WILLIAM T. ALLISON 

ATTORNEY AT LAW

910 Pierremont Road, Suite 410

Shreveport, Louisiana 71106

318.734.0235 (o)

318.935.0696 (f)

bill@allisonlaw.com

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

ATTN: Hon. Phyllis C. Borzi, Assistant Secretary

Re: Claims Procedure Regulations for Plans Providing Disability Benefits

Agendy: Employee Benefits Security Administration

RIN No.: 1210-AB39

Regulation: 29 C.F.R. §2560.503-1

Dear Assistant Secretary Borzi:

I wish to offer the following comments about the proposal ro amend the claims

procedure regulations applicable to disability benefit plans. I am interested in the

content of these regulations because I am an attorney whose practice is focused on the

representation of claimants in ERISA-governed disability benefit disputes. I am well

poised to comment because I have litigated these claims for the last fifteen years have

seen first-hand the difficulties associated with attempting to get a fair review of claims

by conflicted administrators

I have organized my comments as follows. First, I address the most important

substantive issues for the DOL to address as it finalizes the proposed regulations. These

comments relate to where I believe the DOL should make a substantive change in the

proposed regulations. Second, I have set out what I see as the most important technical

issues in the proposed regulations. These are matters that do not change the substance

of a proposed regulation but request language changes for purposes of greater clarity or

conformity with other regulations.

I. Comments on Substantive Matters in the Proposed Regulations

Comment on Notice for Applicable Statute of Limitations

The DOL has invited comment in the statute of limitations issues that have

developed since the Supreme Court's decision in Heimeshoff v. Hartford Life & Accid.

Ins Co., 134 U.S. 604 (2013). I agree that this is a crucial area for regulation as the

Heimeshoff decision has created confusion and much litigation. The DOL can assist by

creating standards for what is a reasonable plan-based limitations provision in the same

way that the DOL used its regulatory power to create timing deadlines for the claims

process in prior versions of the regulations. Since Heimeshoff left open the possibility

that an internal limitations period could run before the appeals process is complete
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 2 of 15

(even where exhaustion is mandatory), the DOL is in a good position to clarify that such

an approach would violate full and fair review required by 29 U.S.C. §1133. Additionally,

because contractual limitations periods are plan terms, the claimant should receive

notice about the limitations period from the plan just as is the case with other plan

terms. As the DOL aptly points out in the preamble to these proposed regulations, plan

administrators are in a better position to know the date of the expiration of the

limitations period and should not be hiding the ball from claimants if the plan

administrator is functioning as a true fiduciary. 

One court has interpreted the existing regulations to require notice of the

expiration of a limitations period. Kienstra v. Carpenters' Health & Welfare Trust Fund

of St. Louis, No. 4:12CV53 HEA, 2014 WL 562557, at *4 (E.D. Mo. Feb. 13, 2014), aff'd

sub nom. Munro-Kienstra v. Carpenters' Health & Welfare Trust Fund of St. Louis, 790

F.3d 799 (8th Cir. 2015)("[a] description of the plan's review procedures and the time

limits applicable to such procedures, including a statement of the claimant's right to

bring a civil action under section 502(a) of [ERISA] following an adverse benefit

determination on review." 29 C.F.R. § 2560.503–1(g)(iv)). This is a minority

perspective. Here, the DOL should do more than interpret its own rules; it should

re-write them to remove any ambiguity. 

I recommend an amendment to the regulations governing the manner and

content of notification of benefit determinations on review. 29 C.F.R. §2560.503-1(j)

[proposed regulation]. The amended language should require:

• that the claims administrator notify the claimant of the date of the expiration of

any plan based limitations period in its notice of adverse action; and

• that the claims administrator include in its initial notice of adverse action, a

statement that the Claimant may appeal the decision, that the appeal is

mandatory and if no appeal is filed the Claimant will be barred from filing suit.

Accordingly, I propose amending the current regulations by adding sub-sections

as follows and renumbering accordingly:

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

...

