January 19, 2016

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: Claims Procedure Amendment for Plans Providing Disability Benefits

Submitted Electronically: www.regulations.gov

Dear Sir/Madam:

America’s Health Insurance Plans (AHIP) is writing to offer comments in response to the Notice 

of Proposed Rulemaking on the Claims Procedure for Plans Providing Disability Benefits (the 

“Proposed Rule”). The Proposed Rule was published by the Department of Labor (DOL) in the 

Federal Register on November 18, 2015 (80 Fed. Reg. 72014). AHIP’s members provide 

insurance coverage to and administer benefits on behalf of group health plans that provide shortterm and long-term disability income insurance.1

According to the Preamble to the Proposed Rule, DOL proposes to “uplift the current standards 

applicable to the processing of claims and appeals for disability benefits so that they better align 

with the requirements regarding internal claims and appeals for group health plans under the 

regulations implementing the requirements of the Affordable Care Act.” (80 Fed. Reg. 72015). 

These changes are intended to ensure a full and fair review of claims and appeals as required by 

Section 503 of the Employee Retirement Income Security Act (ERISA).

AHIP believes the current rules provide extensive protections for claimants and that DOL (along 

with state regulators in the case of disability income insurance carriers) has the enforcement tools 

necessary to deal with any group disability plans that may not act in a responsible manner with 

respect to disability benefits. As discussed below, the rationale suggested by the DOL for the 

Proposed Rule – namely that “insurers and plans looking to contain disability benefit costs are 

often motivated to aggressively dispute disability claims” (80 Fed. Reg. 72016) – is unfounded, 

and the potential costs of the new standards are significantly underestimated. 

 

1

For purposes of our comments, the term “disability income insurance” includes insured and self-funded coverage 

for disability income protection benefits offered through a group health plan.
January 19, 2016

Page 2

If DOL intends to modify the current claims rule applicable to disability income claims, we 

offer a number of recommendations to streamline those proposals in a manner that protects the 

rights of claimants while not unduly increasing compliance or litigation costs that are ultimately 

passed on to employers offering disability income insurance. As DOL is aware, increased costs 

result in fewer employers offering coverage, which in turn places additional burdens on state and 

federal disability programs. Our comments in this letter address the following issues: (a) the 

scope and purpose of disability income protection benefits; (b) differences between disability 

determinations and claims for health benefits governed by the Affordable Care Act (ACA); (c) 

potential cost impacts of the Proposed Rule; and (d) recommended changes to the new standards.

Scope and Purpose of Disability Income Protection Benefits

According to the most recent data from the U.S. Bureau of Labor Statistics, 39 percent of private 

industry workers participate in short-term disability insurance programs and 33 percent 

participate in long-term disability insurance programs.2 Employer-sponsored disability income 

insurance provides income replacement to employees who experience an event that results in 

their inability to work. Short-term disability income insurance typically provides benefits for up 

to six months with coverage starting between 1 and 30 days after the date of disability. Longterm disability insurance generally begins between 90 and 180 days after the date of disability 

and continues up to age 65. Benefits are tied to salary (e.g., 60 percent of pay) and may also 

include overtime, bonuses, and commission compensation.3

In general, a “disability” that triggers coverage is a sickness, illness or injury that makes it 

impossible for the employee to perform the major duties of his or her occupation. Long-term 

disability insurance is generally based on the inability of workers to perform either the job duties 

in which they were previously engaged in (an “own occupation” policy) or any gainful 

employment (an “any occupation” policy). Depending on the coverage terms, income benefits 

may be available either for someone partially or fully disabled.4 Based on data with respect to 

recently filed claims, the majority of triggering events are illnesses due to: (a) musculoskeletal 

and connective tissue damage (29 percent); (b) cancer and neoplasms (15 percent); (c) injuries 

and poisonings (10 percent); (d) cardiovascular and circulatory conditions (9 percent); and (e) 

mental disorders (8 percent).5

 

2

“Workers with Disability Insurance Plans,” The Economics Daily, U.S. Bureau of Labor Statistics, March, 4, 2015, 

accessed at: http://www.bls.gov/opub/ted/2015/disability-insurance-plans-for-workers.htm

3

“Disability Insurance: A Missing Piece in the Financial Security Puzzle,” America’s Health Insurance Plans and 

the Society of Actuaries, October 2004, accessed at: 

http://www.actuarialfoundation.org/publications/disability.shtml

4

“Managing Disability Risks in an Environment of Individual Responsibility,” Advisory Council on Employee 

Welfare and Pension Benefit Plans, December 2012, accessed at: 

http://www.dol.gov/ebsa/publications/2012ACreport2.html

5

“2004 Long Term Disability Claims Review,” Council for Disability Awareness, accessed at: 

http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2014.asp
January 19, 2016

Page 3

One of the primary benefits of disability income insurance is helping workers and their families 

avoid financial hardship by replacing lost income and helping individuals return to work through 

programs that address functional limitations such as modifications to the work environment, 

facilitation of part-time work, development of new job skills, and integration of health and 

disability support services.6 These protections, in turn, lessen the financial impact that would 

otherwise be placed on federal and state public assistance programs. 

