RIN 1210-AB39
December 11, 2017
Page 5

when it last considered changes to the disability claim regulations in 2000.5 Substantial
compliance wisely allows the much less expensive and more efficient® administrative claim
process to continue to resolve disputed claims containing only minor regulatory errors.
Substantial compliance also reserves judicial authority to revoke plan deference, but typically only
in cases where the violation(s) impact the decision or process in some substantial, prejudicial,
and/or material way. Because the substantial compliance standard more effectively addresses
only material and consequential plan errors and strikes a fair balance in conjunction with the
other changes made by the Final Rule, the strict adherence standard should be rejected.

While absolute procedural adherence to the Final Rule may be a laudable policy goal, the practical
effect of this Final Rule is to encourage inappropriate incentives to waste plan resources.
Claimants may use the Final Rule to allege against the plan any regulatory failure whatsoever, no
matter how small or inconsequential to the claim decision quality or process. Allegations may be
made at any time during a claim (e.g., during the initial and appellate levels) and without limit as to
the number and type of allegations made. Each time an allegation is received, the Final Rule
requires the plan to field, review, investigate, and write a response in the form of a 10 day letter; a
letter which, once received by the claimant or claimant's lawyer, requires no further action by the
claimant. The plan nevertheless has expense associated with that activity. That expense is real,
whatever the amount, and the Final Rule provides absolutely no disincentive for abuse. We fail to
see how the benefits of unfettered use of a strict adherence violation tactic, coupled with the 10
day letter requirement, outweigh its costs. In contrast, the “substantial compliance” standard has
served all ERISA constituencies well by balancing the competing interests of encouraging
completion of the less expensive and efficient administrative process and preserving an incentive
for plans to strive to comply with the claim regulations, while minimizing plan and claimant costs
and litigation.

Furthermore, if claimants take advantage of these new strict adherence and deemed exhaustion
mechanisms and file early in federal court, judicial resources will be further strained or wasted.
Overuse will clog the federal dockets. Claims cut short from the administrative process will result
in less developed and incomplete administrative records to the courts. This leaves federal courts
to either become substitute claim examiners who must further develop the record through the
very expensive and typically slow discovery and litigation process, or, simply remand the matter
back to the claim administrator. In either case, the costs to resolve the claim increase. If the claim

beneficiaries); Lacy v. Fulbright & Jaworski, LLP Long Term Disability Plan, 405 F.3TM 254 (5" Cir. 2005)(adopting
substantial compliance and recognizing its use by a variety of federal courts); Moore v. LaFayette Life Ins. Co., 458 F.3"
416 (6 Cir. 2006); Schneider v. Sentry Group Long Term Disability Plan, 422 F.3" 621 (7 Cir. 2005)/(finding a failure
to substantially comply with the claim regulations and ordering retroactive reinstatement of benefits); Perry v. Metro.
Life Ins. Co., 2016 Lexis 116610 (M. D. GA Aug. 30, 2016)(applying substantial compliance to ERISA claim deadlines).

5 Benefit Claims Procedure Regulation FAQs, Q/A-F2, available at https://www.dol.gov/agencies/ebsa/about-
ebsa/our-activities/resource-center/faqs/benefi -claims-procedure-regulation (as visited on December 5, 2017).

6 Based on U.S. Department of Labor studies and data and public court filing statistics, 99.3% of all long-term disability
claims are resolved through the current ERISA administrative process. America’s Health Insurance Plans, Public
Comment Letter regarding “Claims Procedure Amendment for Plans Providing Disability Benefits”, dated January 19,
2017.


RIN 1210-AB39
December 11, 2017
Page 8

the data submitted by the ACLI, are currently used by approximately 42% of STD plans and 51%
of LTD plans.8

Thank you for considering these comments and for your efforts to strengthen the disability
income insurance market through enhanced consumer protections and reasonable modifications
to allow more individuals to enjoy the peace of mind afforded by this important coverage.

Respectfully,

David Schwartz

* ACLI Comment Letter, regarding “Claims Procedure for Plans Providing Disability Benefits”, dated December 11,
2017.


RIN 1210-AB39
December 11, 2017
Page 4

This section of the Final Rule is a short-cut to expensive litigation at the claimant’s/plaintiff's
lawyer's sole option. Claimants, and more specifically their lawyers, who believe these procedural
elements of the Final Rule are necessary, should be expected to use them. We urge the
Department to recognize use increases costs as supported by data provided by the industry.
Unfortunately, these procedural mechanisms will not provide consumer benefits that outweigh
the costs and burdens.