(6) In the case of an adverse benefit decision with respect to disability

benefits— 

(i) If an internal rule, guideline, protocol, or other similar criterion

was relied upon in making the adverse determination, either the
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 3 of 15

specific rule, guideline, protocol, or other similar criterion; or a

statement that such rules, guidelines, protocols, standards or other

similar criteria of the plan do not exist.; and

(ii) A discussion of the decision, including, to the extent that the

plan did not accept or agree with the views of health care

professionals treating a claimant or the decisions of other payers of

benefits who granted a claimant's similar claims (including

disability benefit determinations by the Social Security

Administration) an explanation of the basis for disagreeing with

their views or decisions;

(iii) a notice that the Claimant has a right to appeal the adverse

decision, an explanation of the procedures for filing an appeal, a

description of the information that should be included in the

appeal, a notice that the appeal is mandatory, and notice that the

failure to file an appeal will result in forfeiture of all future rights,

including the right to file suit seeking the denied benefits.

(7) In the case of an adverse benefit determination on review with respect to a

claim for disability benefits, a statement of the date by which a claimant must

bring suit under 502(a) of the Act. However, where the plan includes its own

contractual limitations period, the contractual limitations period will not be

reasonable unless: 

(i) it begins to run no earlier than the date of the claimant's receipt

of the final benefit determination on review including any voluntary

appeals that are taken;

(ii) it expires no earlier than 1 year after the date of the claimant's

receipt of the final benefit determination on review including any

voluntary appeals that are taken;

(iii) the administrator provides notice to the claimant of the date

that the contractual limitations period will run; and

(iv) the contractual limitations period will not abridge any existing

state limitations period that provides for a period longer than one

year. 

(8) In the case of an adverse benefit determination on review with respect to a

claim for disability benefits, the notification shall be provided in a culturally and

linguistically appropriate manner (as described in paragraph (p) of this section).
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 4 of 15

Comment on Timing of Right to Respond to New Evidence or Rationales

The DOL clearly wishes to improve things for claimants who are ambushed with

new rationales or evidence during review on appeal. I commend this effort, since

sandbagging has been a persistent problem in the ERISA appeals process and some

courts have not appreciated how prejudicial this is to claimants. In Abram v. Cargill,

395 F.3d 882, 886 (8th Cir. 2005), the court articulated the problem as follows:

[w]ithout knowing what "inconsistencies" the Plan was attempting to resolve

or having access to the report the Plan relied on, Abram could not

meaningfully participate in the appeals process. . . This type of

"gamesmanship" is inconsistent with full and fair review. 

Id. 

Given that a claimant is rarely allowed to supplement the record in litigation, the

proposed change offers some assurance that a claimant can contribute his or her

relevant evidence to the record that the court will review. Where the claimant, as

plaintiff, has the burden of proof on most issues, this only makes sense. In most

litigation contexts, the party with the burden of proof is given the last word. Here,

giving the last word to the claimant during the claims appeal process is, in effect, giving

claimant the right of rebuttal in litigation. 

There is, however, a countervailing concern that while this extra opportunity to

submit proof to the plan exists, claimants will be extending their time without benefit

payments. This is a problem that already exists and could be exacerbated. Plans have

protested that giving the claimant the last word will make the internal appeals processes

go on forever. This argument is out of touch with the reality of being an ERISA

disability benefits claimant. These claimants, in my experience, would not continue the

process ad nauseum while they are unable to pay their mortgages and feed their

families.

The following suggestion places reasonable limits on both claimants and plan

administrators and responds to the concern that claimants will have to wait too long for

determinations on review. While claimants will want to make fast work of their

responses because they are usually without income during this process, the type of

evidence they often need to respond to new evidence or rationales by the plan may

require hiring an expert such as another physician, psychologist, or vocational

consultant. These professionals are not always readily available for quick turn-arounds

and, depending on the new information such experts are responding to, they may need

weeks to evaluate the new information. 

For this reason, claimants should have at least 60 days to respond to new
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 5 of 15

evidence or rationales provided by the plan on appeal. Moreover, the period for the

decision on review to be completed should be tolled during this 60-day period. When

the claimant has responded, the plan administrator should be allowed whatever time

was left under the existing regulations or 30 days, whichever is longer, to issue its

determination on review. This rule should apply whether the new information is a new

"rationale" or new "evidence." 