Two analyses by Charles River Associates for AHIP examined the positive impact of the 

availability of disability income insurance on public programs. One analysis considered the 

benefits to the federal treasury in reducing the number of individuals receiving Social Security 

Disability Insurance (SSDI) and other assistance (e.g., Medicare, Medicaid, and the 

Supplemental Nutritional Assistance Program) because the recipient either did not need the 

federal benefits or was able to return to work sooner. According to the report, the currently 

available private long-term disability insurance programs are expected to save the federal 

treasury approximately $25 billion over the next 10 years through a reduction in SSDI benefits 

($10 billion) and other federal assistance ($15 billion).7 Similar benefits were found at the state 

level – a second analysis by Charles River Associates determined four states (Indiana, Maine, 

North Dakota, and Tennessee) are estimated to save a combined $58.6 million annually through 

reduced public expenditures (e.g., Medicaid, Temporary Assistance to Needy Families, and state 

benefit payment programs) and additional state income taxes received from workers who were 

able to return to work.8

Comparing Disability and Health Insurance Claim Determinations

As noted, the changes to the current claims procedure rule suggested by DOL are taken primarily 

from regulations adopted by DOL (along with the Departments of Health and Human Services 

and the Treasury) applicable to health benefits as required by the ACA. As an initial matter, 

Congress could have chosen to include disability income insurance as part of the new ACA 

standards applicable to health claims, but clearly choose not to do so. 

 

6

Some of the innovative programs offered by disability insurance carriers to assist workers are discussed in “Trends 

and Innovations in Disability Income Insurance,” AHIP Center for Policy and Research, January 2010, accessed at: 

http://www.ahip.org/Innovations-in-Disability-Insurance/

7

“Private Disability Insurance and Return-to-Work Cost Savings to SSDI and Other Federal Programs,” David 

Babbel and Mark F. Meyer, Charles River Associates, September 2013, accessed at: 

http://www.ahip.org/PrivateDIReturntoWork92013/

8

“The Benefits of Private Disability Income Protection Coverage to State Budgets: Overview and Details for Four 

States,” David Babbel and Mark F. Meyer, Charles River Associates, July 2015 accessed at: 

http://www.ahip.org/PrivateDisability715/
January 19, 2016

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AHIP supports disability income insurance claimants access to a full and fair claims review 

process, however, disability insurance is quite different from health insurance. Any standards 

adopted by DOL must be considered in the context of how disability benefits actually work and 

the differences between claims for health benefits and those for disability income insurance.

As a general matter, claims for health benefits are fully automated (i.e. submitted electronically 

by the health care provider to the insurer or third-party administrator (TPA)). The insurer or 

TPA is making a benefit determination based on fairly simple questions – is the benefit covered, 

is the health care provider in-network, are the proper contracted prices applied to the claim, and 

are there any prior authorization or medical management issues that need to be addressed. In the 

latter situations (which constitute a very small subset of claim reviews) the insurer or TPA relies 

on medical experts to compare the services or treatment against established health care 

guidelines and protocols (i.e., recommendations of the U.S. Preventive Services Task Force). As 

a result, insurers and TPAs process hundreds of thousands of benefit claims on a daily basis. 

The small number of health claims that are denied (generally, for medical necessity reasons) are 

most always resolved through an internal appeals process or by submitting the claim for review 

by an external and independent third-party.9

A review of a claim for disability income benefits typically requires more extensive 

consideration by the insurer or TPA of a complex set of issues including the nature and extent of 

the illness or injury that led to the disability, the potential length or permanency of the disability 

based on the individual’s health status and on-going medical treatment options, and the impact of 

the condition on the claimant’s ability to resume or continue working. This analysis requires not 

only a full medical review but also an assessment of factors such as the functional capacity of the 

individual relative to his or her job duties, the individual’s job skills, and the individual’s 

potential ability to return to work on a part or full time basis. The process used by insurers and 

TPAs to review disability insurance claims may involve multiple health care and occupational 

experts and extensive assessments of the claimant. As discussed above, one of the goals of 

disability insurance is to return the individual to work where feasible and, as a result, the 

assessment of a claimant’s condition and prognoses is often on-going over the course of the term 

of coverage.

