accounting expert, or medical
expert) must not be made based upon the likelihood that the individual will
support the denial of benefits.

Part Two: Comments on Technical Matters in the
Proposed Regulations

I. Effective Date of Proposed Regulation
To avoid the application of the previous regulations to disability claims that are already in

process before the effective date, I suggest the following text be added to the amended
regulations:

The regulations shall apply to all claims pending with the plan fiduciary on
or after the date that the regulations go into effect.

The holding in Abram y. Cargill, 395 F.3d 882 (8th Cir. 2005), my client’s case, was
seriously undermined when the Eighth Circuit later concluded that its decision in Abram was
grounded in the pre-2000 version of the claims regulations and would not apply to cases decided
under the post-2000 claims regulations. See Midgett Washington Group Int'l LTD Plan, 561 F.3d
887, 894-96 (8th Cir. 2009). To avoid this sort of problem occurring again, the above suggested
language should be added to the proposed regulations.

Il. Deemed Exhaustion Drafting Issue
This regulation should be edited to clarify that the deemed exhausted provision applies to

both claims and appeals, not just “claims.” Presumably, if there is a serious violation of the
regulations, the claimant can seek judicial review regardless of whether the claim is in the
“claim” or the “appeal” stage. I suggest the following clarifying language (added language is
bolded and underlined):

29 C.E.R. §2560.503-1(1)(2)(i) [proposed regulation]
In the case of a claim for disability benefits, if the plan fails to strictly adhere to
all the requirements of this section with respect to a claim or appeal.

Ill. Right to Claim File and Meaning of “Testimony”
There is confusion in the proposed language concerning what manner of “testimony” is

contemplated by the new regulations.

In the preamble to the proposed regulations, the DOL has stated: “the proposal would also
grant the claimant a right to respond to the new information by explicitly providing claimants the
right to present evidence and written testimony as part of the claims and appeals process.” Note
that the underscored language refers to “written testimony.” But the actual proposed regulation
uses this phrasing: “[the processes for disability claims must] allow a claimant to review the
claim file and to present evidence and testimony as part of the disability benefit claims and
appeals process.” 29 C.F.R. §2560.503-1(h)(4)(i)[proposed regulation]. Here the regulation
refers to “testimony” without limiting the type of testimony to “written” testimony.



Part One: Comments on Substantive Matters in the
Proposed Regulations

1. Comments on Issues with Periods of Limitation for Suit.

The DOL has invited comment on the period of limitations issues that have developed since
the decision in Heimeshoff v. Hartford Life & Accid. Ins Co., 134 U.S. 604 (2013). [agree that
this is a crucial area for regulation as the Heimeshoff decision has created confusion and
litigation. Even before Heimeshoff was decided, issues surrounding the applicable period of
limitations, coupled with the obligation to exhaust administrative remedies, have posed real
headaches for lawyers/clients in this area. Indeed, I have been in the position of facing a
potential malpractice claim when a long-term disability claim I was pursuing for a client was
defended on the basis of missing the statute of limitations while the parties were engaged in
administrative exhaustion. (Fortunately, that case was resolved satisfactorily).

The DOL could offer significant assistance to plans, claimants and courts by doing two
things: (1) creating standards for what is a reasonable plan-based period of limitations provision,
ie. a reasonable standard for time limits for suit specified within the plan; and (2) creating
notification standards for plans that would include the duty to inform claimants of the date when
the period of limitations will elapse, whether that time is based on a plan-imposed period of
limitations or a legal statute of limitations.

Reasonable Standard for Plan-Based Periods of Limitation: To begin with, it would be very
helpful if the DOL were to establish by regulation a reasonable plan-based period of limitations.
The DOL certainly has the authority to do so as it acted similarly when it promulgated the 180-
day period by which a claimant must file an appeal from an adverse benefit determination. Since
the Heimeshoff decision has left open the possibility that a plan-based period of limitations could
run before the administrative appeals process is concluded which would frustrate the idea of
administrative exhaustion, the DOL is in the best position to clarify that such an approach would
violate the full and fair review required by 29 U.S.C. §1133. Thus, as it did when it mandated
the 180-day appeal period, I suggest that the DOL adopt standards for what is a reasonable plan-
based limitations period. For that reason I suggest that a reasonable period is any period that
runs our no sooner than one (1) year after final determination.

Such an amendment will have the beneficial effect of addressing the different courts’ views
on when claims “accrue” in that it will clarify that no limitations period can start before the
internal claim and appeals process is complete. It also will explain that there will be at least a (1)
one-year period after the completion of the plan’s appeals process in which a claimant can file
suit.

The justification for this rule is that it would cut down on litigation devoted to the threshold
issue of the running of the limitations period. In addition, it may well lead to a standardization of
internal plan limitations periods a salutary goal for both claimants and plan administrators.

Notice Regarding the Expiration Date of the Applicable Limitations Period: Additionally,
whether the plan relies on a plan-based limitations period or a legal statute of limitations,



because the time by which suit must be brought is essentially a crucial term of the plan, I believe
that the regulations should mandate that the claimant receive notice about the date when the
plan-based or legal limitations period will run. That is, the DOL should regulate to require the
plan to advise the claimant of when the applicable limitations period (whether plan-based or
statutory) will expire.

Such a requirement would be consistent with the general obligation on a plan to inform a
claimant about important plan terms. As the DOL aptly points out in the preamble to the
proposed regulations, plan administrators are in a better position to know the date of the
expiration of the applicable limitations period. Advising claimants when that date will occur is
vital information that a plan fiduciary should be disclosing.

There is precedent for such an approach. See e.g. Kienstra v. Carpenters' Health & Welfare
Trust Fund of St. Louis, No. 4:12CV53 HEA, 2014 WL 562557 at *12-13 (E.D. Mo. Feb. 13,
2014), aff'd sub nom., Munro-Kienstra v. Carpenters’ Health & Welfare Trust Fund of St. Louis,
790 F.3d 799 (8th Cir. 2015)(observing that the plan should disclose to a claimant “[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.”). Unfortunately, the Kienstra
decision appears to be a minority perspective. However, with the amendment of the regulations,
the DOL could adopt the approach from Kienstra and require a plan to divulge the specific date
when the plan-based limitations period will run out.

In light of these two concerns, I recommend amendment to the regulations governing the
manner and content of notification of benefit determinations on review which is found at 29
C.F.R. §2560.503-1(j) [proposed regulation]. The amended language should do two things.
First, it should include a definition of what is a reasonable limitations period to include in a plan-
based limitations period. Second, the amendment should require the plan to notify the claimant
of the date when any plan-based limitations period will expire. Accordingly, I propose amending
the proposed regulation by adding a section as follows and renumbering accordingly (added
language is indicated by bolding and underlining):

29 C.E.R. 2560.503-1 (j)(6) [proposed regulation]

In the case of an adverse benefit decision with respect to disability benefits— (i)
A discussion of the decision, including, to the extent that the plan did not follow
or agree with the views presented by the claimant to the plan of health care
professionals treating a claimant or the decisions presented by the claimant to the
plan of other payers of benefits who granted a claimant’s similar claims (including
disability benefit determinations by the Social Security Administration), the basis
for disagreeing with their views or decisions; and (ii) Either the specific internal
rules, guidelines, protocols, standards or other similar criteria of the plan relied
upon in making the adverse determination or, alternatively, a statement that such
tules, guidelines, protocols, standards or other similar criteria of the plan do not
exist.