This portion of the Final Rule provides, in part, the following:

1) Arequirement to “strictly adhere” to “all” requirements of the Final Rule (strict adherence);

2) Deemed exhaustion with the right to proceed to court (deemed exhaustion);

3) Aclaimant may allege “any” violation of the Final Rule and require the plan provide a
written explanation within 10 days that the alleged violation is de minimis and should not
trigger deemed exhaustion (10 day letter);

4) When courts reject a claimant request for immediate deemed exhaustion review, a
requirement that the claim be “refiled” with the plan “on appeal” (refiling on appeal).

The strict adherence standard permits claimants and their lawyers, at their option, to
inappropriately circumvent the administrative process and waste judicial resources. A violation
allegation of any kind can trigger expensive court proceedings at any time for minor violations, no
matter how small, immaterial or inconsequential the alleged violation’s impact is on quality of the
claim process or benefit decision-making, if any at all. And, even if the court ultimately rejects the
claimant’s complaint, the time, effort, and costs to respond to a federal complaint will be
substantial, all while the claimant endures delayed decision-making on the merits of their claim.
The anticipated delay to claimants is likely substantial. According to the recent Federal Court
Management Statistics, as of March 2017, the median time from court filing to disposition for a
civil matter is 9.9 months, and, the amount of federal judicial vacancies has increased from 641.7
“vacant judgeship months” in 2016 to 1,032.3 vacant judgeship months in 20173

The strict adherence standard inappropriately and inefficiently captures minor, inconsequential
plan errors. The Final Rule requires claim adjudicators to “strictly adhere” to “all” the provisions
of the Final Rule. However, for many, many years a number of federal circuits have employed the
“substantial compliance” standard.* And, in fact, the Department itself rejected strict adherence

3 Federal Court Management Statistics, June 2017 available at

http://www.uscourts.gov/sites/default/files/data_tab! es/fcms_na_distprofile0331.2017.pdf (as visited December 8,
2017).

4 Lafleur v. La. Health Serv. & Indemnity Co., 563 F.3d 148 (5 Cir. 2009) (explaining that substantial compliance with
ERISA claim regulations requires a “meaningful review” by the plan and a “meaningful dialogue” with ERISA plan


RIN 1210-AB39
December 11, 2017
Page 6

is kept by the court, additional costs are likely significant. If remanded, then the claimant is back
before the same claim adjudicator, but only after incurring the costs required to go to court and
back. In either case, we see no evidence that the result to claimants, self-funded plan sponsors,
and/or insurers will be any different than if the claimant went through the administrative process
as it is currently configured.

Finally, should the Department retain this section of the rule, we ask the Department to eliminate
the requirement of refiling on appeal and, instead, allow the claim to be refiled as an initial claim
(not on appeal).

Review and Respond

In addition, the Rule’s new requirement mandating a claimants’ right to review and respond to
new information on appeal before a decision is made is flawed and should be eliminated, revised,
or replaced. The Final Rule, at section (h)(4)(i) and (ii), requires:

1) Before the plan can make an adverse benefit determination on appeal, it must provide the
claimant with “any new or additional evidence” it “considered, relied upon, or generated”,
in connection with the determination, “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” so that the claimant has a “reasonable opportunity” to respond “prior to” the
date the decision is required to be provided; and

2) Before the plan can make an adverse benefit determination on appeal “based on a new or
additional rationale”, it must provide “the rationale” to the claimant “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” so that the claimant has a “reasonable opportunity”
to respond “prior to” the date the decision is required to be provided.

The requirement should be eliminated because it adds administrative costs while creating a
process that may negatively impact the quality of benefit decisions made. Under current
regulations, before a final determination is made, claimants already have the right to submit, and
adjudicators are required to consider, whatever comments, arguments, and information they
desire during both the initial claim stage and the required mandatory appeal. Furthermore, the
Final Rule fails to adequately address situations the Department acknowledged in the Preamble to
the Final Rule may occur; the endless loop of back and forth. See, 80 Fed. Reg. 72017. Without an
explicit tolling mechanism, plans may simply run out of time even though they are continuously
engaged in good faith in the exchange of information. In that event, the plan will be rushed to
decision (and be forced to do so without securing the additional, necessary expert opinion) simply
because it has to meet the impending decision deadline required by the Final Rule. This is not
merely theoretical given the plan is to be held to strictly adhere with the Final Rule requirements,
including time deadlines. More troubling still is the regulation simultaneously requires that plans
“shall consult with a health care professional who has the appropriate training and experience in


4,
Me 4 e
David Schwartz Nese
Head of Global Policy ba ad f C I g na

Cigna Federal Affairs
December 11, 2017

601 Pennsylvania Avenue, NW

VIA ELECTRONIC SUBMISSION TO www.regulations.gov Suite 835, South Building
Washington, D.C. 20004

Employee Benefits Security Administration (202) 719-6499

Room N-5655. David.Schwartz@Cigna.com

U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210

Attention: Claims Procedure for Plans Providing Disability Benefits Examination

Re: Claims Procedure for Plans Providing Disability Benefits; 90 Day Delay of Applicability
Date (RIN 1210-AB39)

To Whom It May Concern:

Thank you for the opportunity to submit comments on the Claims Procedure for Plans Providing
Disability Benefits Examination.

