Office of Regulations and Interpretations,

Employee Benefits Security Administration

Room M-5655

U.S. Dept. of Labor

200 Constitution Avenue NW

Washington D.C. 20210 December 6, 2017

Re: Re-Examination of Claims Procedure Regulations for Plans Providing 

Disability Benefits

RIN No.: 1210-AB39

Regulation: 29 C.F.R. §2560.503

Dear Deputy Assistant Secretary Hauser:

As counsel to well over a thousand disabled U.S. Citizens, I am writing once again on their 

behalf to set forth our views on Final Regulation on Claims Procedure for Plans Providing 

Disability Benefits, 81 Fed. Reg. 92316 (Dec. 19, 2016)) scheduled to go take effect on 

April 1, 2018. 

I have been fortunate to have represented disabled consumers for over twenty years. I have 

seen the disabled struggle to be heard and their claims to be justly decided. The regulations 

as presently formulated, left gapping holes in the fair administration of ERISA claims, 

which the regulations to take effect on April 1, 2018 cogently address. 

Even if the cost to the insurance companies for administering and paying ERISA claims 

increases somewhat as they allege, compare that to the price of unjust denials of legitimate 

claims. Just as the premiums for medical coverage have increased in the private 

marketplace, competition for this profitable insurance business will self-regulate the 

premiums for disability insurance going forward. Enacting these regulations to provide a 

more fair system of review will not drive insurers out of the market. We have seen dozens 
of insurers enter and exit the marketplace for reasons completely unrelated to the 

administration of claims, but rather to a change in their business model. 

The insurers have enjoyed the profits from premiums paid for these policies and now 

complain that exacting justice will be too costly. How can that be? A careful reading of 

the regulations to be enacted does not create any new burdens on the insurers, they only 

correct some unfair advantages enjoyed by the insurance industry for too long.

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

response to the adoption of statutory bans on discretionary language clauses in disability 

policies by some states. Notably, during the time period of the BLS study, many states 

enacted discretionary clause bans. This includes but is not limited to Arkansas Admin. 

Code 054.00.101-4 (2013); Cal. Ins. Code §10110.6 (2012); Colo. Rev. Stat. §16-3-1116 

(2008); 50 Ill. Admin. Codes 2001.3 (2005); Md. Code ann. Ins. §12-211; Mich. Admin.

Codes. R. 500.2201-2202 (2007); R.I. Gen. Law §§ 27-18-79; Tex. Admin. Code §3.1202-

1203; Tex. Ins. Code §1701.062, §1701.002 (2011); WAC §284-96-012 (2009). 

Notwithstanding these statutory developments, access and participation in disability plans 

increased according to the BLS data.

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

market share, UNUM and CIGNA, were examined by the states for poor claims handling 

and became subject to fines and Regulatory Settlement Agreements that raised the bar for 

their claims administration. 

http://www.maine.gov/pfr/insurance/publications_reports/exam_rpts/2004/unum_multista

te/unum_multistate.html;

http://www.maine.gov/pfr/insurance/publications_reports/exam_rpts/2009/pdf/cigna_mcr

eport_2009.pdf. 

https://www.insurance.ca.gov/0400-news/0100-press releases/2013/release044-13.cfm. 

Nonetheless, during this period access and participation increased. 

Given this history, I dispute any claim that costs will increase in response to the modest 

changes in the final rules. Accordingly, I urge the Department not to change the final rules 

in response to the industry’s strained logic that the costliness of the final rules will impact 

access to disability benefits in the workplace. 

 

ERISA disability claimants who are denied their benefits face a process that is far below 

the standard for regular civil disputes. These procedural hurdles include: (1) there are no 

jury trials; (2) there is a closed record from the claims process that can rarely be 

supplemented in litigation; (3) courts often apply an unfavorable standard of review, and 

(4) there are no remedies to discourage unfair and self-serving behavior on the part of plans. 

This will never be a level playing field much less one that favors plan participants. United 

States v. Aegerion Pharmaceuticals, Inc., 2017 WL 5586728, at *7 (D.Mass. 11/20, 

2017)("The insurance industry found it could largely immunize itself from suit due to the 

Employee Retirement Income Security Act (“ERISA”).) Even with the final rules in place, 

plan participants will not have achieved the “higher-than-marketplace standards” that the 

Supreme Court insists are required in processing ERISA claims. MetLife v. Glenn, 554 
U.S. 105, 115 (2008). Any consideration the Department makes about the benefits of the 

final rules relative to costs should take this “higher-than-marketplace” expectation into 

account and acknowledge that ERISA exists to protect plan participants. 

The Department has already acknowledged that the disability claims industry has been 

needlessly adversarial toward ERISA disability plan participants and has received many 

comments to that effect. The industry's argument that the final rules are bad for participants 

– despite all evidence to the contrary - cannot be taken seriously. The industry is not a 

credible advocate for participants. 

Requiring the Plan to Discuss the Basis for Disagreement with Social Security 

Decisions or Other Contrary Opinions is Not Costly.