It is clear that the analysis of health care claims (which are generally focused on whether a 

treatment or service is a covered benefit and should be reimbursed) differs markedly from the 

analysis of disability income claims (which involve a determination of an individual’s ability to 

perform meaningful work). These variances affect the process used by the insurers and TPAs to 

review claims and should be taken into consideration by DOL in developing standards for 

internal appeals.

 

9 The fact that health claims may be submitted to external review is a significant reason why most claims are not 

litigated in federal court.
January 19, 2016

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Determining the Cost of the Proposed Rule

As noted in the Preamble to the Proposed Rule, federal agencies are required by Executive 

Orders 12866 and 13563 to assess costs and benefits of rulemaking. This analysis not only 

assists the agency “to select regulatory approaches that maximize net benefits . . . .” (80 Fed. 

Reg. 72020), but also better informs regulated entities of the expected costs and operational 

changes needed to implement the new requirements. Additionally, because the provision of 

disability income insurance by group health plans is voluntary, the regulatory cost analysis gives 

employers an indication of whether the projected cost of the new requirements justifies offering 

of such coverage to their employees. 

The DOL erroneously concludes that there will only be two significant cost drivers resulting 

from adoption of these new requirements - (a) the need to provide claimants with any new or 

additional evidence considered during the course of the internal appeal and (b) a requirement to 

provide notices of adverse benefit determination in a culturally and linguistically appropriate 

manner. AHIP believes this assessment falls short of the reality within which disability plans 

operate. 

With respect to the requirement to provide claimants with new or additional evidence or 

rationales, DOL expects it will take insurer or TPA staff at an hourly labor rate of $30 only five 

minutes to gather, review, copy, and mail the materials although no data is presented to support 

this contention. The DOL cost assumption is a gross oversimplification and does not take into 

account either the task of identifying the additional or new information or rationale and the 

consequences of providing the materials to claimants (i.e., that the mailing will trigger a 

response by the claimant). 

In addition, as discussed in more detail below, the Proposed Rule requires the plan to provide the 

new or additional evidence or rationale sufficiently in advance of the appeal deadline to give 

claimants the opportunity to respond. That response may generate additional work or 

consideration by the plan which in turn must be given to the claimant (with another opportunity 

to respond). This potentially endless round or appeals, responses, and reconsiderations will 

result in additional costs for the insurer or TPA (e.g., the need to retain additional expert 

resources to process appeals). These additional costs are not captured in DOL’s analysis.

Regarding the new language standards, DOL estimates specific costs for provision of oral 

language services (e.g., interpretation) and believes material, printing, and postage costs will 

total $2.50 per mailing (although the DOL “assumes” most communications between 

insurers/TPAs and claimants will be electronic). As with the “new evidence” standard, there is 

no supporting data for the language standards cost determination other than a statement in the 

Preamble that similar estimates were used in connection with the ACA claims rule. In fact, it 
January 19, 2016

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may be likely that due to privacy concerns on the part of plans, TPAs, insurers, and claimants, 

that most communication will continue to be provided by paper and through the U.S. mail and 

not by electronic means.

Also missing from the DOL cost determination is any analysis of the potential for increased 

litigation resulting from the adoption of the Proposed Rule – with additional costs imposed on 

plans and claimants. We believe there are two major areas of concern in this regard. First, the 

Proposed Rule establishes new conflict of interest standards for claim reviewers, including a 

requirement (as discussed in the Preamble to the Proposed Rule) that plans “not be permitted to 

contract with a medical expert based on the expert’s reputation for outcomes in contested cases . 

. . .” (80 Fed. Reg. 72016-72017). We agree that experts should be retained based on their 

qualifications, however, such a “reputational” standard will potentially lead to additional 

litigation (including costs associated with discovery) as claimants’ counsels assert that medical 

experts have a vaguely defined reputation for denying claims. 

Additionally, the new requirement that claimants may immediately proceed to federal court (with 

de novo review by the court of the benefit claim) if the plan does not “strictly adhere” to the 

claims rule will result in more cases being filed in federal court and legal disputes over whether 

the plan’s failure to follow the rule was de minimis and not part of an overall pattern of rule 

violations. The Proposed Rule introduces a variety of subjective compliance standards that are 

ripe for dispute under the strict adherence standard, such as whether information is provided “as 

soon as possible” and “sufficiently in advance” of the deadline for deciding appeals. 

As a result, claim adjudication expenses can be expected to rise, and DOL has not factored into 

its analysis the very significant costs associated with having to go to court. Under the current 

rules, unless there is a futility claim, the parties typically pay the expenses for a court proceeding 

only once (i.e., post final appeal) as a product of the administrative process. The Proposed Rule, 

due to the introduction of the strict adherence standard and the de minimis exception procedures 

into the administrative process, would materially increase costs due to the amount of times plans 

and claimants are brought before a court during the life of a single claim. 

