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January 15, 2016

U.S. Department of Labor

200 Constitution Avenue, NW

Washington, D.C. 20210

RE: Discretionary Clause Rule Comment

RIN 1210–AB39

Dear Members of the Committee:

DRI -- The Voice of the Defense Bar is pleased to provide the Department of 

Labor our comments regarding the proposed Claim Procedure for Plans 

Providing Disability Benefits, 72014 Fed. Reg. Vol. 80, No. 222, Wednesday, 

Nov. 18, 2015, Proposed Rules.

DRI is a national organization of over 22,000 defense trial lawyers and

corporate counsel involved in the defense of civil litigation. Among its goals is

anticipating and addressing issues germane to defense lawyers and the civil 

justice system. DRI is committed to enhancing the skills, effectiveness, and 

professionalism of defense attorneys. Because of this commitment, DRI seeks 

to address issues germane to defense attorneys and the civil justice system, to 

promote the role of the defense attorney, and to improve the civil justice 

system. DRI has long been a voice in the ongoing effort to make the civil justice 

system fairer, efficient, and — where national issues are involved — consistent.

The important issues raised by the proposed rules are, accordingly, of 

substantial concern to DRI. Since its members have first-hand experience with 

ERISA disability claims litigation, DRI is well-suited to address these issues. 

This is particularly true with respect to anticipating the potential ramifications 

the proposed rules may have on ERISA claims litigation. We welcome the 

opportunity to engage in constructive dialogue with respect to the proposed 

regulations.

Summary of Recommendations 

The recommendations offered below stem from our members’ experience in 

litigating disability benefits disputes throughout the United States and our 

evaluation of the practical implications of implementing the proposed rules in 

their current form. We believe these recommended changes are appropriate to 

best serve the continued vitality of ERISA plans, and reduce unintended 

consequences associated with the proposed rules in their current form. We 

address the following recommended changes:
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- Provide clarification as to what constitutes “new evidence” or “new 

rationales”, with respect to which claimants must be given a right to 

review and respond;

- Specifically adopt a tolling provision to allow claimants and plans the 

time necessary to complete the meaningful dialogue contemplated in the 

new review and response requirements;

- Revise the “deemed exhausted” proposal to provide that in the event of 

an alleged violation, a claimant may proceed to court, but not until after 

the plan provides its response as to why no violation occurred and/or 

why the alleged violation was minor;

- Provide clarification as to the types of “internal rules, guidelines, 

protocols, standards or other similar criteria of the plan that were used 

in denying the claim”, that plans must identify to claimants in the 

context of adverse benefits determinations;

- Eliminate the provision purporting to require courts not to defer to a 

plan’s determinations in the event of an alleged violation.

Highlighted below are the primary concerns that drive these recommendations, 

focusing on potential unintended consequences, as well as specific detailed 

recommendations for the modification of the proposed rules.

(1) The Department should clarify the review and response requirements 

and adopt a tolling provision:

The proposed rules require plans to provide claimants with the 

opportunity to review and respond to “new evidence” or “new rationales” 

relied on in the context of an appeal. The proposed rules do not define 

what constitutes “new evidence” or a “new rationale” and seem to 

contemplate the completion of this process within the already tight 

regulatory deadlines.

Courts have expressed concern that imposing a requirement to consider 

new evidence prior to a final decision “would set up an unnecessary cycle 

of submission, review, re-submission, and re-review” that “would 

undoubtedly prolong the appeal process [and] . . . unnecessarily increase 

cost of appeals. Metzger v. UNUM Life Ins. Co. of Am., 476 F.3d 1161, 

1166 (10th Cir.2007) (citing Sandoval v. Aetna Life & Cas. Ins. Co., 967 

F.2d 377, 382 (10th Cir.1992) (noting that Congress intended to 

minimize the costs of claims settlement by passing ERISA)). We believe 

these concerns are well founded, particularly in light of the current 

regulation’s requirement that administrators consult with an appropriate 

health care professional where medical judgment is involved. 29 C.F.R. 

Section 2560.503-1(h)(3)(iii). See Metzger, 476 F.3d at 1166.

In order to avoid the unintended consequences of undue delay and 

increased costs, the Department should clarify that “if a claimant's 
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assertions [in response to new evidence or a new rationale disclosed by 

the plan on appeal,] do not include new factual information or medical 

diagnoses, a plan need not generate report after report rather than 

relying on the reports it already has in hand.” Brief of the Secretary of 

Labor, Hilda L. Solis, as Amicus Curiae in Support of Plaintiff-Appellant’s 

Petition for Rehearing, Midgett v. Washington Group Int’l Long Term 

Disability Plan, 561 F.3d 887 (8th Cir. 2009) (No. 08–2523). Moreover, 

the Department should make clear that in considering the claimant’s 

response to the new evidence, to the extent the plan elects to consult 

with a health care professional, the plan may consult with the same 

health care professional who rendered the initial report on appeal, to 

which the claimant responded, without having to provide an opportunity 

for further response by the claimant.