Cigna Corporation, together with its subsidiaries (either individually or collectively referred to as
Cigna), is a global health services organization dedicated to helping people improve their health,
well-being and sense of security. Our subsidiaries are major providers of medical, dental,
disability, life and accident insurance, and related products and services. Worldwide, we offer
peace of mind and a sense of security to our customers seeking protection for themselves and
their families at critical points in their lives.

Cigna appreciates the work of the Department of Labor (Department) stemming from Executive
Order 13777 entitled Enforcing the Regulatory Reform Agenda, and reconsidering the recent
regulations impacting individuals who might become disabled. Cigna thanks the Department for
its decision to delay the applicability of the December 19, 2016 Final Rule for 90 days, and to
carefully consider additional comments and data while examining alternatives to minimize
unnecessary costs and adverse consequences. As we indicated in our prior comment letter, the
Department's actions are an important recognition of the far-reaching impact the Final Rule will
have on the affordability and availability of disability coverage, the burdens upon the federal
courts, and the time and resources required to conclude the administrative process and resolve
claims for benefits.

In response to the Department's request for data and information demonstrating those impacts,
we join in support of the data submitted by the American Council of Life Insurers (ACLI) and
America’s Health Insurance Plans (AHIP). We believe AHIP and ACLI provide the Department the

“Cigna’ is a registered service mark, and, “the ‘Tree of Life” logo is a service mark, of Cigna Intellectual Property, Inc., licensed for use by
Cigna Corporation and its operating subsidiaries. All products and services are provided exclusively by such operating subsidiaries and not
by Cigna Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company (CGLIC), Cigna Health and Life
Insurance Company (CHLIC), and HMO or service company subsidiaries of Cigna Health Corporation and Cigna Dental Health, Inc.


RIN 1210-AB39
December 11, 2017
Page 7

the field of medicine involved in the medical judgment” before making its final appeal
determination. Therefore, in some situations, plans will be forced to choose between violating the
regulations by missing the time deadline or by forgoing medical opinions they are required to
obtain. We fail to see how this promotes full and fair treatment and/or better decision quality.

If this portion of the Final Rule is not eliminated, then, at a minimum, the Department should
consider revising the Final Rule in at least three ways. First, there should be an explicit “tolling”
mechanism stopping decision-making timeframes from running from the date the new or
additional information or rationale is provided and the date the claimant responds. Second, even
if the rule provides for tolling, the residual time left upon the plan’s receipt of a claimant response
may still be inadequate for appropriate decision-making. The Final Rule should therefore include
an explicit, but reasonable, period of time within which the plan must make its decision (for
example, 30 days). Third, the Department should consider adding a timeframe within which
claimants are required to “respond” (for example, 30 days). And, further, if claimants fail to timely
respond, this communication loop should be considered closed, freeing the plan to decide the
claim within the remaining timeframe.

Alternatively, the Department could consider a different approach. A familiar and economical
approach would be to add a requirement that plans offer a voluntary appeal at the option of the
claimant and, further, that the voluntary appeal must consider whatever information and
arguments the claimant seeks to submit. Therefore, a claimant who believes the adjudicator has
changed rationales or introduced new information during the mandatory appeal that they wish to
address, would now have two options to address those concerns (court or further appeal) instead
of one (court). If claimants are ready for court, they may pursue redress in that forum because
mandatory appeals have been exhausted, but if they desire to address those concerns further in
the administrative process they may demand the voluntary appeal. Another alternative could be
adoption of a rule which requires plans that do not offer voluntary appeals to remain subject to
sections (h)(4)(i) and (ii), while those plans who do offer a voluntary appeal are exempted from
those requirements.

This optional appeal should be expected to resolve a material amount of claims. Further,
voluntary appeals come with certain claimant protections such as, that plans waive the right to
claim voluntary appeals are required for exhaustion, the statute of limitations is tolled during
voluntary appeals, no fees or costs to appeal are allowed, and the right to receive claim
information such that the claimant can make an informed decision about whether to submit to a
voluntary appeal.”