DOL has not met the requirements for economic reviews of proposed rules as set out in 

Executive Orders 12866 and 13563 and has ignored the significant cost burdens that will be 

placed on plans and claimants. We strongly urge DOL to further examine the economic impacts 

of the changes being considered in order to assist in an appropriate agency determination of the 

regulatory costs and benefits and to assist insurers, TPAs, and employers with their 

responsibilities under ERISA. 
January 19, 2016

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Comments and Recommendations on the Proposed Rule

Underpinning the Proposed Rule is DOL’s apparent belief that a substantial (and growing) 

number of claimants are being unjustly denied disability income insurance benefits. That 

reasoning is stated as follows in the Preamble to the Proposed Rule:

Even though fewer private-sector employees participate in disability plans than in 

other types of plans, disability cases dominate the ERISA litigation landscape 

today. An aging American workforce may likely be a contributing factor to the 

significant volume of disability cases. Aging workers initiate more disability 

claims, as the prevalence of disability increases with age. And as a result, 

insurers and plans looking to contain disability benefit costs are often motivated 

to aggressively dispute disability claims. 

(80 Fed. Reg. 72016, footnotes omitted).

There are several problems with the analysis presented by DOL. First, data indicates that 

the number of individuals filing disability claims has actually decreased over the past few 

years. The total number of both SSDI applications and awards has decreased since 

201010 and the number of individuals receiving long-term disability insurance payments 

has also decreased.11 While these declines are arguably due primarily to economic 

factors, there is no direct evidence that a “significant volume of disability cases” can be 

expected in the near future.12

In addition, the fact that a high percentage of ERISA claims filed in federal court are for 

long-term disability benefits (62 percent for long-term disability claims vs. 17.4 percent 

for health claims according to the study cited by DOL)13, this number is more likely the 

result of the complex nature of disability claim determinations as compared to most 

claims for health benefits, as discussed above. It should be noted that only a very small 

percentage of disability insurance claims ultimately reach the courts. The DOLreferenced study estimates 62 percent of ERISA cases in federal courts are for long-term 

disability benefits, while the most recent data from the Administrator of the United States 

Courts indicates that 7,191 ERISA cases were filed in 2014 (a number which has been 

 

10 “Disabled Worker Beneficiary Statistics by Calendar Year, Quarter, and Month,” U.S. Social Security 

Administration, Selected Data from Social Security’s Disability Program, accessed at: 

https://www.ssa.gov/OACT/STATS/dibStat.html

11 “2014 Long Term Disability Claims Review,” op cit.

12 In fact, the cost and complexity of the new standards proposed by DOL may result in fewer employers offering 

disability income insurance.

13 “ERISA Benefits Litigation: An Empirical Picture,” Sean M. Anderson, ABA J. Lab. & Emp. L.J., Fall 2012
January 19, 2016

Page 8

decreasing since 2010).14 Applying the 62 percent estimate, it can be derived that 4,458 

of these federal court filings were related to long-term disability benefits. Compared to 

the total number of long-term disability benefit claims that are expected to be filed 

annually (616,000 according to the DOL’s cost analysis in the Preamble to the Final 

Rule15), the percentage of actual court filings is fairly miniscule (0.7 percent). While 

these cases are important to the claimants and group disability benefits plans engaged in 

litigation, they hardly represent a significant number of individuals who are facing 

barriers in resolving claim denials.

Finally, the DOL has presented no evidence to conclude that insurers or TPAs are 

aggressively disputing disability claims. In fact, the 0.7 percent court filing rate alone 

belies that assertion. It is in the best interest of insurers and TPAs and the group 

disability benefits plans they represent to quickly and fairly resolve disability benefit 

claims rather than “aggressively” denying claims and engaging in litigation. Employers 

have a wide choice of insurers and TPAs from which to choose and good claim servicing 

is likely a material part of any employer’s selection process. Insurers and TPAs can (and 

do) control costs more efficiently by ensuring a claim is appropriately reviewed after the 

initial request, resolving any follow-up appeals if the benefit is denied, and working with 

the claimant to get them back to work if possible.

Ensuring the Independence and Impartiality of Claim Reviewers

The Proposed Rule establishes standards for the qualifications of individuals making decisions 

with respect to claims and appeals. Specifically, the plan must “ensure the independence and 

impartiality of the persons involved in making the decision.” As a result, “decisions regarding 

hiring, compensation, termination, promotion, or other similar matters with respect to any 

individual (such as a claims adjudicator or medical expert) must not be made based upon the 

likelihood that the individual will support the denial of benefits.” (Proposed §2560.503-1(b)(7)). 