(2) The Department should adopt a tolling provision:

Additionally, the Department should adopt a tolling provision in order to 

allow the plan and claimant the time necessary to engage in the 

“meaningful dialogue” contemplated by the new review and response 

requirements. While the current regulations allow for an extension on 

appeal, without an additional tolling provision, plans will simply be 

unable to render decisions within the deadlines and significant disputes 

in subsequent litigation are likely to result. In some cases, more than 

one cycle of review, response and consideration may be required in order 

for the plan to make a final decision. A significant percentage of 

claimants filing appeals are represented by counsel. Some counsel may 

be strategically inclined to hold back certain evidence during the claims 

process in an effort to have the last word. In that event, if the plan has 

already taken an extension, a claimant’s lawyer could effectively preclude 

the plan from obtaining the information it needs to provide a full and fair 

review in a timely manner. The proposed rules should encourage open 

communications, not gamesmanship. Plans need to have the flexibility to 

respond to late provided evidence without running afoul of the 

deadlines. This is particularly true in light of the fact that pursuant to 

the proposed rules, the consequence of failing to meet the deadline is 

that administrative remedies are deemed exhausted and no deference is 

afforded the determination.

In order to address these issues and avoid unintended consequences, we 

propose that the Department include a tolling provision whereby the 

deadline for making a final determination on appeal is tolled from the 

time the plan provides any new evidence or new rationale to the 

claimant, to the time the claimant responds. We also suggest that the 

Department mandate a specified time period for a claimant to respond 

(e.g., 21 days) and a minimum period for a plan to render a decision once 

the response is received or from the expiration of the specified response 
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deadline (e.g., 21 days). A response from a claimant could include 

anything from one sentence to volumes of material and if the response is 

voluminous, the plan will need adequate time to review in order to render 

an appropriate decision. 

Moreover, in furtherance of the “meaningful dialogue” contemplated by 

the proposed regulations, the Department should clarify and facilitate 

the process by which plans and claimants can agree to 

extensions. Extensions by agreement further ERISA’s goals as

articulated by the Supreme Court. See Conkright v. Frommert, 559 U.S. 

506 (2010) (ERISA’s exclusive enforcement scheme seeks to promote the 

formation of benefits plans by “encouraging resolution of benefits 

disputes through internal administrative proceedings rather than costly 

litigation.”). Tolling should also apply from the time that a plan requests 

that the claimant agree to an extension, until the claimant responds to 

the request.

(3) The Department should clarify the requirement that adverse benefit 

determinations contain “internal rules, guidelines, protocols, standards or 

other similar criteria . . .”

The proposed regulation requires that adverse benefit determinations 

contain “the internal rules, guidelines, protocols, standards or other 

similar criteria of the plan that were used in denying the claim (or a 

statement that these do not exist).” It is common for health plans to 

adopt rules and guidelines with respect to, for instance, covered 

procedures and what constitutes “medical necessity.” Disability claims, 

by contrast, typically rise and fall on the terms of the plan at issue and 

frequently hinge on volumes of medical records and opinions that are 

unique to the claimant. Disability plans may adopt internal 

“administrative interpretations” of specific policy language, such as 

limitations or exclusions. See Glista v. Unum Life Ins., 378 F.3d 113 (1st

Cir. 2004)(internal interpretation of pre-existing condition 

provision). That is the type of internal rule or guideline that the 

proposed regulation seems geared towards identifying. However, these 

types of internal rules or guidelines are only relevant in situations where 

the claim turns on interpretation of a policy term, which is relatively rare 

in the disability context. 

Insurance companies that administer claims may also have generalized 

guidelines for employees, not geared towards the administration of any 

specific plan or plan language. Such generalized guidelines not 

specifically referenced in the context of a particular plan or claim, would 

not seem to be contemplated in the language of the proposed rules. But 

in the absence of clarifying language in the regulation, disputes as to the 

scope of the requirement are likely to arise in subsequent litigation, 
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thereby increasing the cost and length of such proceedings, contrary to 

ERISA’s underlying interests. Varity Corp. v. Howe, 516 U.S. 489, 497 

(1996) (“Congress sought to create a system that is [not] so complex that 

administrative costs, or litigation expenses, unduly discourage employers 

from offering [ERISA] plans in the first place.”).