Accordingly, I suggest the following amendment to the proposed regulation (new

language indicated by bolding and underlining):

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

(ii) Provide that, prior to any adverse benefit determination on

review of a disability benefit claim, the administrator shall provide

the claimant, free of charge, any new or additional evidence or

rationale considered, relied upon, or generated by the plan (or at

the direction of the plan) in connection with the claim; such

evidence must be provided as soon as possible and sufficiently in

advance of the date on which the notice of adverse benefit

determination on review is required to be provided under

paragraph (i) of this section to give the claimant a reasonable

opportunity to respond prior to that date. Such new evidence or

rationale must be provided to claimant before the decision on

appeal is issued and the claimant must be afforded up to 60 days to

respond. The time to render a determination on review will be

suspended while the claimant responds to the new evidence or

rationale. After receiving the claimant's response to the new

evidence or rationale or notification that the claimant will not be

providing any response, the plan will have whatever time was left

on the original appeal resolution time period or 30 days, whichever

is greater, in which to render its final determination.

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

(ii) Provide that any information, evidence or opinion relevant to

the claim received or generated by the administrator while any

adverse benefit decision is under review by the administrator shall

be provided to the Claimant within 15 days of its receipt by the

administrator; and

(iii) The period in which the administrator is required to render its

decision on review pursuant to subsection (i) of this section shall be

suspended until the claimant notifies the administrator that it will not
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 6 of 15

comment on the new evidence or offer any additional evidence; the

claimant files additional comments or evidence with the administrator; or

60 days, whichever comes first. After receiving the claimant's response to

the new evidence or rationale or notification that the claimant will not be

providing any response, or the expiration of the 60 day period for

claimant’s comments or submission of additional evidence, the plan will

have whatever time was left on the original appeal resolution time period

or 30 days, whichever is greater, in which to render its final determination

Independence and Impartiality - Avoiding Conflicts of Interest

The proposed regulation regarding the impartiality of claims personnel is

essential but the proposed regulation needs clarification in three areas.

First, the proposed regulation should make clear that impartiality is ensured,

even where the plan, itself, is not directly responsible for hiring or compensating the

individuals involved in deciding a claim. This clarification is necessary because, as a

practical matter, plans frequently delegate the selection of experts to third-party

vendors who, in turn, employ the experts. The business of providing these “experts” has

become a huge industry in the last few decades, and to ensure success, such vendors

ferret out those practitioners upon whom they can rely to provide favorable opinions to

their clients, claims administrators and insurers.

Second, clarification is needed concerning which individuals are "involved." 

Claims administrators often protest that physicians, or other consulting experts, are not

"involved in making the decision" but merely supply information (such as an opinion on

physical restrictions and limitations) that is considered by the claims adjudicator. Under

this logic, plans may argue that consulting experts are not affected by the impartiality

regulation. 

Finally, the proposed regulation should make clear that not only claims

adjudicators and consulting physicians must be impartial. Vocational experts and

accountants are also frequently used in the claims process and should be included in the

scope of the impartiality requirement. 

In light of these concerns, I suggest that the proposed regulation language be

amended as follows (added language is bolded and underlined): 

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

Alternative A

In the case of a plan providing disability benefits, the plan and its agents,
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 7 of 15

contractors, or vendors (such as any entities who supply consulting experts to

plans) must ensure that all claims and appeals for disability benefits are

adjudicated in a manner designed to ensure the independence and impartiality of

the persons involved in making the decision or who are consulted in the process

of making the decision. Accordingly, decisions regarding hiring, compensation,

termination, promotion, or other similar matters with respect to any individual,

(such as a claims adjudicator, vocational expert, accounting expert, or medical

expert) must not be made based upon the likelihood that the individual will

support the denial of benefits. Claims administrators shall keep contemporary

records about each outside vendor and expert it uses and shall make available to

claimants on request the statistical information outlining the number of cases in

which the outside vendor or expert was retained and the number of those in

which the expert’s opinion was contrary to the opinion of one or more treating

source.

Alternative B

Accordingly, 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, in whole or in part, that the individual will support the denial of

benefits. Claims administrators shall keep contemporary records about

each outside vendor or expert it uses and shall make available to claimants

on request the statistical information outlining the number of cases in

which the outside vendor or expert was retained and the number of those

in which the expert’s opinion was contrary to the opinion of one or more

treating source.