ERISA disability benefits have always been deeply intertwined with the Social Security 

system and mostly are simply supplemental to Social Security benefits. Most disability 

plans require claimants to apply for the SSA benefit, and the plans usually provide 

representation for claimants before the SSA. This is done so that the plan may take 

advantage of the plan term that the SSDI benefit will offset the LTD benefit. So the insurer 

financially benefits by the SSA decision. Once they have the offset, which can be half of 

the LTD benefit, how can they simply ignore the government’s SSD decision that entitled 

them to the offset in the first place.

This rule merely requires disability plans to observe a fundamental due process principle 

that is imbedded in ERISA—namely the principle that a claimant is entitled to a wellarticulated explanation for the adverse benefits decision so that the participant may fairly 

dispute it. The 2000 regulations require no less. The definition of “disabled” under the 

Social Security Act (42 U.SC. Sec. 423) is far more stringent than the definitions in 

disability insurance policies; and a favorable outcome of a Social Security claim represents 

an objective process by a neutral administrative agency. Requiring disability plans to 

meaningfully provide a rationale for an outcome contrary to the SS determination is easily 

achieved with no real burden at all. 

In fact, in the past dozen denial of claims our firm has handled, the insurers, such as Cigna 

and Prudential send us a letter requiring us to perform the groundwork of obtaining the 

entire SSA file and establishing when the SSDI award was rendered and all evidence 

considered by the SSA. So any burden has been effectively placed on the claimants. 

To the extent that the industry argues that increasing the cost of disability insurance will 

burden the government, and more specifically the SSA, the Bureau of Labor Statistics 

publication speaks to this: 

It is important to note that expanding access to employer-provided disability 

insurance would not necessarily relieve the burden on SSDI. The ability to 

access disability insurance does not affect a worker’s eligibility for SSDI. 

People can receive SSDI benefits and long-term disability payments, but the 
private disability insurance payment is usually reduced by the amount of the 

SSDI payment. 

https://www.bls.gov/opub/btn/volume-4/disability-insurance-plans.htm.

Additionally, the disability plans and insurers are required in many jurisdictions to discuss 

why they are denying a disability claim when the Social Security Administration awarded 

benefits under an obviously more strenuous standard. Montour v. Hartford Life & Acc.Ins 

Co., 588 F.3d 623, 635-637 (9th Cir. 2009); Salomaa v. Honda Long Term Disability Plan, 

642 F.3d 666, 679 (9th Cir. 2011); Bennett v. Kemper Nat. Services Inc., 514 F.3d 547, 

553-554 (6th Cir. 2008); Brown v. Hartford Life Ins. Co., 301 F. App'x 777, 776 (10th Cir. 

2008). As a matter of Supreme Court precedent, it is arbitrary and capricious for the claims 

administrator to advocate for Social Security benefits, reap the benefit of the Social 

Security award by means of an offset, and then ignore the SSA’s determination. 

Metropolitan Life v. Glenn, 554 U.S. 105 (2008). As the industry comments often 

acknowledged, requiring an explanation of the reasons for disagreeing with the Social 

Security decision and other contrary evidence tracks the existing standard. 

A rule clarifying that an explanation of the basis for disagreeing with a Social Security 

decision is a requirement will increase uniformity and predictability in the process, which 

is generally associated with costs savings and not cost increases. 

The Deemed Exhausted Rule is Not Costly

The deemed exhausted rule establishes the procedure for claimants to follow when the 

insurers violate the regulations and fail to decide the claim in time. This has already been 

the case made law in many jurisdictions, including New Jersey, which I know because I 

was plaintiff’s counsel in some of the cases. The industry comments are seriously out of 

step with litigation and how the incentives are aligned to discourage litigation. 

This rule is simply a codification of existing judge-made law. Claimants are already able 

to get into court when the claims process has failed them in a meaningful way. See e.g.

Brown v. J.B. Hunt Transp. Servs., 586 F.3d 1079, 1085-86 (8th Cir. 2009) (failure to 

respond to request for documents excused claims from exhaustion requirement because 

there was no full and fair review). It is not likely that additional costs will result from this 

regulation. Hall v. National Gypsum Co., 105 F.3d 225, 231-32 (5th Cir. 1997); LaAsmar 

v. Phelps Dodge Corp. Life, 605 F.3d 789 (10th Cir. 2010); Nichols v. Prudential Ins. Co. 

of Am., 406 F.3d 98 (2d Cir. 2005); Jebian v. Hewlett-Packard Co. Employee. Benefits 

Org. Income Prot. Plan, 349 F.3d 1098 (9th Cir. 2003); Dunnigan v. Metropolitan Life Ins. 

Co., 277 F.3d 223, 231 n.5 (2d Cir. 2002). 

Providing the Right to Review and Respond to New Evidence or Rationale From the 

Plan During the Appeal Review is Not Costly.