We propose that the Department clarify the proposed regulation to 

require that adverse benefit determinations contain “internal rules, 

guidelines, protocols, standards or other similar criteria used in 

interpreting the plan language at issue with respect to the claim (or a 

statement that these do not exist).” The suggested clarity would ensure 

that all parties fully understand the scope of plans’ obligations and

reduce the likelihood of disputes as well as the cost and length of 

subsequent litigation, consistent with ERISA’s objectives of an efficient, 

cost effective claims administration process.

(4) The Department should narrow the “deemed exhausted” provision 

and require the exchange of meaningful dialogue before a claimant can 

proceed to court:

ERISA’s longstanding exhaustion requirement recognizes “the important 

public policy of encouraging private rather than judicial resolution of 

disputes under ERISA.” See, e.g., Costantino v. TRW, Inc., 13 F.3d 969, 

975 (6th Cir. 1994). In other words, the purpose of an exhaustion 

requirement is to ensure that as much as possible a dispute is resolved 

at the administrative level and before it goes to court. Among the several 

purposes of requiring administrative exhaustion are to reduce the 

number of frivolous lawsuits, promote consistent treatment of benefits 

claims, provide a nonadversarial method of claims settlement; minimize 

costs, prevent premature judicial intervention in the decision-making 

process, and to help assemble a factual record which will assist a court 

in reviewing the administrative decision. Id. The very nature of a multilayered administrative process must allow a plan the “opportunity to 

correct its own mistakes with respect to the programs it administers 

before it is haled into federal court. . .” Adair v. El Pueblo Boys & Girls 

Ranch, Inc. Long Term Disability Plan, 2013 WL 275519 (D. Colo., Jan 24, 

2013). See also, Conkright, 559 U.S. at 1643 (rejecting “one strike and 

your out” approach to ERISA claims administration).

The proposed regulations provide that in the event a plan fails to strictly 

comply with all the regulatory requirements, administrative remedies are 

deemed exhausted and the claimant can proceed to court, subject to an 

exception for minor violations. DRI is concerned that an unintended 

consequence of this proposal will be a significant increase in premature 

lawsuits, resulting increased costs, and delay in the final outcome of 
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benefits disputes. Additionally, judges will be forced to adjudicate 

benefits disputes piecemeal and based on incomplete records, and to 

step into the shoes of claim administrators, contrary to ERISA’s 

underlying purposes. Again, many disability claimants are represented 

by counsel and exhaustion issues are already frequently litigated in 

ERISA cases. If possible delay is the only disincentive to filing suit before 

the completion of the administrative process, premature lawsuits are 

bound to increase substantially and many claims that could have been 

resolved administratively, will involve lengthy and costly disputes in 

federal court regarding whether violations took place and if so whether 

the minor exception applies. The costs of these procedural disputes in 

many cases will be disproportionate to the amounts at stake. 

In order to avoid these unintended consequences, DRI proposes that the 

Department revise the proposal to state that a claimant cannot proceed 

to court without first notifying the plan of the alleged violation and until

the earlier of the claimant’s receipt of the plan’s written explanation of 

the alleged violation, or 14 days from the claimant’s request for such an 

explanation. This proposal is consistent with the Department’s overall 

goal of encouraging meaningful dialogue.

(5) The Department should eliminate the provision purporting to 

require courts not to defer to a plan’s determinations in the event of an 

alleged violation:

In Conkright, the Court relied on its prior decision in Metropolitan Life 

Ins. Co. v. Glenn, 554 U.S. 105, to hold that “a single honest mistake” 

does not rob the administrator of deference. The Court noted that 

“Firestone deference protects [ERISA’s underlying” interests and . . . 

preserves the careful balancing on which ERISA is based.” Id.

(“Respondents claim that deference is less important once a plan 

administrator's interpretation has been found unreasonable, but the 

interests in efficiency, predictability, and uniformity do not suddenly 

disappear simply because of a single honest mistake, as illustrated by 

this case. When the District Court declined to apply a deferential 

standard of review on remand, the court made the case more complicated 

than necessary.”). Glenn, in turn, eschewed hard and fast rules, 

emphasized that when the plan grants discretion review is at all times 

deferential, but held that factors such as procedural unreasonableness, 

are relevant to the question of whether an administrator abused its 

discretion. 554 U.S. 105.

DRI has serious doubts about the Department’s authority to regulate 

judicial standards of review. Having said that, a rule that purports to 

eliminate all deference in the event of a procedural violation threatens 
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ERISA’s underlying interests, as the Court explained in Conkright, adding 

time, cost and complexity to a process that is already complex and 

costly. As evidenced by post-Glenn ERISA jurisprudence, courts are well 

equipped to weigh the relevant factors and determine how much weight 

to give to procedural issues. The Department should avoid adopting a 

hard and fast rule of the type specifically rejected by the Supreme Court 

in Glenn.

Respectfully Submitted,

Laura E. Proctor

DRI President

c: John R. Kouris

 Executive Director