Opportunity to Supplement the Record

Although the EBSA has not chosen to regulate about this, it should do so. Many

meritorious disability claims are denied and the courts affirm these determinations

because of issues regarding the scope of the record on review in the court. For instance,

Social Security Disability Insurance decisions, which are the focus of some of the

proposed rules, are often crucial to proving disability claims. However, the Social

Security Administration ("SSA") takes time in issuing its decisions and the SSA's ruling

may sometimes come after the final denial on appeal of the disability plan. This is true

as well for other kinds of evidence. Even where it would not be a problem to do so, plan

administrators often refuse to consider this type of evidence, choosing instead to shut

the door on a meritorious claim. Meanwhile, plans will often counterclaim to recover

the offset that is provided by the SSA benefit. Metropolitan Life Ins. Co. v. Glenn, 554

U.S. 105 (2008). Sometimes a claims administrator may rush an appeal decision

through simply to avoid the claimant being awarded SSDI and having that evidence in

the claims file. There is a clear solution to this that would track the Fifth Circuit's en
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 8 of 15

banc holding in Vega v. National Life Ins. Serv., Inc., 188 F.3d 287, 300 (5th Cir. 1999),

where the Court wrote:

We hold today that the administrative record consists of relevant

information made available to the administrator prior to the complainant's

filing of a lawsuit and in a manner that gives the administrator a fair

opportunity to consider it. Thus, if the information in the doctors'

affidavits had been presented to National Life before filing this lawsuit in

time for their fair consideration, they could be treated as part of the

record. Furthermore, in restricting the district court's review to evidence

in the record, we are merely encouraging attorneys for claimants to make a

good faith effort to resolve the claim with the administrator before filing

suit in district court; we are not establishing a rule that will adversely

affect the rights of claimants.

Id.

In light of this holding from Vega, I recommend a rule that would require the

plan administrator to accept and review evidence and treat it as part of the record, so

long as it is sent in time for the administrator to consider the evidence before litigation

is commenced, and that would allow the claimant to supplement the record after suit is

filed with any evidence that was not available to the claimant before suit was filed. In

such a case, the court in which the suit is pending, may in its discretion, stay the

procedings and remand to the administrator to consider the additional evidence

Discussion of the Decision and Its Relationship to SSDI or other Disability

Awards 

Alternative A

The regulation as presented, requiring a claims administrator to meaningfully

distinguish the views of treating physicians or other entities that are paying benefits, will

be helpful. Often, administrators ignore evidence that is favorable to the claimant. 

Generally, if the administrator pays any attention to contrary opinions, my clients

receive pre-packaged or boilerplate paragraphs in the denial letters that have nothing to

do with their claims. Because of this they cannot mount a response. This stands in the

way of full and fair review. Sometimes courts do not understand the difference between

the type of explanation required by ERISA and these empty paragraphs. Assuming that

this regulation is intended to change plans' reliance on this sort of explanation or a

wholesale failure to address the contrary evidence, I am in favor of the regulation. 

Alternative B

The regulation requiring a discussion about the difference between the plan's
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 9 of 15

decision and awards made by other systems, such as Social Security, should be

expanded to set forth a deferential review requirement. The regulation could utilize the

same language as the regulatory settlement agreements that have been used by many

state insurance commissioners in response to concerns about disability claims processes

used by insurers such as UNUM. For example, in the regulatory settlement agreement

UNUM was required to follow, this language was used:

The Companies must give significant weight to evidence of an award of

Social Security disability benefits as supporting a finding of disability,

unless the Companies have compelling evidence that the decision of the

Social Security Administration was (i) founded on an error of law or an

abuse of discretion, (ii) inconsistent with the applicable medical evidence,

or (iii) inconsistent with the definition of disability contained in the

applicable insurance policy.

Including similar language in the proposed regulation would be helpful to assure

that plans give the appropriate weight to an award made by another entity.

II. Comments on Technical Matters in the Proposed Regulations

Effective Date of Proposed Regulation

To avoid the application of the previous regulations to disability claims that are

already in process before the effective date, I suggest the following text be added:

The regulations shall apply to all claims pending with the plan fiduciary on

or after the date that the regulations go into effect. 

The holding in Abram v. Cargill, 395 F.3d 882 (8th Cir. 2005), was seriously

undermined when the Eighth Circuit later concluded that its decision in Abram was

grounded in the pre-2000 version of the claims regulations and would not apply to cases

decided under the post-2000 claims regulations. See Midgett Washington Group Int'l

LTD Plan, 561 F.3d 887, 894-96 (8th Cir. 2009). To avoid this sort of problem

occurring again, the above suggested language should be added to the proposed

regulations.