This rule is fundamental to full and fair review. It permits a claimant to respond to a 

disability claims administrator’s assertions in a way that will make the response a part of 
the record if the claimant has to go to court to vindicate his/her rights. This is because most 

ERISA cases are decided on a closed record. Without this rule, the claims administrator’s 

new evidence or rationale will be included in the record that the court reviews, but the 

claimant’s rebuttal will not. Perhaps what the industry is really chafing about is the loss of 

its ability to strategically withhold information that would help the claimant achieve 

reversal or win his/her case in court. 

The Department has already acknowledged the importance of this rule and that it is already 

the standard in some jurisdictions. The industry complains that providing the claimant 

with new evidence or rationales before making a final decision is costly. Then they assert 

that some of the new regulations will invite more litigation. Well, providing their rationale 

and evidence upon which their denial is based will invite more discussion and 

communication during the appeal, which is more likely to reduce the need for some 

litigation. If the parties address their difference of opinion, it is often based on a 

fundamental misunderstanding or misapprehension of the facts, which may be handled 

successfully pre-litigation if the rule is maintained. 

The Impartiality Rule

Few industry commenters complained about the proposed rule requiring that consulting 

experts be impartial. Comment #76 (UNUM), Comment #92 (NFL), Comment #129 

(AHIP). This muted objections are understandable, since it is hard to argue that disability 

claims administrators should be free to hire biased experts. The majority of those who 

object to this rule admitted that the proposed rule reflects the existing law. Comment #76, 

(UNUM), Comment #92 (NFL). The industry complaints seem to be based on the fear of 

increased litigation, particularly in the form of discovery. First, federal judges are well 

versed at limiting discovery in ERISA cases in proportion to the needs of the case. See e.g. 

Paquin v. Prudential Ins. Co. of Am. 2017 WL 3189550 (D. Colo. 7/10/2017); Heartsill 

v. Ascension Alliance, 2017 WL 2955008 (E.D. Mo. 7/11/2017; Ashmore v. NFL Player 

Disability and Neurocognitive Benefit Plan, 2017 WL 4342197 (S.D. Fla. 9/27/2017); Baty 

v. Metropolitan Life Ins. Co., 2017 WL 4516825 (D. Kan. 10/10/2017); Harding v. 

Hartford Life and Accident Ins. Co., 2017 WL 1316264 (N.D. Ill. 4/10/2017); Hancock v. 

Aetna Life Ins. Co., 321 F.R.D. 383 (W.D. Wash. 2017); Kroll v. Kaiser Foundation Health 

Plan Long Term Disability Plan, 2009 WL 3415678 (N.D. Cal. 10/22/2009). Next, if the 

impartiality rule is already the law, it is not clear how more discovery would result from 

codifying it. Additionally, the credibility of experts who are opining on whether a claimant 

qualifies for benefits should be subject to some sort of scrutiny. If a claimant needs to 

conduct discovery into whether a physician hired by the administrator is well-known to 

support denials, the cost of conducting this discovery cannot possibly outweigh the 

benefits. ERISA claimants are entitled to a process that does not have a predetermined 

outcome based on which reviewing physician is hired by the plan. This final rule addresses 

a serious problem in the ERISA disability claims process and should remain. 

The Rule Requiring Disclosure of any Internal Limitations Period
Few industry commenters focused on the final rule requiring claims administrators to 

provide the claimant with the date when any internal time limit for filing suit will expire. 

I am assuming, therefore, that these objectors are not claiming that this rule has a cost 

impact. The claims administrators are in a position to satisfy this rule, since the expiration 

date of an internal limitations period is essentially a plan term that should be accessible to 

the plan administrator and not be hidden from unsuspecting plan participants. As with 

most of the final rules, information respecting the period of limitations is required to be 

disclosed in several jurisdictions, so it is unlikely to incur additional costs to create 

uniformity. Santana-Diaz v. Metro. Life Ins. Co., 816 F.3d 172, 179 (1st Cir. 2016); Moyer 

v. Metro. Life Ins. Co., 762 F. 3 503, 505 (6th Cir. 2014); Mirza v. Ins. Adm'r of America, 

Inc., 800 F. 3d 129, 134 (3d Cir. 2015). 

The Rule Requiring Disclosure of Internal Guidelines

Few commenters objected to the proposed rule requiring claims administrator to disclose 

internal guidelines or certify that none exist. Comment #50 (DRI), Comments #76 

(UNUM). These commenters complained that internal guidelines tend to be procedural 

rather than substantive, implying that the guidelines are irrelevant. As this lengthy 

rulemaking process has shown, procedure affects substantive outcomes. So even if internal 

guidelines are procedural, that is no reason to withhold those guidelines from claimants. 

The disclosure of claims manuals and internal guidelines, which often contain additional 

plan terms that are hidden from the ERISA participants, will ultimately cut down on 

litigation, since discovery of these documents is often disputed. See Glista v. Unum Life 

Ins. Co. Of Am., 378 F.3d 113, 123-125 (1st Cir. 2004); Mullins v. AT&T Corp., 290 Fed. 

Appx. 642, 646 (4th Cir. 2008). 

Very truly yours,

 

BONNY G. RAFEL