The Preamble to the Proposed Rule notes that, “a plan would not be permitted to provide 

bonuses based on the number of denials made by a claims adjudicator,” and “would not be 

permitted to contract with a medical expert based on the expert’s reputation for outcomes in 

contested cases, rather than based on the expert’s professional qualifications.” (80 Fed. Reg. 

72016-72017).

AHIP agrees group disability plans must ensure that anyone making a decision with respect to a 

claim is acting in a responsible, knowledgeable, and impartial manner and is making decisions 

 

14 “Table C-2A U.S. District Courts – Civil Cases Commenced, by Nature of Suit, During the 12-Month Periods 

Ending September 30, 2009 Through 2014,” U.S. Courts, accessed at: http://www.uscourts.gov/statistics-reports

15 “Table 2 – Fair and Full Review Burden,” 80 Fed. Reg. 72023. This estimate by DOL reflects only those claims 

where additional evidence or rationale is generated and, as a result, the actual number of filed claims may be higher.
January 19, 2016

Page 9

based only on the facts in hand. We support the language in the proposed rule for this standard. 

However, we are concerned with the suggestion in the Preamble that the adjudicator’s 

“reputation for outcomes,” absent any other factor (such as compensation based on decision 

results) is grounds for challenging the independence of the reviewer. For example, a medical 

expert may be selected based on his or her qualifications and compensated appropriately. That

expert may subsequently have a high volume of denials due to the types of claims submitted 

and/or the lack of supporting evidence submitted by claimants. By imposing a vague 

“reputational” standard, DOL is inviting litigation with regard to the overall outcomes of all 

claims reviewed by a claims adjudicator or medical expert (which in turn opens the door for 

massive discovery requests), rather than a more appropriate challenge to the reviewer’s 

qualifications or compensation. 

AHIP recommends that the standards in the Proposed Rule for the impartiality and 

independence of individuals reviewing claims be adopted. AHIP further recommends that 

DOL not adopt any standards that disqualify an adjudicator based solely on a 

“reputational standard” such as the volume of claim denials.

Providing Claimants with Information about Adverse Benefit Determinations

The Proposed Rule states that notices to plan participants and beneficiaries of adverse benefit 

determinations (both the initial claim denial and any subsequent appeal decision) must include 

the following information:

 A discussion of the decision including the extent to which the plan did not follow or 

agree with the views presented by the claimant to the plan of: (a) health care 

professionals treating the claimant or (b) decisions of other benefit payers who granted a 

claimant’s similar claim for benefits (including Social Security Administration (SSA) 

benefit determinations) and the basis for disagreeing with such views or decisions.

 The specific internal rules, guidelines, protocols, standards or other similar criteria of 

the plan relied upon in making the adverse determination or a statement that such 

information does not exist.

 A statement that the claimant may receive, on request and free of charge, reasonable 

access to and copies of all documents, records, and other information relevant to the 

benefit claim.16 

 

16 Under the current claims rule applicable to disability benefits a document or other information is relevant” if: (a) it 

was relied upon in making the determination; (b) was submitted, considered, or generated in the course of making 

the determination; or (c) constitutes a statement of policy or guidance with respect to the plan concerning the denied 

treatment option or benefit for the claimant’s diagnosis (see: 29 CFR §2560.503-1(m)(8)).
January 19, 2016

Page 10

(Proposed §2560.503-1(g)(1)(vii) and (j)(6)). 

We agree a claimant needs sufficient information about why his or her claim was denied under 

the governing disability income plan. There are, however, several concerns raised by the new 

requirements proposed by DOL.

First, a claims adjudicator takes into account a multitude of factors, such as various medical 

reviews, the claimant’s functional capacity and job skills, and the claimant’s ability to return to 

work on a part or full time basis. This decision process and the factors taken into consideration 

are very different from those considered by the individual’s health care provider or even by other 

benefit payers.

A treating health care provider will focus on a patient’s diagnosis and treatment plan while the 

disability claims adjudicator considers the long-term effect of the individual’s condition on their 

ability to work. The claims adjudicators are not necessarily agreeing or disagreeing with medical 

findings by a treating health care provider, rather they are considering if the claimant’s disease or 

illness significantly impairs their work skills. Comparing the two viewpoints does not provide 

claimants with any useful information with respect to a denial of benefits. 