Notice of Right to Request Relevant Documents

The regulation concerning notice of the right to request relevant documents

contained in 29 C.F.R. §2560.503-1(g)(1)(vii)(C) [proposed regulation] is an

improvement since it was formerly missing from the regulation. However, it would be

more helpful to claimants to use the words "claim file," which is plain language and is
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 10 of 15

consistent with the amendment at 29 C.F.R. §2560.503-1(h)(4)(i) [proposed regulation]. 

Attorneys understand the language of (g)(1)(vii)(C), but lay persons, who are the actual

participants and often not represented, may not realize what rights are given here. 

Accordingly, I suggest the following amendment to the proposed regulation

(added language is underlined and bolded):

29 C.F.R. §2560.503-1(g)(1)(vii)(C)[proposed regulation]

A statement that the claimant is entitled to receive, upon request and free

of charge, reasonable access to the claimant's claim file, including copies of

all documents, records, and other information relevant to the claimant's

claim for benefits. Whether a document, record, or other information is

relevant to a claim for benefits shall be determined by reference to

paragraph (m)(8) of this section.

Deemed Exhaustion Drafting Issue

This regulation should be edited to clarify that the deemed exhausted provision

applies to both claims and appeals, not just "claims." Presumably, if there is a violation

of the regulations, the claimant can seek review regardless of whether the claim is in the

"claim" or the "appeal" stage. I suggest the following clarifying language (added

language is bolded and underlined):

29 C.F.R. §2560.503-1(l)(2)(i) [proposed regulation]

In the case of a claim for disability benefits, if the plan fails to strictly adhere to

all the requirements of this section with respect to a claim or appeal, the claimant

shall be deemed to have exhausted his administrative remedies.

Deemed Exhaustion of Claims and Appeals Processes

I am pleased that the DOL has undertaken to clarify the consequences that will

result when the plan does not comply with the procedural requirements of the

regulations. The DOL has wisely separated the consequences into two categories, i.e. for

serious violations and for minor violations. I see four areas that could be improved in

the proposal.

First, the standard of judicial review that will apply requires clarification because

there is a potential conflict between language in the preamble and the proposed

regulation. The preamble says: "in those situations when the minor errors exception

does not apply, the proposal clarifies that the reviewing tribunal should not give special

deference to the plan's decision, but rather should review the dispute de novo." The
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 11 of 15

underscored language clearly contemplates that a court should exercise de novo review. 

However, the regulation itself says: "if 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." 29

C.F.R. §2560.503-1(l)(2)(i) [proposed regulation]. I anticipate that plans will argue that

this underscored language does not go far enough to require a court to exercise de novo

review. For example, this language could mean simply that the plan did not make a

decision and another plan review would be ordered rather than de novo judicial review. 

To avoid a potential ambiguity on this point, I suggest the following amendment to the

proposed regulation (added language is bolded and underlined): 

29 C.F.R. 2560.503-1(l)(2)(i) [proposed regulation]

if 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, and the reviewing tribunal

should not give special deference to the plan's decision, but rather shall review

the dispute de novo.

Second, the portion of the proposed regulation concerning refiled appeals

requires clarification. The claimant whose appeal is refiled may need to supplement the

record for the refiled appeal, since it is possible that his or her attempt to communicate

with the plan was thwarted in some way. I suggest amending the regulation to require

the plan to give the claimant notice of his or her right to supplement the appeal. 

Third, there is a lack of clarity in the phrase "reasonable time." It would be better

to specify a period of time. Ten (10) days seems reasonable. 

Finally, for the same reasons as described above with regard to the appropriate

standard of judicial review, it would be beneficial to specify the standard of judicial

review is de novo when the court does not remand. I suggest the following amendment

(added language is bolded and underlined, deleted language shown by strikeout):

29 C.F.R. 2560-503-1(l)(2)(ii) [proposed regulation]

If a court rejects the claimant's request for immediate review under paragraph

(l)(2)(i) of this section on the basis that the plan met the standards for the

exception under this paragraph (l)(2)(ii), the claim shall be considered as re-filed

on appeal upon the plan's receipt of the decision of the court. Within a reasonable

time ten (10) days after the receipt of the decision, the plan shall provide the

claimant with notice of the resubmission and notify the claimant of the right to

supplement the appeal if she chooses. If the court accepts the claimant's request
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 12 of 15

for immediate review, the court will retain jurisdiction and decide the case

applying de novo review.