This alternative would also address an additional concern with the Final Rule as currently written,
which is, the very real risk that plans will eliminate offering voluntary appeals to claimants in
response to the rising administrative costs imposed by the Final Rule as currently written.

Leaving the Final Rule unchanged puts at risk additional appeal mechanisms which, according to

7 2560.503-1(d) and 1(c)(3).


RIN 1210-AB39
December 11, 2017
Page 2

reasonably convincing factual evidence it seeks to appropriately revise the Final Rule. We set out
below both our support for and concerns with the Final Rule. We understand the Department's
focus is on costs, benefits, and impacts, so we placed our emphasis accordingly. We outline first
our support for those portions of the Final Rule we deem economical consumer protections and
conclude with those parts of the Final Rule we deem unduly expensive and objectionable.

I. Provisions Cigna Supports
Coverage Rescissions
We support the adoption of this consumer-oriented provision without change.
of Inter:
We support the adoption of this consumer-oriented provision without change.
Our support is based on our agreement with the Department’s commentary in the Preamble
adopting the Final Rule which clarified that the conflict of interest “requirements in the rule do not
modify the scope of ‘relevant documents’ subject to the disclosure requirements in paragraphs
(g)(1)(vii)(C) and (h)(2)(iii) of the section 503 Regulation, as amended by this rule.”
Il. Provisions Cigna Supports with Clarification and/or Modification
mmunication Requi in Non-English Langu
We support the adoption of these consumer-oriented requirements to provide a statement
informing certain claimants of the availability of oral language services and, upon request, their
claim “notice” in a culturally and linguistically appropriate manner.
ont imitati i ure
We support the adoption of this consumer-oriented provision, with one modification.
Requested Modification: The Final Rule requires plans determine and disclose “the calendar date
on which the contractual limitations period expires for the claim.” Because the Final Rule is asking
a plan to determine a legal question, the answer to which a court may or may not agree with, we
suggest the Department recognize that and revise the rule to require the plan to determine the

“calendar date on which the contractual limitations period for the claim is expected to expire”
(emphasis added).


RIN 1210-AB39
December 11, 2017
Page 3

Enh isclosur ireme! im Fi Inter CO)

We support these consumer-oriented standards and requirements in the Final Rule, with one
modification.

Requested Modification: The Final Rule requires plans to disclose certain information “relied
upon” by the plan in making an adverse benefit determination “or, alternatively, a statement that
such rules, guidelines, protocols, standards or other similar criteria of the plan do not exist.” The
requirement for a negative response if no such information is required to be disclosed is illogical.
The Final Rule only requires plans to affirmatively disclose the information if it is, in fact, relied
upon in making an adverse benefit determination. For example, it will be possible for a guideline
to “exist” at the plan but not be disclosed because it was not actually used and “relied upon” in
making any given claim determination. A rule that forces a binary choice between disclosure and
representing that such a guideline does not exist would put such a plan in an impossible position;
a position where it cannot provide a fully accurate response. And because plans have to “strictly
adhere” to the Final Rule, they are at risk for costly court intervention for a rule violation they
could not avoid. We, therefore, request the Department eliminate the language that says “Either ...
or, alternatively, a statement that such rules, guidelines, protocols, standards or other similar
criteria of the plan do not exist.”

IIL. Provisions of Concern to Cigna

Before we set out our concerns, we emphasize that much of the Final Rule’s actual burden and
impact to which we object is directly proportional to the frequency of use of the behaviors
encouraged by the Final Rule. Therefore, we ask the Department to consider the expected impacts
contained in the AHIP and ACLI submissions in light of the expected behavior the commenters
who support immediate unchanged implementation of the Final Rule are likely to exhibit. The
large majority of those commenters are plaintiff disability lawyers. Recognizing the comments of
that constituency, the Department concluded those commenters “firmly believe[s] that disability
claimants are in need of the increased procedural protections provided by the Final Rule”!
(emphasis added). If that is so, then we believe it reasonable for the Department to take them at
their word and assume claimants and their representatives will routinely and frequently utilize
the procedural aspects of the Final Rule they believe they need. Those very costly procedures
include the deemed exhaustion/strict adherence mechanism that encourages new, premature, and
more numerous federal court interventions, and the “review and respond” procedure that adds
unnecessary, additional layers of procedure and cost without commensurate material consumer
benefit while endangering full and fair adjudication. We believe these two parts of the Final Rule
cause virtually all of the objectionable, additional, and unproductive costs identified in the ACLI
data.2

1 82 FR 56562 (Nov. 29, 2017)
2 ACLI Comment Letter, regarding “Claims Procedure for Plans Providing Disability Benefits”, dated December 11,
2017.