Even a determination that the individual is entitled to benefits under other coverage, such as 

worker’s compensation or Social Security, is not dispositive of, and may not even be relevant to, 

an adjudicator’s decision rendered under the governing disability income insurance policy or 

plan. For example, under rules related to SSDI, a disability is “the inability to do any substantial 

gainful activity by reason of any medical determinable physical or mental impairment which can 

be expected to result in death or which has lasted or is expected to last for a continuous period of 

not less than 12 months.” (20 CFR §404.1505(a)). Disability for purposes of disability insurance 

is defined by the terms of the plan or policy and is typically related to the ability of the employee 

to perform the specific responsibilities of his or her current occupation or, longer-term, any other 

occupation for which they may qualify. A finding of disability by the SSA does not indicate that 

an individual is or is not disabled for purposes of a private disability insurance, many of which 

vary in their definitions of disability. 

Claims adjudicators are trained to understand their own plan or policy requirements and apply 

those standards to claims in accordance with the internal rules, guidelines, policies, and 

procedures. The Proposed Rule puts disability income insurance claims adjudicators in the 

untenable position of having to be aware of and the ability to interpret the legal standards and 

evidence considered by other benefit payers.17 

 

17 For example, will insurers and TPAs be expected to be experts in the worker’s compensation standards applicable 

in all U.S. states and territories?
January 19, 2016

Page 11

In addition, we are concerned about the proposed requirement that a claims adjudicator must 

inform claimants if “internal rules, guidelines, protocols, standards, or other similar criteria of 

the plan relied upon in making the adverse determination” do not exist. The rules are clear that 

such information must be provided if requested and the plan will comply with such requests. It 

does not make sense, therefore, to have plans respond negatively since they will make the 

information available as needed.

AHIP supports adoption of the proposed standards for disclosures of information 

about adverse benefit determinations with two exceptions: (a) claims adjudicators 

should not be required to specifically address whether they disagree with views 

presented by the claimant’s treating health care professional or decisions of other 

benefit payers and (b) claims adjudicators should not be required to state that 

internal rules, guidelines, protocols or other information “does not exist.”

Providing Notices in a Culturally and Linguistically Appropriate Manner

The Proposed Rule adopts new standards for providing notices and communicating with 

individuals who have limited English language proficiency. Plans must provide oral language 

services (e.g., telephone customer hotlines) that support their institution’s ability to respond to 

questions in any applicable non-English language. Plans must also provide assistance with filing 

claims and appeals in any applicable non-English language. In addition, notices must be 

provided on request in any applicable non-English language. Plans must also include in the 

English versions of all notices a statement in applicable non-English languages indicating how to 

access language services. The “applicable non-English language” statement is required if the 

notice is sent to any county in which 10 percent or more of the residential population is literate 

only in the same non-English language. (Proposed §2560.503-1(p)).

AHIP supports this change to the current rules. As discussed below, however, many insurers and 

TPAs responsible for disability insurance administration do not currently have systems in place 

to provide oral translation services and the necessary language disclosures on notices and other 

materials that are sent to claimants. The Preamble to the Proposed Rule indicates that since most 

health insurers already comply with language requirements for health claims, there will be 

minimal compliance costs. In fact, many insurers and TPAs responsible for disability income 

insurance claims do not have similar capability, even if that insurer or TPA is affiliated with a 

health insurer that does. For this reason, we believe the implementation date for the rule must 

provide covered entities a reasonable time to come into compliance.

AHIP recommends DOL adopt the proposed requirements for providing notices to 

claimants in a culturally and linguistically appropriate manner. AHIP further 
January 19, 2016

Page 12

recommends that DOL give covered entities reasonable time to comply, given the 

operational changes and costs associated with these new standards.

Appeals of Adverse Benefit Determinations 

The Proposed Rule requires plans to provide claimants, free of charge, with any new or 

additional evidence or rationale generated or considered by the plan in connection with the 

claim. This information “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 . . 

. .” (Proposed §2560.503-1(h)(4)(i) and (ii)). Claimants must be given a reasonable opportunity 

to respond to any new or additional evidence or rationale in advance of the time limits for 

making plan decisions. The Preamble to the Proposed Rule explains the process as follows:

As an example of how these new provisions would work, assume the plan denies 

a claim at the initial stage based on a medical report generated by the plan 

administrator. Also assume the claimant appeals the adverse benefit

determination and, during the 45-day period the plan has to make its decision on 

appeal, the plan administrator causes a new medical report to be generated by a 

medical specialist who was not involved with developing the first medical report. 

The proposal would require the plan to automatically furnish to the claimant any 

new evidence in the second report. The plan would have to furnish the new 

evidence to the claimant before the expiration of the 45-day period. The evidence 

would have to be furnished as soon as possible and sufficiently in advance of the 

applicable deadline (including an extension if available) in order to give the 

claimant a reasonable opportunity to respond to the new evidence. The plan 

would be required to consider any response from the claimant. If the claimant’s 

response happened to cause the plan to generate a third medical report containing 

new evidence, the plan would have to automatically furnish to the claimant any

new evidence in the third report. The new evidence would have to be furnished as 

soon as possible and sufficiently in advance of the applicable deadline to allow 

the claimant a reasonable opportunity to respond to the new evidence in the third 

report.