Right to Claim File and Meaning of Testimony 

The meaning of "testimony" as contemplated by the new regulations is unclear.

The preamble to the proposed regulations states: "the proposal would also grant

the claimant a right to respond to the new information by explicitly providing claimants

the right to present evidence and written testimony as part of the claims and appeals

process." Note the underscored language refers to "written testimony." But the actual

proposed regulation uses this phrasing: "[the processes for disability claims must] allow

a claimant to review the claim file and to present evidence and testimony as part of the

disability benefit claims and appeals process." 29 C.F.R. §2560.503-1(h)(4)(i)[proposed

regulation]. Here the regulation refers to "testimony" without limiting the type of

testimony to "written" testimony.

By comparison, the current regulation uses the following language: "[the process

must] provide claimants the opportunity to submit written comments, documents,

records, and other information relating to the claim for benefits." 29 C.F.R.

2560.503-1(h)(ii)(2)[current regulation].

Hence, there is an inconsistency between the preamble and the proposed

regulation in that the preamble specifies "written testimony" whereas the proposed

regulation just says "testimony." This could lead to costly disagreements over whether

the regulation contemplates actual live testimony, i.e. a hearing. 

Furthermore, under the current regulation sometimes claimants submit

testimony in the form of an audio or video CD. This is particularly useful in cases where

the claimant cannot read or write so that a written statement is impossible. It is also

helpful in those cases where actually seeing the claimant might be important. As such, I

am concerned that the reference to "written testimony" in the preamble might

encourage plan administrators to disallow any audio or video submissions on the

grounds that these forms of evidence do not represent "written evidence." If the

proposed regulation were interpreted in this way, claimants will be in a worse position

than they face at present. 

Further, the proposed regulation's verbiage, i.e. "evidence and testimony" could

be interpreted to impose courtroom evidentiary standards for claimants submitting

proof of their claim – something that is not normally applied in the ERISA context. 

Plans are in a position to observe rules of evidence as they have in-house counsel and

other legal resources to rely upon to assure compliance with the rules of evidence. But

claimants, who are often representing themselves, are not equipped to understand,
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 13 of 15

much less apply, the usual evidentiary standards suggested by the phrase "evidence and

testimony." The agency needs to make clear that it is not curtailing or narrowing the

types of information that claimants may submit to the administrator. 

III. Other Issues of Concern with the Regulations

Adverse Benefit Determination to Include Rescission

Alternative A

An addition to the regulation that an adverse benefit determination includes an

adverse decision on coverage is necessary. However, I question whether the definition

of "rescission" in 29 C.F.R. §2560.503-1(m)(4)(ii) [proposed regulation] is sufficient to

cover the situation where the plan asserts that coverage never existed in the first place. 

Coverage disputes regarding disability benefits should be appealable by the claimant as

a matter of full and fair review. I suggest the following amendment (added language

indicated by bolding and underlining):

29 C.F.R. §2560.503-1(m)(4)(ii) [proposed regulation]

In the case of a plan providing disability benefits, the term "adverse benefit

determination" also means any rescission of disability coverage with respect to a

participant or beneficiary (whether or not, in connection with the rescission,

there is an adverse effect on any particular benefit at that time). For this purpose,

the term "rescission" means a cancellation or discontinuance of coverage or any

other repudiation of coverage that has retroactive effect, except to the extent it is

attributable to a failure to timely pay required premiums or contributions

towards the cost of coverage.

Alternative B

The proposed language regarding treating rescissions as adverse benefit

determinations should be expanded to encompass any situation where a limitation is

invoked so that the claimant can immediately appeal. For instance, a plan may approve

benefits but may invoke a temporal limitation that exists in the plan, such as a mental

illness limitation. Many insurers defer the right to appeal until the date that benefits

end, which imposes significant economic hardship on claimants who may then be

deprived of benefits for several months while appeals proceed. The claimant should

have the option to immediately appeal that determination to avoid the economic

hardship in the future. 
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 14 of 15

Disclosure of Internal Rules etc.

The DOL's proposed regulation regarding disclosure of the internal rules or

criteria used to make a disability benefit decision, 29 C.F.R. §2560.503-1(g)(1)

(vii)(B)[proposed regulation], is helpful because internal rules, guidelines, protocols,

standards, claims manuals, and similar materials often create hidden plan terms that

the claimant is unable to learn of or discover in order to address them in the appeal. As

is true in the healthcare context, plans sometimes argue that internal criteria are

confidential or proprietary. But keeping the rules that are used to administer a plan a

secret is inconsistent with the most basic premise of ERISA. 