(80 Fed. Reg. 72017).

The Proposed Rule does not address how plans should react if the review process cannot be 

completed within in the 45-day deadline for making appeal decisions. The Preamble does note 

that plans for disability benefits may request an extension of time to reach a decision on appeal 

“due to a claimant’s failure to submit information necessary to decide a claim.” (29 CFR 

§2560.503-1(i)(4)). The period of time to make a determination is tolled starting with the date 

on which the claimant is notified that additional information is required. The Preamble asks if 
January 19, 2016

Page 13

special tolling rules are needed and whether the tolling rule adopted for group health plan claim 

appeals should be used. That rule provides as follows:

(I)f the new or additional evidence is received so late that it would be impossible 

to provide it to the claimant in time for the claimant to have a reasonable 

opportunity to respond, the period for providing a notice of final internal adverse 

benefit determination is tolled until such time as the claimant has a reasonable 

opportunity to respond. After the claimant responds, or has a reasonable 

opportunity to respond but fails to do so, the plan administrator shall notify the 

claimant of the plan’s benefit determination as soon as a plan acting in a 

reasonable and prompt fashion can provide the notice, taking into account the 

medical exigencies.

(29 CFR §2590.715-2719(b)(2)(ii)(C)(2)).

AHIP supports procedures allowing claimants access to all information necessary to effectively 

challenge a claim denial that they believe to be incorrect. However, we have concerns with the 

new process set out in the Proposed Rule which we believe will significantly prolong the 

determination and appeals process, increase the potential for litigation, and significantly expand 

compliance costs. 

Courts have acknowledged the need for speedy and efficient resolution of disability claims. This 

issue was addressed by the federal appellate court in Metzger v. Unum Life Insurance Company, 

470 F. 3d 1161 (10th Cir. 2007):

Permitting a claimant to receive and rebut medical opinion reports generated in 

the course of an administrative appeal—even when those reports contain no new 

factual information and deny benefits on the same basis as the initial decision—

would set up an unnecessary cycle of submissions, review, re-submission, and rereview. This would undoubtedly prolong the appeal process, which under the 

regulations, should normally be completed within 45 days. Moreover, such 

repeating cycles of review within a single appeal would unnecessarily increase 

cost of appeals.

470 F. 3d 1161, 1166-1167 (internal citations omitted). See also: Pettaway v. Teachers 

Insurance and Annuity Association of America, 644 F. 3d 427 (DC Cir. 2011); Midgett v. 

Washington Group International Long Term Disability Plan, 561 F. 3d 887 (8th Cir. 2009); and 

Glazer v. Reliance Standard Life Insurance Company, 524 F. 3d 1241 (11th Cir. 2008).

The point of these decisions is clear – claimants and plans need an orderly process that provides 

finality and clear decision making. An endless round of reviews is also contrary to the policy 
January 19, 2016

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reasons behind the original claims rules issued by DOL in 2000 which recommended a process 

that “will ensure that benefit claimants, at least in ERISA covered plans, are provided faster, 

fuller, and fairer decisions on their benefit claims.” (65 Fed. Reg. 70249). 

In addition, the new requirements contemplated by the Proposed Rule are simply not necessary. 

During an appeal of a denial of benefits, the plan administrator reconsiders its original decision 

based on information provided by the claimant. The plan administrator may also, as part of that 

review, have additional medical or other reviews (e.g., occupational assessments) of the 

claimant. If material from these additional reviews support the original decision, it is 

unnecessary for the claimant to respond. Nor should the Proposed Rule be imposed on a plan 

that has an established process for secondary level of internal appeals. Contrary to the Proposed 

Rule, which could very well result in an endless loop of document production, a secondary level 

of internal appeals would provide claimants with the information that they need to contest the 

denial of income benefits.

AHIP recommends that DOL not establish standards for claimants to respond to new 

reports, rationales or other materials generated by the plan during the course of an appeal 

prior to the end of the 45 day time period for the plan to make a decision, particularly with 

respect to a plan that already has in place an established process for a secondary internal 

level of appeals.

Failure to Establish or Follow Reasonable Procedures

If a plan fails to “strictly adhere” to the standards in the claims procedure rules, the claimant is 

deemed to have exhausted the administrative remedies under the plan and may pursue any 

available remedies under ERISA Section 502(a). In addition, “(i)f 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.” 

(Proposed §2560.503-1(l)(2)(i)). As stated in the Preamble to the Proposed Rule, “rather than 

giving special deference to the plan, the reviewing court should review the dispute de novo.” (80 

Fed. Reg. 72018). 