The courts have opted to treat federal court appeals of adverse claims decisions

much the same way as they do appeals from administrative agencies. Given that the

DOL is not in a position to change the court’s philosophy in that regard, it should do

whatever it can to ensure that the claimant who appeals an adverse decision to federal

court is afforded nearly the same safeguards as a litigant appealing a decision of a

federal agency. In the latter case, the procedures to be followed by the various federal

agencies are public, promulgated, and readily accessible by any litigant. The procedures

to be followed by claims administrators in determining whether to allow or reject a

claim should be just as public and accessible.

Benefits must be administered "in accordance with the documents and

instruments governing the plan." 29 U.S.C. §1104. In addition, much litigation would

be avoided if the claimant could know what criteria he or she needed to meet in an

appeal See e.g. Cook v. New York Times Co. Long-Term Disability Plan, 2004 WL

203111, at *10 (S.D.N.Y. Jan. 30, 2004); Craig v. Pillsbury, 458 F.3d 748, 754 (8th Cir.

2006)(decrying the use of "double-secret" plan terms); Samples v. First Health Group

Corp., 631 F. Supp. 2d 1174, 1183 (9th Cir. 2007). Given that the regulations require

adverse benefit determinations to include the reasons for the denial and the applicable

plan terms, this additional requirement should not be onerous and would promote the

dialogue between claimant and plan that ERISA contemplates. Booten v. Lockheed

Med. Ben Plan, 110 F.3d 1461, 1463 (9th Cir. 1997)("in simple English, what this

regulation calls for is a meaningful dialogue between ERISA plan administrators and

their beneficiaries.").

Venue Selection Provisions Inconsistent with ERISA

There is a serious issue that is not addressed in the proposed regulations that

should be considered. The regulations should make clear that ERISA's broad venue

provision cannot be thwarted by contrary plan or policy provisions. Some courts have

permitted plans to draft around ERISA's venue requirements. At a minimum, the

present state of the law means that there will continue to be litigation on this question

before the merits of a dispute can even be reached. Venue selection clauses are mostly
Hon. Phyllis C. Borzi, Assistant Secretary

January 5, 2016

Page 15 of 15

used to disadvantage ERISA claimants in litigation or create barriers to their statutory

right to sue. McQuennie v. Carpenters Local Union 429, No. 3:15-CV-00432, 2015 WL

6872444, at *5 (D. Conn. Nov. 9, 2015)(pro se litigant allowed to sue in home state of

Connecticut because he could not afford to travel to California); but see, Turner v.

Sedgwick Claims Mgmt. Servs., No. 7:14-CV-1244-LSC, 2015 WL 225495 (N.D. Ala.

Jan. 16, 2015). In Turner the court encouraged the agency to regulate in this area as

opposed to filing amicus briefs in some cases and not others. Id. at 21("[a]lso

underwhelming is that the Secretary has expressed his view only rarely, through the ad

hoc, highly informal means of amicus briefs in private litigation, rather than in a

regulation, an enforcement setting, or even in a published statement of policy or

guidance."). There is a fear that other courts will take this same point of view, which

would harm disability claimants. 

Accordingly, I recommend that DOL propose a regulation requiring that in the

final denial letter plans not only notify claimants of their right to sue and the date of the

expiration of any internal limitations period but also of the statutory ERISA venue

provision. 

Notice of Right to Retain Counsel for Appeal

Often ERISA claimants who have been wrongly denied disability benefits do not

realize that they have the right to be represented in the administrative appeal process. 

Not knowing what evidence would have proven their claim to the plan administrator,

and limited by the administrator or the court in submitting any new evidence in support

of their claims in later litigation, they have often squandered their last, best opportunity

to prove a meritorious claim. I propose that the DOL adopt a regulation that benefit

denials must advise claimants of their right to hire an attorney to represent them in the

appeal phase. The Social Security Administration does this. There is no reason to hide

this right from claimants. 

I appreciate the opportunity to comment on these proposed regulations and

sincerely hope that my comments are of some use to you. Should you have any

questions, please do not hesitate to contact me at your convenience.

Sincerely,

William T. Allison