Administrative remedies are not deemed exhausted under a plan if the failure to follow the 

claims rule is, “based on de minimis violations that do not cause, and are not likely to cause

prejudice or harm to the claimant . . . .” The plan must demonstrate that the violation was for 

good cause or due to matters beyond the plan’s control and that the violation “occurred in the 

context of an ongoing, good faith exchange of information between the plan and the claimant.” 

(Proposed §2560.503-1(l)(2)(ii)). If requested, the plan must provide claimants with a written 

explanation for asserting that the violation did not cause the administrative remedies available 

under the plan to be exhausted. If a court rejects a claimant’s request for immediate review of a 

claim under this provision, the claim is considered refilled on appeal upon the plan’s receipt of 
January 19, 2016

Page 15

the court’s decision. After a reasonable period of time, the plan must provide claimants with a 

notice of the resubmission of their appeal.

These new requirements suggested by DOL will unnecessarily preempt the procedures 

established by plans to resolve disputed claims and significantly increase litigation and 

compliance costs. Claimants will be encouraged to immediately file proceedings in federal court 

if they believe the plan has in any manner – however insignificant, non-prejudicial or technical–

failed to follow the claims rules, especially if the court’s review will be dev novo. Under the 

Proposed Rule, it appears that any claimant can lodge any unfounded allegation that a plan is not 

strictly adhering to any part of the claim procedure, including any of the subjective standards set 

out by the rule. For example, a simple allegation that new information was not furnished “as 

soon as possible” or “sufficiently in advance” of the deadline for decision making would require 

the plan to engage in the process of a written explanation. 

Further, what if the plan misses a notice or other deadline by a day or two, is this sufficient cause 

to argue a failure to follow the rules? Will courts now contend with disputes between plans and 

claimants whether a violation was de minimis or part of an ongoing good faith exchange of 

information? If the “failure” occurs near the end of the plan’s review process, should claimants 

be permitted to essentially re-litigate all issues by claiming the plan did not strictly follow the 

rules and requesting a de novo review? The time and expense both for plans, claimants, and the 

courts seems unjustified when viewed against the assumed benefit. 

Under the existing rule, claimants are entitled to challenge the plans procedures and may request 

de novo review, but have done so together with a full and complete record ripe for the court to 

adjudicate. See: Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (S. Ct. 

1985); Nichols v. Prudential Insurance Company, 406 F. 3d 98 (2nd Cir. 2005); Fallick v. 

Nationwide Mutual Insurance Company, 162 F. 3d 410 (6th Cir. 1998); and Curry v. Contract 

Fabricators, Inc., 891 F. 2d 842 (11th Cir. 1990). Under the Proposed Rule, however, even a 

completely baseless claim of procedural violation could be filed in court, only to have the court 

send the dispute back to the administrative process if the court determines the plan acted 

appropriately. Even if the claimant demonstrates a procedural error by the plan, there may be a 

less than fully-developed claim record and the court may choose to remand the matter back to the 

administrator, where the process starts all over again.

The ultimate goal of the claims rule is to focus claimants and plans on the real issue – is the 

claimant disabled and is he or she able to work. Shifting that focus to disagreements over 

whether the plan has failed in some minor way to follow all of the necessary steps laid out in the 

rule distracts from that goal. 
January 19, 2016

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AHIP recommends that DOL adopt rules encouraging claimants to resolve disputes 

through the internal claims and appeals process, rather than inviting legal disputes over 

technical and non-prejudicial violations of the rule.

Effective Date

The Preamble to the Proposed Rule indicates the final rule will be effective 60 days after 

publication in the Federal Register (80 Fed. Reg. 72020). Given the significant and extensive 

changes contemplated, plan sponsors, insurers, and TPAs will need sufficient time to make the 

necessary operational and operational changes to implement the new standards. For example, 

the requirement to add language translation services for customer call centers, add appropriate 

language tag-lines to notices, and (if necessary) translate documents into applicable non-English 

languages, will take time (e.g., adding and training support staff, ensuring translation services, 

upgrading information technology systems, negotiating and contracting with outside vendors). 

At a minimum, the new requirements, once finalized, should be effective for plan years

beginning 12 months after the date the final rule is published.

AHIP recommends that the effective date of any new standards adopted by DOL is for plan 

years beginning 12 months after the date of publication of the final rule.

AHIP and its members appreciate the opportunity to provide feedback regarding the Proposed 

Rule and we look forward to working with the DOL on these important issues.

Sincerely,

 

Winthrop S. Cashdollar Thomas J. Wilder

Executive Director, Product Policy Senior Counsel